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The diversity of the labour market in the Visegrad Group countries is presented in the article from an institutional perspective. Institutions such as different tax and transfer policies, employment protection legislation, or active and passive labour market policies can affect not only the effectiveness of the economy from a macro perspective, but they can also be crucial in determining the system of rules and incentives for earning money. The institutional conditions of the labour market directly affect the behaviour of labour market participants, their incomes, and therefore income inequalities. To asses and compare the situation between the Visegrad group countries, a synthetic measure of labour market institutions is calculated. A taxonomic analysis is done to group the V4 countries against other selected European Union countries, which enables the assessment and comparison of similarities and differences across the Visegrad countries. Finally, the trade-offs between a synthetic measure of labour market institutions and income inequalities are analysed. The Pearson correlation coefficient and, additionally, the Spearman’s rank correlation coefficient are applied. The analysis is done for 2016, as it was the most recent data available while writing the article. The results from such an analysis can help to answer the question of the state’s role in limiting income inequalities through labour market institutions and to identify the policies which are the most effective in this field. W artykule przedstawiono różnorodność rynku pracy w krajach Grupy Wyszehradzkiej z perspektywy ekonomii instytucjonalnej. Instytucje takie jak: regulacje w zakresie podatków i transferów, przepisy dotyczące ochrony zatrudnienia lub aktywna i pasywna polityka rynku pracy mogą wpływać nie tylko na efektywność gospodarki z perspektywy makroekonomicznej, ale również odgrywać kluczową rolę w określaniu systemu zasad i zachęt do zarabiania pieniędzy. W tej perspektywie warunki instytucjonalne rynku pracy bezpośrednio wpływają na zachowanie uczestników rynku pracy, ich dochody, a tym samym nierówności dochodowe. W celu dokonania oceny i porównania sytuacji między krajami Grupy Wyszehradzkiej, obliczono syntetyczną miarę instytucji rynku pracy. Ponadto przeprowadzono analizę taksonomiczną, w efekcie której pogrupowano kraje V4 względem wybranych krajów Unii Europejskiej. Takie działanie umożliwiło ocenę i porównanie podobieństw i różnic między krajami wyszehradzkimi. Finalnie podjęto próbę identyfikacji i oceny związków między syntetyczną miarą instytucji rynku pracy a nierównościami dochodowymi. Zastosowano współczynnik korelacji Pearsona i dodatkowo współczynnik korelacji rang Spearmana. Wyniki analizy są próbą odpowiedzi na pytanie o rolę państwa w ograniczaniu nierówności dochodowych za pomocą instytucji rynku pracy i pomagają zidentyfikować te działania, które są najbardziej skuteczne w analizowanej dziedzinie.

In a comment to Karadja & Prawitz (2019), henceforth KP, Per Pettersson-Lidbom (2020), henceforth P-L, argues that the main results in KP are severely biased. He argues that KP's results are biased due to non-classical measurement error in emigration and due to confounders related to the instrument. In this response, we show that P-L's reasoning regarding measurement error bias contradicts the results from his proposed test. More generally, P-L's results cannot exclude alternative and arguably more likely explanations. We present two straightforward tests that both indicate that measurement error does not bias KP's results. Second, we argue that KP controls for confounders in a standard way given the identication strategy. Including fixed effects at the level of the exogenous cross-sectional variation, as P-L does, severely limits the available identifying variation and decreases precision. Nevertheless, we document that KP's results are robust to non-linear frost shock controls, including fixed effects for groups of similar frost shocks. In addition, we show that our results are robust to altering regional fixed effects or dropping them altogether, in contrast to what is suggested by P-L.

The pronounced and persistent impact of the global financial crisis of 2008 motivates our empirical analysis of the role of institutions and macroeconomic fundamentals on countries' adjustment to shocks. Our empirical analysis shows that the associations of growth level, growth volatility, shocks, institutions, and macroeconomic fundamentals have changed in important ways after the crisis. Gross domestic product growth across countries has become more dependent on external factors, including global growth, global oil prices, and global financial volatility. After accounting for the effects global shocks, we find that several factors facilitate adjustment to shocks in middle-income countries. Educational attainment, share of manufacturing output in gross domestic product, and exchange rate stability increase the level of economic growth, while exchange rate flexibility, education attainment, and lack of political polarization reduce the volatility of economic growth. Countries cope with shocks better in the short to medium term by using appropriate policy tools and having good long-term fundamentals.

