EMPLOYMENT PROTECTION AND THE NON‐LINEAR RELATIONSHIP BETWEEN THE WAGE‐PRODUCTIVITY GAP AND UNEMPLOYMENT

This paper studies the relationship between the wage‐productivity gap and the unemployment rate in OECD countries between 1985 and 2007. In particular, we investigate whether differences in the employment protection across countries affect the link between these two variables. We show that the elasticity of unemployment with respect to the wage‐productivity gap is non‐linear and that it switches from a positive to a negative value with stricter employment legislation. From a theoretical point of view, we argue that this result is related to a set of labor market reforms introduced in many OECD countries, which affected the relative strictness of institutions.     

Optimal collusion under cost asymmetry

Cost asymmetry is generally thought to hinder collusion because a more efficient firm has both more to gain from deviations and less to fear from retaliation than less efficient firms. Our paper reexamines this conventional wisdom and characterizes optimal collusion without any prior restriction on the class of strategies. We stress that firms can credibly agree on retaliation schemes that maximally punish even the most efficient firm. This implies that whenever collusion is sustainable under cost symmetry, some collusion is also sustainable under cost asymmetry; efficient collusion, however, remains more difficult to sustain when costs are asymmetric. Finally, we show that in the presence of side payments cost asymmetry facilitates collusion.     

Dependent self-employment as a way to evade employment protection legislation

This paper examines whether the strictness of employment protection legislation encourages employers to contract out work to their own paid employees by the formula of dependent self-employment, while making transitions to independent self-employment less likely by altering the relative valuation of risk between salaried work and self-employment in favour of the former. In conducting this analysis, discrete choice models are applied to data drawn from the European Community Household Panel from 1994 to 2001. To test the hypotheses, a tentative individual measure of the potential severance payment that a worker would receive in the case of dismissal is included as well as aggregated variables that try to capture differences in labour market institutions and macroeconomic conditions. Evidence for a positive impact of the strictness of employment protection legislation and the potential severance payment on transitions to dependent self-employment is found. The opposite effects, however, are detected for individuals becoming independent self-employed.     

HOUSEHOLDS’ BEHAVIOUR AND ENVIRONMENTAL EMISSIONS IN A REGIONAL ECONOMY

Households have significant demand-side potential to drive reductions in atmospheric emissions, including both direct and indirect emissions. Our analysis focuses on the behaviour of a regional economy (Aragon, Spain) and its impact on greenhouse gases (GHG) and sulphur dioxide (SO₂). Using a CGE model, we simulate scenarios and evaluate the environmental impact of adopting changes considered in the Aragonese Climate Change and Clean Energy Strategy. Specifically, we analyse the impact of electricity savings and the promotion of public transport (bus or train) versus private car use. The results indicate that 1 MWh of saving in electricity consumption by households could reduce emissions of GHG by 0.112 kt of equivalent CO₂ and 8.209 kg of SO₂ with a shift in demand preferences and 0.022 kt of equivalent CO₂ and 7.612 kg of SO₂ with an efficiency improvement. Moreover, household changes in demand preferences regarding private/public transport, also contribute to reduce emissions.     

Modelling demand and supply influences on utilization: A flow demand model to predict hospital utilization at the small area level

This study outlines a model to predict hospital utilization at the small area level within a National Health Service (NHS) institutional context. The proposed approach departs from alternative analyses based on utilization flows of hospital care between a local population and a hospital. A flow demand model is outlined that relates flow demand to utilization flows; models the interaction between hospital supply and utilization of alternative hospitals; captures the process of demand for hospital care, with special attention given to the role of other health care sectors, to the organizational and institutional context of the hospital system and to geographic variations. The flow approach partly overcomes the problem of dealing with simultaneity of determination between supply and demand. A two-part econometric model suitable to estimate the flow demand model for prediction purposes is tested and applied to the Portuguese health care system. The results show the model to be robust and to provide key information for defining future hospital policies at the central level.     

Financial constraints and cash–cash flow sensitivity

This article explores the cash–cash flow relationship by comparing financially constrained and financially unconstrained companies. Unlike previous research, we test the sensitivity of cash to cash flow by considering unlisted firms as constrained and listed firms as unconstrained. Our empirical evidence is based on findings from Spanish firms and is consistent with the core rationale that unlisted firms face more difficulties than their listed counterparts when looking for funding from external markets. As a result, unlisted firms tend to hoard significant amounts of cash out of the generated cash flow, while listed firms do not. Our findings are robust to a number of additional empirical tests.     

Can ice cream be money?: Perishable medium of exchange

The aim of this paper is to demonstrate that a perishable good may be used as commodity money, even in economies in which perfectly durable commodities are available. This is shown in the general context of a search-theoretical model of a decentralized economy.     

An exchange algorithm for computing the least quartile difference estimator

We propose an exchange algorithm (EA) for computing the least quartile difference estimate in a multiple linear regression model. Empirical results suggest that the EA is faster and more accurate than the usual p-subset algorithm.     

Growth and the current account: Malaysia and Singapore

A foreign trade model is estimated for two South East Asian countries, selected because they represent two extremes as far as the current account balance is concerned—Malaysia, deficit, Singapore, surplus. The specification highlights, (a) the simultaneous interdependence of exports and import flows—a result of what Krugman [1995] denotes as the slicing up of the production process—and, (b) the impact of investment on imports as a result of productivity shocks on the current account. The estimation results point to the instability of the market for foreign exchange. Using an intertemporal framework, a methodology to derive the external long run equilibrium is applied to the estimated model. The implied constraint on domestic growth turns out to be mild. This research has been financed by the Dgicyt under grant PB94-1502, and the Junta de C. y L. under grant SA 35/97. The comments and suggestions of the editor of the journal and an anonymous referee are gratefully acknowledged. The paper has also benefited from the comments of the participants at the Fifty-First International Atlantic Economic Conference, March 13–20, 2001, Athens, Greece, and at the AEA conference on New Financial Instruments and Emerging Markets, Paris, 1998. Any possible remaining errors are the authors.