How Do Local Labor Markets and Human Capital Affect Employment Outcomes after Job Loss?

This article uses the Longitudinal Employer‐Household Dynamics to evaluate how local industry concentration affects earnings losses for displaced workers. “Concentrated industries” are those industries with a high employment share within a labor market. This article compares earnings changes between displaced workers and job stayers within concentrated industries to the same within less concentrated industries. A separate comparison is made based on the expected level of job availability within the labor market. The findings show that earnings changes for displaced workers relative to job stayers are 7–13% higher within concentrated industries when job loss occurs during periods of high job availability. Earnings changes are 4.5–6% lower, however, when the same comparison is made during periods of low job availability. When firms are hiring workers, they are more likely to hire those previously employed within the same industry, since these workers have accumulated more relevant human capital.     

Do #AllLivesMatter? An Evaluation of Race and Excessive Use of Force by Police

There is anecdotal evidence showing that African-Americans are more likely to be subjected to excessive use of force by police than are people of other races. The counterargument is that these issues are not related to race and there are other factors at work. There have been several high-profile cases, such as those in Ferguson, Cleveland, and Baton Rouge. In this study, we estimate the effect of race on excessive use of force incidents using a new dataset comprising citizen complaints against the Chicago Police Department. Our findings show that not only does race play a role in excessive use of force complaints, but also that race plays a role in which complaints are sustained. Our study also highlights the importance of having data on which to perform rigorous empirical analysis in order to inform policymakers.     

Do Firms Use Tax Reserves to Meet Analysts’ Forecasts? Evidence from the Pre‐ and Post‐FIN 48 Periods

We examine whether firms decrease tax reserves to meet analysts’ quarterly earnings forecasts in the period prior to FIN 48, and whether that behavior changed following FIN 48. We use analysts’ forecasts of pretax and after‐tax income to impute premanaged earnings, or earnings before any tax manipulation. Pre‐FIN 48, we observe that firms reduce their tax reserves (i.e., increase income) when premanaged earnings are below analysts’ forecasts. Specifically, 78 percent of firm‐quarters that would have missed the analyst forecast if not for the tax reserve decrease, meet that target when the decrease is included. Furthermore, we find a significant positive association between the decrease in tax reserves and the deviation of premanaged earnings from analysts’ forecasts. In contrast, post‐FIN 48, we find no evidence that firms use changes in tax reserves to manage earnings to meet analysts’ forecasts. Thus, our results suggest that FIN 48 has, at least initially, curtailed firms’ use of tax reserves to manage earnings.     

“Subsidies” or “taxes”? Corporate credit misallocation induced by the nexus of state-owned enterprises and state-owned banks

Diverging from common claims made in the literature, this paper shows that “two-way” credit misallocation is linked to state ownership status. Specifically, not all Chinese state-owned firms benefit from their ownership status by obtaining lower interest costs as a type of subsidy. Some firms are subjected to higher interest costs as a form of tax. We report further evidence for the relationship between financial development and economic growth by accounting for heterogeneity in interstate banking coverage. From listed and unlisted firms’ data, we find that when the presence of state-owned banks is strong, state ownership-associated distortions in interest costs are more severe.     

The Role of Property Rights in the Relationship between Capital Flows and Economic Growth in SSA: Do Natural Resources Endowment and Country Income Level Matter?

This paper studies the role played by the quality of property rights in the linkages of international capital flows into sub‐Saharan African (SSA) economies. Using panel data of 36 SSA countries over the period 1996–2015 and the ARDL procedure with the Pooled Mean Group regression method appropriate for non‐stationary panel data estimation, we account for the joint effects of property rights quality and openness to foreign capital flows on economic growth. We uncover the existence of a property rights quality threshold beyond which property rights either amplifies the spillovers effects or attenuates the negative effect of capital flows on economic growth. For instance, it takes a level of property rights of at least 60 to have a positive long‐term impact of capital flows on economic growth in natural resource‐poor African countries. The quality of property rights matters more to obtain spillover effects of capital flows on growth in natural resource‐poor countries than in their peer natural resource‐rich countries. Finally, with regard to the countries' income levels, capital flows have significant long‐term spillovers effects on economic growth in advanced African economies than in their low‐income peers.     

What Does “Privatization” Do for Efficiency? Evidence from Argentina’s and Brazil’s Railways

Railway restructuring and privatization have now become a mainstream policy option in many developing countries. This paper provides the first analysis of the efficiency payoffs of railway reform for two developing countries, Argentina and Brazil. We track down the evolution of the performance of the private operators in both countries since reform, compare with the pre-reform performance when possible, distinguishing between the output and input sources of efficiency changes. This is done by computing the total factor productivity of each business unit since the regulators started collecting enough data.     

Are “new” and “old” EU members becoming more financially integrated? A threshold cointegration analysis

We assess the degree of financial integration for a selected number of “new” EU member states with Germany. The analysis is performed using a threshold vector error-correction (TVECM) model with fixed rolling window. By employing this methodology we are able to evaluate the degree and dynamics of transaction costs resulting from various market imperfections. TVECM model is applied on interest rate data from different segments of financial markets covering the 1994–2006 period. The hypothesis we test is to what extent European integration tendencies resulted in a more efficient and integrated financial markets. Our findings support the gradual integration hypothesis.     

A 50-year history of “zombie firms” in Japan: How banks and shareholders have been involved in corporate bailouts?

We review long-term changes in “zombie firms” in Japan over this half-century using listed firm data with a framework in which the concept of “zombie firms” includes possible efficient bailouts. The first wave of zombie firms occurred during the period of main banks (hereinafter MBs). MBs were able to actively choose which firms would receive bailouts at the time. However, commonly held beliefs about MBs’ monitoring power and the special role of corporate groups and long-term credit banks for bailouts are not supported. In the largest wave of the lost decade, we find the zombie firm problem in the manufacturing sector was just as serious as the non-manufacturing in terms of firm count. Moreover, the pathological phenomena such as unwilling concentration of loans to MBs were also rather typical in the manufacturing. Soft budget constraints have continued in the manufacturing even after the resolution of banks’ non-performing loans since the bubble burst came to an end, leading to the manufacturing-centered third wave of zombie firms following the Global Financial Crisis.     

“Set a Sufficiently Ambitious Budget Target and Let the Automatic Stabilizers Work”. Will it Really Work in the European Monetary Union?

We examine the popular recipe in the title by means of an AD-LM-AS two-country model of the EMU, controlling for asymmetry in demand and supply shocks and in the monetary-policy transmission mechanism. Unless structural symmetry holds and symmetric shock occurs, national automatic stabilizers, even though supplemented with the common monetary policy, cannot deliver optimal stabilization in each economy. Inflation and output gaps are not closed and may be divergent in sign. Considering that a federal system of inter-regional insurance is lacking, the recipe under examination is too optimistic, while serious threat to EMU cohesion may arise. The econometric estimates we present show that existing national fiscal systems work very poorly as for the minimization, after shocks, of the dispersion of national incomes around the EMU average.