Based on survey data covering 6,547 firms in 10 Central and Eastern European countries we examine the impact of the banking sector environment, as well as the institutional and regulatory environment, on credit constrained firms. We find that small and foreign-owned firms are less likely to demand credit compared to audited and innovative firms. On the other hand, small, medium, publicly listed, sole proprietorship and foreign-owned firms had a higher probability of being credit constrained in 2008-2009 than in 2012-2014. The banking sector's environment analysis reveals that firms operating in more concentrated banking markets are less likely to be credit constrained. However, higher capital requirements, increased levels of loan loss reserves and a higher presence of foreign banks have a negative impact on the availability of bank credit. The evaluation of the institutional and regulatory environment in which firms operate shows that credit information sharing is negatively correlated with access to credit. Furthermore, we show that banking sector contestability can mitigate this negative effect. Finally, we find that in a better credit information sharing environment, foreign banks are more likely to provide credit.

Institutionelle Rahmenbedingungen spielen eine entscheidende Rolle für das Funktionieren von Märkten. Das institutionelle Umfeld bleibt dabei in der Regel nicht konstant, sondern verändert sich im Zeitablauf. Um zu analysieren, ob Veränderungen der institu­tionellen Rahmenbedingungen Effekte auf die wirtschaftliche Entwicklung insbesondere von Branchen haben, müssen die entsprechenden, für einen bestimmten Wirtschaftszweig relevanten Neuerungen zunächst identifiziert werden. Das ifo Zentrum für Industrieökonomik und neue Technologien will mit dem Aufbau einer »Institutionen-Datenbank auf Branchenebene« hierzu einen Beitrag leisten. Ziel der Datenbank ist es, institutionelle Veränderungen, die eine Branche betreffen, systematisch und möglichst standardisiert zu erfassen und damit vorhandene Branchenkenntnisse wissenschaftlich nutzbar zu machen. Der Artikel stellt erste deskriptive Auswertungen der Datenbankinhalte vor.

This study estimates the impact of financial deregulation on top income shares. Using the novel econometric method of constructing synthetic control groups, we show that the "Big Bang"-deregulations in the United Kingdom in 1986 and Japan 1997-1999 increased the share of pre-tax incomes going to top earners by over 20 percent in the U.K. and over 10 percent in Japan. The effect is strongest in the top five percentiles in the U.K. whereas it is mainly driven by the lower part of the top decile in Japan. The findings are robust to placebo tests, alternative ways to construct synthetic controls and scrutiny of post-treatment trends. Higher earnings among financial sector employees appear to be an important mechanism behind this result.

Trade unions face major challenges in developing effective responses to the growing international scope, integration and complexity of multinational companies' operations. There is marked variation in trade unions' responses, which may be local and national or cross-border in nature. Focusing on cross-border union co-operation and action, the paper shows that considerations of both structural and institutional contingency and union agency are important in accounting for the marked variation in union responses. In examining contingency, the paper highlights how a series of institutional and structural factors, relating to the national and regional institutional environments in which MNCs are based, and where they locate their operations; sector of operation; and the business structure and strategy of MNCs, tend to shape the nature of union responses. By exploring the role of agency from two perspectives - bottom up and top down - the multi-level nature of the challenge confronting unions in establishing viable forms of transnational cooperation and action is demonstrated. A perceptible shift is underway towards contexts in which local or national responses are no longer adequate or appropriate, and towards those which call for cross-border initiatives.

The current rules of the social and economic system have allowed the development of the sharing economy. However, through their spread across numerous industries, institutional inconsistencies and discussions on new regulation requirements have emerged demanding a re-assessment of rules, e.g. in tax laws, social security laws, labour laws and in the regulation of specific industries. Die Ökonomie des Teilens hat sich-gestützt auf Internetplattformen-in viele Wirtschaftsbereiche hinein ausgedehnt. Hat das neue Transaktionsmodell das Potenzial, die Wirtschafts- und Gesellschaftsordnung grundlegend zu transformieren? Dabei fanden die Transaktionen zunächst noch innerhalb des bestehenden institutionellen Gefüges statt. Doch mit ihrer zunehmenden Bedeutung zeigen sich Konflikte und institutionelle Inkonsistenzen. Wie die Aktivitäten in der Sharing Economy zu differenzieren sind und welche Regeln entsprechend angewandt werden sollten, sind Fragen, die der konstruktiven Diskussion bedürfen.

