Social security and endogenous fertility: pensions and child allowances as siamese twins

This paper analyses public pensions and child support in a model with endogenous fertility. We show that the individual fertility choice may not coincide with the social optimum, due to the existence of external effects of children on society as a whole. The market outcome without government intervention is efficient, however, as the externalities exactly cancel out in that case. If the government wants to redistribute towards the old, it cannot replicate the command optimum by merely applying lump-sum transfers, but rather needs a child allowance scheme to effectively alter the number of offspring. Finally, we analyse whether a Pareto-improving social security reform is possible. It is shown that merely reducing the PAYG-scheme cannot be Pareto-improving, but the introduction of a child allowance scheme can be.     

Flexible pension take-up in social security

This paper studies the redistribution and welfare effects of increasing the flexibility of individual pension take-up. We use an overlapping-generations model with Beveridgean pay-as-you-go pensions and heterogeneous individuals who differ in ability and lifespan. We find that introducing flexible pension take-up can induce a Pareto improvement when the initial pension scheme contains within-cohort redistribution and induces early retirement. Such a Pareto improving reform entails the application of uniform actuarial adjustment of pension entitlements based on average lifespan. Introducing actuarial non-neutrality that stimulates later retirement further improves such a flexibility reform.     

Measuring and Interpreting Trends in the Division of Labour in the Netherlands

This paper introduces indicators about the division of labour to measure and interpret recent trends in the structure of employment in the Netherlands. Changes in the division of labour occur at three different levels: the level of the individual worker, the level of the industry and the spatial level. At each level the organisation of work is determined by an equilibrium of forces that glue tasks together or unbundle them. Communication costs are the main force for clustering or gluing together tasks; comparative advantage stimulates unbundling and specialisation. The estimates suggest that on average the Netherlands has witnessed unbundling in the period 1996?C2005, which implies that advantages of specialisation have increased. These developments explain to a considerable extent changes in the structure of employment. Especially at the spatial level it explains a substantial part of the increase in offshoring tasks abroad.     

The diffusion of computers and the distribution of wages

When the costs are decreasing workers adopt technology at the point where the costs equal the increased productivity. Output per worker increases immediately, while productivity benefits increase only gradually if costs continue to fall. As a result, workers in computer-adopting labor market groups experience an immediate fall in wages due to increased supply. On the other hand, adopting workers experience wage increases with some delay. This model explains why increased computer use does not immediately lead to higher wage inequality. More specifically, the results of the model are shown to be consistent with the question why within-group wage inequality among skilled workers as a result of computer technology adoption in the United States increased in the 1970s, while between-group wage inequality and within-group wage inequality among the unskilled did not start to increase until the 1980s. The model also predicts that the more compressed German wage structure leads to a lagged diffusion of computer technology along with smaller changes in wage inequality. Our empirical analysis suggests that this is consistent with the actual developments in Germany since the 1980s. Finally, the theoretical predictions seem to be of the right magnitude to explain the empirical quantities observed in the data.     

For Rigour in Organizational Management Theory Research

Rigour is required in examining the empirical validity of theories in organizational management, and is often considered to be the opposite of creativity in the development of knowledge about managing organizations. In this article, we argue that rigour is necessary in the enterprise of organizational management research. Moreover, it can actually be a contributor to creativity. The issue is not rigour versus creativity, but rather how rigour can foster creativity. We show that rigour in both theory and methodology can foster creativity. Rigour in theory provides the logical thinking that is the foundation that allows the development of sound theory. This can be achieved in various ways, including theory building, mathematical modelling, causal modelling, and theory analysis. Rigour in methodology can assist creativity in quantitative integration. The contribution of rigour to creativity is evidenced by the recently created statistico‐organizational theory and other new advancements in the field of structural contingency research.     

The international spillover effects of pension reform

This paper explores how pension reforms in countries with PAYG schemes affect countries with funded systems. We use a two-country two-period overlapping-generations model, where the countries only differ in their pension systems. We distinguish between the case where a reform potentially leads to a Pareto improvement in the PAYG country, and where this is impossible. In the latter case, the funded country shares both in the costs and the benefits of the reform. However, if a Pareto-improving pension reform is feasible in the PAYG country, a Pareto improvement in the funded country is not guaranteed.     

ECB: Quo Vadis?

The European Central Bank has implemented a very ambitious monetary policy since the financial crisis of 2008, intervening heavily in the eurozone economies. This policy has generated substantial risks to both the ECB’s primary task and its independence. It is therefore time for a fundamental evaluation of the ECB’s monetary policy strategy.     

Fiscal policy in an optimizing model with finite lives and endogenous labour supply

Summary In this paper the impact of balanced budget, money-financed and bond-financed fiscal policy is analyzed, in the short run as well as in the long run. The analysis is based on an optimizing model of a closed economy that displays perfect foresight of agents and sticky wages and prices. Consumers have finite planning horizons modeled according to the Blanchard-Yaari framework. Labour supply is endogenized by including leisure in the utility function. Labour scarcity is also allowed for. The results are illustrated by numerical simulation experiments.List of symbols A financial wealth - B stock of bonds - c actual consumption - c _d demand for consumption goods - c _s supply of consumption goods - D dividend - E equity - F government budget deficit - g government expenditures - H human wealth - i actual investment (excluding installation costs) - i _d demand for investment goods (excluding installation costs) - j actual investment - j _d demand for investment goods - j _s supply of investment goods - k capital stock - l actual employment - l _d notional demand for labour - l _k Keynesian demand for labour - l _s supply of labour - M money stock - P _l nominal wage - P _y price - q Tobin'sq - R nominal interest rate - T lump-sum tax - u instantaneous utility - U lifetime utility - W total wealth - y actual production - y _d demand for goods - y _l labour constrained supply of goods - y _s notional supply of goods     

Endogenous growth and income distribution

A theory of endogenous growth is based on an investment possibility function, relating the growth rate of output to the ratio of gross investment to output and the growth rate of employment as formulated originally by M. F. Scott. Consumers maximize an intertemporal utility function and producers maximize the value of the firm. The long-run rate of growth depends on consumer preferences, the exogenous growth of labor supply and the tax rate on output. The functional distribution of income is determined along with the investment ratio in the steady state. Labor market imperfections and real wage inertia induce transition processes, which are relevant for medium term growth.We are indebted to Olivier Blanchard, Casper van Ewijk, Frederick van der Ploeg, Anton van Schaik, Maurice Scott, Jacques Smulders, and two anonymous referees for their valuable comments on an earlier version. Of course, the usual disclaimer applies.     

ORGANIZATION DESIGN AND THE LIFE-CYCLES OF PRODUCTS [1]

This paper presents a model which elaborates the relationship between organization design and the product life-cycle. Consideration is given to the structural implications of corporations which have multiple products at differing phases in their life-cycles. This involves a theoretical synthesis of work on P.L.C. with that on degree of product diversification.