Exchange rate volatility effects on labour markets

With the transition to the euro, exchange rate volatility between the countries participating in European Monetary Union has been eliminated, reducing uncertainty and transaction costs. The other side of the coin is the loss of the exchange rate as a potential mechanism of adjustment to external shocks. The present article uses the case of Germany to study the implications of EMU for labour markets.     

On optimal cycles in dynamic programming models with convex return function

Summary. In this paper we study the behavior of optimal paths in dynamic programming models with a strictly convex return function. Such a model has been investigated in Dawid and Kopel (1997) who assume that the growth of a renewable resource is governed by a piecewise linear function. We prove that in their model the optimal cycles undergo the following qualitative changes or bifurcations: a cycle of period n“bifurcates” into a cycle of period n+1 for increasing elasticity of the return function. We also show that under the assumption of a concave differentiable growth function the qualitative properties of the optimal policy remain valid: oscillating behavior is optimal. Furthermore, we demonstrate numerically that the period of a cyclic optimal path increases if the convexity of the return function (measured by the elasticity) increases. Received: January 22, 1997; revised version: October 13, 1997     

CREDIT MARKET IMPERFECTIONS AND THE INCIDENCE OF WORKER-OWNED FIRMS

Under plausible conditions, in a market economy with both democratic and capitalist firms, credit market imperfections imply that the fraction of workers in democratic firms is an increasing function of the share of worker wealth. Our analysis addresses two agency problems that all firms must solve: eliciting effort from a team of workers and choosing the appropriate level of risk, in a situation where neither effort nor risk is contractually specified. The democratic firm enjoys a relative advantage in dealing with the agency problems surrounding labor, while the capitalist firm has a relative advantage in dealing with agency problems involving risk-bearing.     

The NCAA and the Rule of Reason

This brief essay considers the use of antitrust’s rule of reason in assessing challenges to rule-making by the NCAA. In particular, it looks at the O’Bannon case, which involved challenges to NCAA rules that limit the compensation of student athletes under the NCAA rubric that protects the “amateur” status of collegiate athletes. Within that rubric, the Ninth Circuit got the right answer. That outcome leads to a broader question, however: Should the NCAA’s long held goal, frequently supported by the courts, of preserving athletic amateurism be jettisoned? Given the dual role that colleges play, that is a complex question, which raises issues that are not only commercial but also educational. More important for the purpose at hand, is whether jettisoning amateurism in NCAA athletics is a suitable task for an antitrust tribunal. This paper argues that antitrust law is not an appropriate vehicle for addressing that issue. This does not mean that antitrust has no role to play in policing athlete compensation in NCAA schools. But it does suggest that that role be limited to addressing restraints on trade that occur within the rubric of amateur status—at least until such time as a more competent body decides whether amateurism in collegiate athletics is worth preserving.     

Innovation efforts and performances of Brazilian firms

We analyze the relationship between innovation and firms' performance in Brazil using a comprehensive database that cross-references innovation information by PINTEC (Technological Innovation Research) of the IBGE (Brazilian Institute of Geography and Statistics) and financial information from Serasa and Gazeta Mercantil. Results from the structural equation modeling suggest that variables associating with investments in innovation, which are connected to the innovative effort of a company, do not explain financial performance significantly.     

Potential Secondary Effects of Regulating Children's Television Advertising

The Federal Communications Commission and the National Association of Broadcasters are currently formulating rules and regulations to limit the amount of TV advertising directed at children. What has not been considered are potential secondary effects of these proposed rules and regulations.

The apparent basis of this action is great faith in the power and effectiveness of consumerist legislation. Even if the law is effective in accomplishing its primary objectives, it may produce negative consequences for many consumers and negative reactions within the business community.     

Do foreigners replace native immigrants? A panel cointegration analysis of internal migration in Italy

This paper examines the impact of the immigration of foreigners on domestic labor mobility. Since David Card's seminal study on the regional labor market impact of the Mariel Boatlift it is controversial whether domestic labor mobility equilibrates economic conditions across regions. However, there is little or no evidence that natives leave destinations where migrants tend to cluster. In this paper we reconcile the existing evidence by taking another route: we analyze whether the immigration of foreigners replaces domestic mobility from poor to rich regions. We focus on Italy, which is characterized by large North-South wage and unemployment differentials, and apply panel cointegration methods. The main finding is that, conditional on unemployment and wage differentials, the presence of foreign workers in the labor force of the destination regions discourages internal labor mobility significantly. As a consequence, spatial correlation studies which use the variance of the foreigner share across regions for identifying the wage and employment effects of immigration, tend to understate the actual impact of foreign immigration.