Die Piraterie am Horn von Afrika hat in den letzten Jahren deutlich zugenommen: 217 Schiffe berichteten 2009, von somalischen Piraten angegriffen worden zu sein. Obwohl damit weniger als ein Prozent aller Schiffe, die den Golf von Aden 2009 durchquerten, angegriffen wurde, sorgt somalische Piraterie für erhebliche wirtschaftliche Kosten und Störungen. Einige Schiffe meiden inzwischen routinemäßig die Region, und die geschätzten zusätzlichen Kosten für Seetransportversicherungen wurden für 2009 auf etwa 400 Millionen US-Dollar geschätzt. Internationale Seestreitkräfte, die seit August 2008 im Golf von Aden präsent sind, sollen die Lieferung von Lebensmittelhilfen an notleidende Somalier sicherstellen, den Schiffsverkehr im Golf von Aden schützen und die Bedrohung der Seefahrt durch Piraten in der Region eindämmen. Die Präsenz der Marine hat zwar einen explosionsartigen Anstieg der Piraterie im Golf von Aden verhindert, sie scheint aber keinen nachhaltig abschreckenden Effekt gehabt zu haben. Die privaten Schifffahrtsunternehmen kooperieren zu wenig mit der Marine, und das Risiko der Piraten, bei Begegnungen mit der Marine verletzt oder verhaftet und vor Gericht gestellt zu werden, ist relativ gering. Eine starke Zentralregierung, die in Somalia für Recht und Ordnung sorgt, ist nicht in Sicht, und eine Verbesserung der lokalen politischen Stabilität und Sicherheit würde den Piraten eher nutzen als schaden. Der vielversprechendste Weg zu einer Lösung des Problems von der Landseite aus wäre die Einrichtung und Finanzierung einer somalischen Küstenwache. Dies würde nicht nur ehemaligen Piraten eine alternative Beschäftigung, sondern somalischen Fischern auch neue Chancen bieten.

In der abschließenden Podiumsdiskussion, die sich noch einmal mit dem Themenbereich IKT-Infrastruktur befasst, diskutieren Roland Berger, René Obermann, Lars-Hendrik Röller, Hans-Werner Sinn und Roland Tichy, „wie wir Investitionen in moderne Breitbandnetze bekommen". Dabei ging es vor allem um die Frage, ob und wie sich eine geänderte Regulierung als Konjunkturprogramm erweisen kann, wenn sie den derzeitigen Investitionsstau in der deutschen IKT-Netzinfrastruktur beheben kann. Vieles deutet darauf hin, dass der Staat durch entsprechende Rahmensetzungen private Zukunftsinvestitionen anregen kann, die seinen eigenen Haushalt schonen. Nach Ansicht der Podiumsteilnehmer erfordert der Ausbau der Breitbandnetze keine großen zusätzlichen Ausgaben durch die Bundesregierung, sondern eine „intelligente Regulierung, die die Investitionsaktivitäten der Telekommunikationsunternehmen stimuliert". Dadurch könnten bei den Nutzern aus allen Wirtschaftsbereichen, gerade auch aus dem Mittelstand, wichtige Beschäftigungs- und Produktivitätssteigerungseffekte entstehen.

