Multiprincipals multiagents incentive design

This paper studies a simple setting in which the contractual arrangements which determine the incentives for agents are not designed by a single central planner, but are themselves the outcome of a game among multiple noncooperatively acting principals. The notion of an Epsilon Contracting Equilibrium is introduced to predict the outcome of the contract-design game among principals. Symmetric pure strategy Epsilon Contracting Equlibria may not exist in perfectly symmetric environments. In a symmetric Epsilon Contracting Equilibrium in mixed strategies coordination failure may lead to a suboptimal institutional network in which the agents “cheat” their principals. Received: 14 June 1995 / Accepted: 09 August 1999     

CHILD CARE PRICES AND MATERNAL EMPLOYMENT: A META‐ANALYSIS

The literature estimates for labor force participation elasticity with regard to child care prices are extensive and varying. While some estimates imply substantial gains from child care subsidies, others find insignificant effects. To determine the causes of the variance, this paper reviews and analyzes the elasticity sizes using estimates from 36 peer‐reviewed articles and working papers in the literature. We start by reviewing the theoretical and empirical aspects related to participation elasticity with regard to child care costs, paying special attention to sample characteristics, methodological aspects, and macro level factors. We conclude by providing a meta‐regression using control variables based on our review of the literature to explain some of the differences between the estimates. As research builds on and improves the methods and assumptions in prior works, elasticity estimates have become smaller over time. This decline might also be partially explained by changes in labor market characteristics. In countries with high rates of part‐time work and very high or very low rates of female labor force participation, we find elasticity rates to be smaller.     

Labor force participation of women left behind in Tajikistan

This paper examines the impact of male migration on the labor force participation of the women left behind in Tajikistan. Studies from many countries show that when men migrate, female labor force participation decreases and this is largely explained by the income effect from remittances. Our study challenges this finding. Using panel data from 2007, 2009 and 2011, we find that, in Tajikistan, migration has no significant effect on the number of hours that women work. We use panel data which allow us to control for unobservable heterogeneity, rather than the cross-sectional data used by others. We analyze several countervailing factors that may have neutralized the income effect, such as the need to substitute for the missing labor in the household. We also find that women work more when the household has a farm, regardless of the presence of a migrant in the household.     

Corruption’s impact on foreign portfolio investment

Corruption has significant effects on a nation’s financial markets through its adverse impact on foreign portfolio investment (FPI). Yet, the effects of corruption on FPI are nonlinear and reverse J-shaped, with intermediate levels of corruption yielding the most negative effects. Highly transparent nations, where a “level playing field” exists between foreign and local investors due to lack of information asymmetries related to corruption, attract the most foreign investment. However, at the margin, very corrupt countries attract more investment than moderately corrupt countries because a “perverse level playing field” in the former countries may put foreigners and locals on an even footing in terms of resolving asymmetric information problems. This nonlinear pattern is consistent with foreign investors’ desire to trade in markets where they are not at an informational disadvantage.     

Impact of Funding Targeted Pre-school Interventions on School Readiness: Evidence from the Netherlands

We analyze the effectiveness of the early childhood programme (ECP) in the Netherlands. The programme is designed for 2.5–4 year olds from disadvantaged backgrounds. 37 municipalities received an additional subsidy to expand ECP programmes, which allows us to analyze the effects of the programme within a difference-in-difference-in-differences framework. Most children first enroll in primary schools at age 4 in the Netherlands, but pupils begin to learn reading and mathematics in grade 3 at age 6. We use grade repetition constructed from school registry data from 2008 to 2015 in the first two grades as an indicator of school readiness. Our results show significantly lower grade repetition rates for targeted boys who are in regions that receive the subsidy. Grade repetition drops by 0.8–1.8 percentage points from a mean of 10.5% for the disadvantaged group targeted by the programme.     

Achieving environmental sustainability through green transformational leadership policy: Can green team resilience help?