Die Forderung nach höherer Transparenz und besserer Wirkungsorientierung von Subventionen ist ein finanzpolitischer Evergreen, der mit der Schuldenbremse und der Forderung nach langfristiger Tragfähigkeit der Finanzpolitik, zusätzliche Dringlichkeit erhält. Die im Auftrag des Bundesministeriums der Finanzen durchgeführte Untersuchung fe 6/13 hat anhand der praktischen Erfahrungen in sechs Ländern - Dänemark, USA, Australien, Niederlanden, Schweiz und Vereinigtes Königreich - Anregungen zur Weiterentwicklung des Subventionsregimes des Bundes identifiziert und entwickelt. Diese Anregungen werden mit Blick auf die Besonderheiten der deutschen Subventionspolitik formuliert, die mit einem kurzen Stärken-Schwächen-Profil charakterisiert wird. Als besondere Stärke der deutschen Subventionspolitik wird dabei der alle zwei Jahre erstellte Subventionsbericht des Bundes hervorgehoben; an ihn knüpfen zentrale Weiterentwicklungsoptionen an. Folgende Module zur Weiterentwicklung der Subventionstransparenz und -kontrolle des Bundes entwickelt die Studie: I. Verbreiterung des Berichtsgegenstandes: Die Studie zeigt Wege, wie mehr Maßnahmen mit subventionsäquivalenten Charakter unter dem Rubrum "Förderungen und Transfers" in die quantitative und qualitative Berichterstattung des Subventionsberichts einbezogen werden können. II. Ein neutraleres Image für Subventionen: Subventionskritik ist wichtig; die häufige Stigmatisierung von Finanzhilfen aber schadet der Finanzpolitik. Skizziert wird eine Regierungs-Kampagne "Meine Subvention", die den Weg zu einem neutraleren Image eröffnet. III. Subventionsdatenbank: Eine Datenbank in Anlehnung das schweizerische Online-Verzeichnis der Bundeshilfen könnte die Subventionstransparenz merklich verbessern. IV. Rollierende Evaluationszyklen und Spending Reviews: Es werden drei Stufen für regelmäßige vollständige Evaluierungspflichten entworfen, wobei die oberste Stufe den Einstieg in Subventions-orientierte Spending Reviews markieren würde. V. Steuervergünstigungen systematisieren und dem Bundeshaushalt annähern: Steuervergünstigungen sind Substitute für direkte Staatsausgaben. Um beide so weit wie möglich gleich zu behandeln, entwirft der Bericht drei Stufen der Annäherung bzw. fiktiven Vollintegration von Steuervergünstigungen in den jährlichen Haushaltsprozess. VI. Nachhaltigkeitsprüfung durch den Subventionsbericht: Im Koalitionsvertrag der Bundesregierung ist vereinbart, dass der Subventionsbericht stärker überprüfen soll, ob die dargestellten Maßnahmen nachhaltig sind. Im Bericht werden umsetzbare Optionen für eine Nachhaltigkeitsüberprüfung von Subventionen entwickelt. Studie im Auftrage der Bundesministeriums der Finanzen The call for greater transparency and more performance orientation of subsidies is an evergreen of German economic policy. The new budgetary Debt Brake and the demand for long-term fiscal sustainability add to the urgency of this claim. The research report fe 6/13 commissioned by the Federal Ministry of Finance analyses the practical experiences in six countries - Denmark, the USA, Australia, the Netherlands, Switzerland and the United Kingdom - and develops suggestions for the further improvement of German subsidy policy. The suggestions are formulated with a view to the special features of the German subsidy policy, characterized with a short SWOT profile. Here, the biannual Federal subsidy report stands out as a particular strength of the German regime. Most of the following modules to improve of the transparency and performance of subsidies are attached to this report - directly or indirectly: I. Broadening the subsidy report's coverage: Today, many budgetary transfers which are narrow equivalents to classical subsidies are not covered by the subsidy report. The study proposes to establish a new report-section "aid and transfers". Here, these equivalent measures can be described and, thus, gradually integrated into the subsidy report. II. A more neutral image for subsidies: Many subsidies deserve the critical scrutiny they receive in public. Yet justified criticism has turned into a common stigma for subsidies which is detrimental to rational expenditure policy. The study outlines a government campaign "My Subsidy" as path to a more neutral image. III. Subsidy database: A database in line with the Swiss online-register of all federal subsidies could improve state aid transparency markedly. IV. Periodic subsidy evaluations and spending reviews: We develop three stages of obligatory regular evaluationscycles for subsidies, with the top stage marking an entry into subsidy-oriented spending reviews. V. Integration of tax expenditures with the federal budget: Tax expenditures are close substitutes for direct government spending. As far as possible both should be treated alike. We design three stages of convergence to the budget. The top stage would offer the full integration of tax expenditures with the budget process. VI. Sustainability impact assessment by the subsidy report: The coalition agreement of the German federal government stipulates, inter alia, that the subsidy report in future shall monitor whether subsidies are sustainable. The study develops a framework for these sustainability impact assessments of subsidies.

Deutschland erlebt zurzeit einen gewaltigen Zustrom von Menschen, die sich hier neben Sicherheit an Leib und Leben auch eine wirtschaftliche Perspektive wünschen. Ein großer Teil der Flüchtlinge wird, das zeigen historische Erfahrungen, im Land bleiben. Gleichzeitig wird der Migrationsdruck aus Afrika und dem Nahen Osten aufgrund der demographischen Entwicklung nicht nachlassen. Deutschland sollte aus humanitären Gründen, aber auch aus langfristigem wirtschaftlichem Eigeninteresse, die Einwanderer nicht am Arbeiten hindern. Dafür braucht es passende institutionelle Rahmenbedingungen auf dem Arbeitsmarkt und in den sozialen Sicherungssystemen, damit Einwanderung eine Win‑Win‑Situation entstehen lassen kann, in der sowohl die Einheimischen als auch die Zuwanderer wirtschaftlich profitieren. Der neu eingeführte Mindestlohn oder eine Anhebung der Hartz‑IV‑Regelsätze gefährden dieses Ziel.

Anknüpfend an die kontrovers geführte Diskussion über die Performance der Kreditwirtschaft in Deutschland geht dieser Beitrag auf Basis einer empirischen Analyse der Frage nach den Haupteinflussfaktoren der Rentabilität von Banken und Bankensystemen in Europa nach: Lassen sich Performanceunterschiede im Wesentlichen auf institutionelle oder strukturelle länderspezifische Systemmerkmale zurückführen, die insbesondere an divergierenden Eigentumsstrukturen bzw. Konsolidierungs- und Konzentrationsprozessen ansetzen? Oder prägen vielmehr bankindividuelle geschäftspolitische Merkmale die Rentabilität? Mittels rekursiver Partitionierung wird das Untersuchungssample bestehend aus 3000 europäischen Banken im Hinblick auf die ausgewählte Performance- Zielgröße "Eigenkapitalrendite" schrittweise anhand des jeweils trennschärfsten Inputfaktors in möglichst homogene Subsegmente unterteilt. Das vom Algorithmus als trennschärfstes Kriterium ausgewiesene institutionelle Merkmal "Eigentum an Sparkassen" separiert Banken aus Ländern mit Privatisierungserfolgen von Banken aus Ländern mit einem durch öffentliches Eigentum dominierten Sparkassensektor. Demnach weisen Banken aus Ländern mit ersten Privatisierungserfolgen signifikant höhere Renditen auf. Following the controversial discussion on banking industry's performance, this study analyses the main driving forces of banks and banking systems profitability: Are performance differences primarily due to country specific institutional attributes (here related to ownership structures in the European banking industries) or structural characteristics of the banking system (aligned to consolidation and concentration processes in banking markets), or can they mainly be attributed to bank specific, strategic features expressed by financial ratios? Using recursive partitioning, the sample of around 3,000 European banks is successively divided by the most discriminatory predictor with regard to the dependent variable return on equity in as homogenous sub-segments as possible. The algorithm chooses the institutional characteristic ownership of savings banks as the most selective input factor. Banks located in countries with at least first privatization success indicate a significant higher profitability than banks resident in countries with public dominated savings banks sectors.

Auf dem Weg in die Europäische Union haben die mittel- und osteuropäischen Länder einen beachtlichen Reformprozess durchlaufen, um die an sie gestellten Anforderungen hinsichtlich der Aufnahme zu erfüllen. In diesem Beitrag wird deutlich gemacht, dass sich die institutionellen Rahmenbedingungen in den alten und neuen EU-Mitgliedsländern nur langsam annähern, denn nach wie vor bestehen erhebliche Unterschiede in der Effizienz des öffentlichen Sektors.

Von den ökonomischen Eigenschaften eines Gutes hängt es ab, ob es öffentlich bereitgestellt werden sollte oder privat angeboten werden kann. Diese lange Zeit herrschende Ansicht in den Wirtschaftswissenschaften hat sich jedoch insbesondere seit Coase gewandelt. Welche Folgen ergeben sich hieraus für die aktuelle Wirtschaftspolitik?

In einer radikalen Deregulierung des Arbeitsmarktes und tiefen Einschnitten in das System der sozialen Sicherung wird zumeist die einzige Möglichkeit gesehen, Deutschland aus seiner wirtschaftlichen „Schlusslichtposition“ zu manövrieren. Welche ökonomischen Argumente stehen hinter diesen Vorschlägen? Sind sie tatsächlich so zwingend und unbezweifelbar, wie überall behauptet wird? Wo steht Deutschland im internationalen Vergleich der Arbeitsmarkt- und Sozialstaatsinstitutionen? Helfen radikale Strukturreformen wirklich weiter? Welche makroökonomischen Ursachen hat die Krise?