The race to gain competitive advantage through the formulation of a sustainable business strategy is key for the survival in the global business sphere. Even more importantly is the quest to deploy an effective green strategy to combat the numerous negative impact industrialization has on the environment. Researches pointed out the role of leaders and stakeholder's engagement in bringing about reform. This research focuses on how to build a robust psychological capital within an organization through the leader's transformative ability in combating environmental issues. This is necessary because research related to green transformational leadership and the effect on green team resilience has not been considered in literature. Drawing from the combination of three theories; broaden-and-build theory, job demand–resource theory, and conservation of resource theory, this study contributes to the extant literature by testing the effect of green transformational leadership via the mediating role of green work engagement to green team resilience. Using Amos 20 version to analyze 351 questionnaires that were collected from employees in four and five star hotels in Turkey, the result reviews that green transformational leadership has a positive effect on green work engagement and green team resilience, and green work engagement fully mediates the relationship between the variables. The theoretical and practical implications are discussed.     

Do interest rate controls work? Evidence from Kenya

This paper reviews the impact of interest rate controls in Kenya, introduced in September 2016. The intent of the controls was to reduce the cost of borrowing, expand access to credit, and increase the return on savings. However, we find that the law on interest rate controls has had the opposite effect of what was intended. Specifically, it has led to a collapse of credit to micro‐, small‐, and medium‐sized enterprises; shrinking of the loan book of the small banks; and reduced financial intermediation. Because of their adverse effects on bank lending, we estimate that the interest rate controls have reduced economic growth by ¼–¾ percentage points on an annual basis. We also show that interest rate caps reduced the signaling effects of monetary policy. These suggest that (1) the adverse effects could largely be avoided if the ceiling was high enough to facilitate lending to higher‐risk borrowers and (2) alternative policies could be preferable to address concerns about the high cost of credit.     

Employee referrals as a screening device

This article develops a career‐concerns model to examine the screening function of employee referrals. First, I show that employees' reputational concerns provide them with an incentive to refer high‐ability applicants. This result explains how firms that offer fixed payments, rather than bonuses contingent on the referral's posthire performance, can elicit high‐ability referrals from their employees. Second, I consider the promotion competition as a potential mechanism that creates a conflict of interest between a firm and its employees concerning referral hiring. I show that referrals may still serve a screening function even when the promotion competition distorts employees' referral decisions.     

Does Other Comprehensive Income Volatility Influence Credit Risk and the Cost of Debt?

We examine the usefulness of other comprehensive income (OCI) to debt investors in nonfinancial companies. Motivated by Merton's (1974) real options framework, we construct a measure of incremental OCI volatility, designed to capture the effect of OCI on overall firm asset volatility, which is a primary driver of credit risk in Merton's (1974) model. We find that the volatility of incremental OCI influences the likelihood of default, credit ratings, and the cost of debt. Overall, our evidence suggests that creditors use information from OCI in their assessment of firm credit risk and in pricing debt contracts.     

Achieving Customer Satisfaction through Integrated Products and Services: An Exploratory Study

Complex products such as manufacturing equipment have always needed maintenance and repair services. Increasingly, leading manufacturers are integrating products and services to generate increased revenues and achieve customer satisfaction. Designing integrated products and services requires a different approach to new product development and a clear understanding of how customers perceive the value they obtain from actual usage of products and services—so‐called value‐in‐use. However, there is a lack of research on integrated products and services and how they impact customer satisfaction. An exploratory study was undertaken to understand customers' views on integrated products and services and the value‐in‐use derived from such offerings. As value‐in‐use and its impacts are complicated concepts, a technique from psychology—Repertory Grid Technique—was used to gather data in 33 interviews. The interviews allowed a deep understanding of customer views on integrated products and services to be obtained, and a systematic analysis identified the key attributes of value‐in‐use. In order to probe further, the data were then analyzed using Honey's procedure, which identified the impact of the attributes of value‐in‐use on customer satisfaction. Two key attributes—relational dynamic and access—were found to have the most influence on customer satisfaction. This paper contributes to the innovation field by identifying customer needs for integrated products and services and how these impact customer satisfaction. These are key points and need to be fully considered by managers during new product and service development. Similarly, the paper identifies a number of important areas for further research.