Wenn das Finanzausgleichsgesetz zum Ende des Jahres 2019 außer Kraft tritt, ergibt sich eine historische Chance, die Reibungsverluste im gegenwärtigen Ausgleichssystem durch eine Neuordnung der Bund-Länder-Finanzbeziehungen zu verringern. Der Autor analysiert, in welchem institutionellen Rahmen ein anreizverträglicher Länderfinanzausgleich erreicht werden kann. Es stellt sich insbesondere heraus, dass die Anreizwirkungen des Ausgleichssystems im besonderen Maße von der Wahrnehmbarkeit (Salienz) der vom Land getroffenen steuerpolitischen Entscheidungen im interregionalen Steuerwettbewerb abhängen. Jurisdictions that engage in inter regional tax competition usually try to lessen competitive pressures by substituting salient tax instruments with hidden ones. Given this, the author investigates the efficiency consequences of inter regional tax competition and fiscal equalisation in a federal system when taxpayers fail to optimally react to shrouded attributes of local tax policy. If the statutory tax rate is a relatively salient instrument and taxpayers pay little attention to the quality and frequency of tax enforcement, the underlying substitution of tax instruments with the aim of reducing the perceived tax price may suppress the under exploitation of tax bases that is typically triggered by fiscal equalisation.

This essay assesses the impact of geographic factors, trade openness and political institutions on one of the key possible avenues for addressing the "resource curse": export diversification. It does so with refined data spanning 1960-2010 and in a single framework that uses instrumental variables approach to tackle endogeneity, omitted variable bias and measurement error issues that characterize many studies of the resource curse. The results show that natural resource-rich developing countries are less likely to achieve export diversity the more autocratic institutions they have, particularly weak executive constraints and low legislative effectiveness; the weaker the rule of law; if they are located in the Middle East or Africa; if they are landlocked or mountainous; and the richer they are in oil, but not in other resources. On the other hand, the quality of government and competitiveness of political participation do not predict export concentration. There is also little evidence to support the view that trade integration, trade policy and tariff rates matter for export concentration in this set of countries. While neither colonial experiences under British or French rule, nor having legal systems designed under English Common Law or French Commercial Code have significant effects, resource-rich developing countries with past socialist institutions are significantly more likely to have more concentrated exports. Population size, ethnic or religious fractionalization, and human capital do not seem to affect the diversity of exports. Finally, unlike oil wealth, abundance in non-fuel minerals, coal, and forest resources is associated with higher export diversity.

Recent research has led to the empirical regularity that firm growth rate distributions are heavy tailed. This finding implies that a few firms experience spectacular growth rates and decline, but that most firms have marginal growth rates. The literature on high growth firms shows that high growth firms are the central drivers of job creation in the economy but that these firms are neither clustered in high technology sectors nor are these firms necessarily young and small. The evidence on the determinants of firm growth confirms that firm growth is difficult to predict. The finding that firm growth is well approximated by a random process does not only reflect the heterogeneity at the firm level but is also associated with the low persistence of growth rates over time.

Public policy and cluster management face a common challenge in developing sustainable clusters. Many clusters report difficulties acquiring membership fees once the governmental subsidies come to an end, which brings doubts as to the cluster management's capabilities and likewise to the public policy design. This paper applies the theory of institutional voids and elaborates a theoretical framework to identify cluster services. It shows that analyzing the specific institutional environment of the cluster enables the identification of valuable cluster services. As the identified institutional voids impose a competitive disadvantage on the companies, such services will increase their willingness to pay. Therewith, the article combines cluster literature and institutional theory to draw synergies on participation incentives.

This study explores the different approaches to service delivery in fragile states by surveying donors' own evaluations of their existing fragile states policies. Because there is limited understanding of what works in risky environments, monitoring and evaluation are critical components of effective assistance. By highlighting trends in the strategies that donors have developed to implement acknowledged good practices, we can better understand how these experiences might contribute to future project and evaluation design.

Countries with weaker domestic institutions hold fewer foreign assets and exhibit concentrated corporate ownership. An equilibrium business cycle model of international capital flows with corporate governance frictions between outside investors and insiders explains both phenomena. Investment dynamics under insider control leads relative dividend and labor income for outsiders to be more negatively correlated in countries with weaker institutions. Consequently, outsiders hold more domestic assets to hedge labor income risk. I provide empirical evidence on this hedging demand. Concentrated ownership arises because international diversification through the sale of domestic assets by insiders is penalized by lower stock market valuation.

There is ample evidence for a "democracy premium". Laws that have been implemented via election lead to a more cooperative behavior compared to a top-down approach. This has been observed using field data and laboratory experiments. We present evidence from Chinese students and workers who participated in public goods experiments and a value survey. We find a premium for top-down rule implementation stemming from people with stronger individual values for obeying authorities. When participants have values for obeying authorities, they even conform to non-preferred rule. Our findings provide strong evidence that the efficiency of political institutions depends on societal norms.

This survey reviews how a recent political economy literature helps explaining variation in governance, competition, funding composition and access to credit. Evolution in political institutions can account for financial evolution, and appear critical to explain rapid changes in financial structure, such as the Great Reversal in the early XX century, unlike time-invariant legal institutions or cultural traits. Future research should model the sources and consequences of financial instability, and to predict how major redistributive shocks will shape regulatory choices and financial governance.

This study analyses institutional features national authorities should have in order to apply common policies effectively. It shows that the effective implementation of EU law and policy can be achieved without increased control. The article suggests that benchmarking of the results of the application of common rules by the national authorities and comparative assessment of their performance is more efficient.

Several recent papers suggest that the negative association between natural resource intensity and economic growth can be reversed if institutional quality is high enough. We try to understand this result in more detail by decomposing the resource measure, using alternative measures of both resources and institutions, and by studying different time periods. While an institutional reversal is present in many specifications, only ores and metals interacted with the ICRG measure of institutional quality consistently have a negative growth effect but a positive interaction that turns the curse around when institutions are good enough.

The formation of regional production networks in East Asia has occurred mainly through market forces, without much help from regional institutions in promoting the creation of a single Asian market. While this approach has served the region well in the past, the drastic changes experienced since the 2008 - 2009 financial crisis and the challenges Asian countries are facing - rowing inequalities and competition, on the one hand, and enhanced threats to the environment and people's health on the other - have rendered more urgent the need for intergovernmental cooperation at global and regional levels. Asia's institutions for regionalism need strengthening through reform and innovation such as better governance and resourcing, greater and more effective participation and delegation of powers, overall streamlining of regional architecture, including the phasing out of outdated or irrelevant institutions and, where needed, the creation of new ones. Ultimately, given its rootedness in regional order, institutional efficacy is a function of the ability and willingness of its members, especially influential stakeholders, to collaborate.

Previous research has recognized that weak institutions can hamper investments and alter patterns of trade. However, little is known about the impact of institutional quality on offshoring. This is surprising, given that offshoring has become an important part of many firms’ internationalization strategy. This study uses detailed Swedish firm-level data on production and trade in combination with a large set of institutional measures of the target economies to study the relationship between institutional quality and offshoring. The results suggest that weak institutions are negatively related to offshoring in general and to offshoring of R&D-intensive goods in particular. Furthermore, firms that are able to establish long-term contracts do so by starting small and successively deepening their engagements. These results are robust to a large number of econometric specifications and various measures of institutional quality.

Several European countries have reformed their labor market institutions. Incentive effects of unemployment benefits have been an important aspect of these reforms. We analyse this issue in a principal-agent model, higher level of unemployment benefits improves the workers' position in wage bargaining, leading to stronger effort incentives and higher output. However, it also reduces incentives for labor market participation. Accordingly, there is a trade-off. We analyze how changes in the economic environment such as globalization and better educated workers affect this trade-off.

It is now well established that highly developed countries tend to score well on measures of social capital and have higher levels of generalized trust. In turn, the willingness to trust has been shown to be correlated with various social and environmental factors (e.g. institutions, culture) on one hand, and accumulated human capital on the other. To what extent is an individual's trust driven by contemporaneous institutions and environmental conditions and to what extent is it determined by the individual's human capital? We collect data from students in Moscow and Manila and use the variation in their height and gender to instrument for measures of their human capital to identify the causal effect of the latter on trust. We find that human capital positively affects the propensity to trust, and its contribution appears larger than the combined effect of other omitted variables including, plausibly, social and environmental factors.

Following the collapse of planning, new small and medium-sized firms rapidly emerged in all transition economies. Using firm level data, we investigate the interaction between the widespread opportunities for new business activities such firms faced and their business environment. The business environment includes physical infrastructure, the availability of an educated labour force, provision of administrative and judicial services, the control of corruption and crime, and the stability of the macroeconomic environment. By comparing how different elements of the business environment affected firms in formerly planned economies with those in economies outside transition, we document not only the challenges faced by transition firms but also the effects of the planning legacy.

Institutions can contribute to regulating interethnic conflict; however, in many cases they fail to bring about lasting peace. The paper argues that their negligence of intraethnic factors accounts for some of this failure. Ethnic groups are often treated as unitary actors even though most consist of various linguistic, tribal or religious subgroups. This internal heterogeneity is often obscured by overarching collective ethnic identities that are fostered by interethnic conflict. However, when such interethnic conflict is settled, these subgroup differences may come back to the fore. This resurgence can lead to subgroup conflict about the political and economic resources provided through intergroup institutional settlements. Such conflict can in turn undermine the peace-making effect of intergroup arrangements. Different subgroup identity constellations make such destructive effects more or less likely. The paper focuses on self-government provisions in the aftermath of violent interethnic conflict and argues that lasting intergroup arrangements are especially challenging when they involve contested ethnic groups.

We survey the literature on venture capital and institutions and present a case study comparing the development of the venture capital market in the US to Sweden. Our literature survey underscores that the legal environment, financial market development, the tax system, labor market regulations, and public spending on research and development correlates with venture capital activities across countries. Our case study suggests these institutional differences led to the later development of an active venture capital market in Sweden compared to the US. In particular, a later development of financial markets and a heavier tax burden for entrepreneurs have played a key role.

The theory of the firm suggests that firms can respond to poor contract enforcement by vertically integrating their production process. The purpose of this paper is to examine whether firms’ integration opportunities affect the way contract enforcement institutions determine international trade patterns. We find that the benefits of judicial quality for the exports of contract-intense goods are more muted in industries that have a greater propensity towards vertical integration arrangements with input suppliers. We show that our results are not driven by primitive industry characteristics. Our results confirm the role of judicial quality as source of comparative advantage and suggest that this depends not only on the technological characteristics of the goods produced but also on the way firms are able to organize the production process.

The impact of economic institutions on development is presently taken for granted but there is surprisingly scarce evidence on the channels through which institutions affect the organization of output. Imperfections in contractual enforcement, for example, could lead firms to adopt technologies that inefficiently minimize dependence on other sectors, thus going hand in hand with a reduction in productivity. Another channel would be the concentration of economic activity in sectors that have fewer interactions with other sectors. Using a dataset on manufacturing, this paper presents empirical evidence supporting both effects: better contractual enforcement raises relatively more the labor share of sectors that interact more with other sectors; further, good governance also boosts relatively more labor productivity in more complex subsectors of manufacturing. Both effects are strongest among countries whose labor productivity ranks in the second and third quartiles of the world productivity distribution and they are mute for the two extreme groups of poor and developed economies.

This paper examines the relationship between institutions and the remuneration of different jobs by comparing the German and Belgian labour markets with respect to a typology of institutions (social representations, norms, conventions, legislation, and organisations). The observed institutional differences between the two countries lead to the hypotheses of (I) higher overall pay inequality in Germany; (II) higher pay inequalities between employees and workers in Belgium; and (III) higher (lower) impact of educational credentials (work-post tenure) on earnings in Germany. We provide survey-based empirical evidence supporting hypotheses I and III, but find no evidence for hypothesis II. These results underline the importance of institutional details: although Germany and Belgium belong to the same "variety of capitalism", we provide evidence that small institutional disparities within Continental-European capitalism account for distinct structures of pay., info:eu-repo/semantics/published

We document that trust in public institutions - and particularly trust in banks, business and government - has declined over recent years. U.S. time series evidence suggests that this partly reflects the pro-cyclical nature of trust in institutions. Cross-country comparisons reveal a clear legacy of the Great Recession, and those countries whose unemployment grew the most suffered the biggest loss in confidence in institutions, particularly in trust in government and the financial sector. Finally, analysis of several repeated cross-sections of confidence within U.S. states yields similar qualitative patterns, but much smaller magnitudes in response to state-specific shocks.

The theory of the firm suggests that firms can respond to poor contract enforcement by vertically integrating their production process. The purpose of this paper is to examine whether firms' integration opportunities affect the way institutions determine international trade patterns. We find that vertical integration lessens the impact of a country's ability to enforce contracts on the comparative advantage of complex goods. We also find that countries with good financial institutions export disproportionately more in sectors that produce complex goods and that have a high propensity for vertical integration. In doing so we use a new outcome-based measure of vertical integration propensity and we employ several empirical strategies: cross section, panel and event study analysis. Our results confirm the role of institutions as source of comparative advantage and suggest that this depends not only on the technological characteristics of the goods produced but also on the way firms are able to organize the production process.