SOCIAL INVESTMENT AND YOUTH LABOR MARKET PARTICIPATION

In this paper, we first rely on small area techniques to derive from EU statistics on income and living conditions (EU‐SILC) survey new indicators of compensatory and social‐investment policies at regional level. While compensatory policies have mainly the goal of protecting individuals from “old” risks (e.g., old‐age), investment‐related social policies tend to focus more on “new social risks” (e.g., skill deficits). We rely on these new indicators to perform a data‐driven structural vector autoregressive (SVAR) analysis to investigate the causal relationships between youth labor market outcomes and these two types of spending. Our results support the view that social‐investment policies are effective for tackling new social challenges. (JEL C18, C54, E02)     

Public consumption composition in a growing economy

This paper explores the role of the composition of public consumption within a three sector R&D growth model. A competitive industry supplies a homogeneous good and a monopolistic sector manufactures a composite commodity differentiated in many varieties, whose size can be increased through investment in R&D. We investigate the effects of changes in the level and in the composition of public consumption on the steady state and on the economy’s transitional dynamics. By varying the aggregate composition of demand, the government can effectively move resources away from the traditional industry to foster innovation. Welfare effects are also evaluated. We show that the composition of government consumption affects the entire time path of utility.     

Individual behaviour and long-range planning attitude

Declining welfare systems increase the importance of self-determination in pension decisions. Thus, the stability of long-life consumption markedly relies on individual long-range planning attitude. Our paper investigates how behavioural traits affect this attitude and influence the probability of holding voluntary integrative pension schemes (VIPS). We find that psychophysiological heterogeneity plays a role in predicting demand for VIPS, together with saving/indebtedness style and conventional sociodemographic characteristics. Specifically, individuals who have a high degree of non-planning impulsiveness, and who are inclined to intense psychophysiological arousals, are less likely to demand VIPS. Our results imply that behavioural individualities might prompt individuals to postpone, or even neglect, decisions necessary to maintain stable lifestyles in the long range.     

Communities and managerial competencies supporting SMEs innovation networking: a longitudinal case study

Over the last few decades, the need for small and medium‐sized enterprises (SMEs) to rely on networking to get access to innovation and larger knowledge bases has become evident. This paper analyzes the birth and evolution of an Italian innovation community created by a group of SMEs searching for innovation. Coming from quite different fields, these SMEs converged around a challenging project in the field of biomedical and rehabilitation devices. The aim of the paper is twofold: (1) to investigate what type of competences and tasks have to be accomplished to effectively manage an innovation community (IC) and what managerial roles (promotors) emerge by crossing competences and tasks; and (2) to what extent community members' absorptive capacity (ACAP) influences their ability to acquire and exploit innovation generated by the community. Using an in‐depth longitudinal case study analysis, we identified three different stages in community evolution. We also studied which promotors' roles that emerged in each stage and determined their relationship both between each other and to community performance. Furthermore, we investigated to what extent an existing knowledge base in a specific domain and previous experiences in networking influenced community members' ability to exploit innovation. We found that a specific correspondence among competences and tasks is needed to guarantee community performance and that promotors should interact among themselves to enable the community to reach its goal. Concerning ACAP, we found that prior experience and familiarity in networking are not predictive of new knowledge exploitation.     

Does it Matter that we do not Agree on the Definition of Poverty? A Comparison of Four Approaches

While there is world-wide agreement on poverty reduction as an overriding goal of development policy, there is little agreement on the definition of poverty. Four approaches to the definition and measurement of poverty are reviewed in this paper: the monetary, capability, social exclusion and participatory approaches. The theoretical underpinnings of the various measures and problems of operationalizing them are pointed out. It is argued that each is a construction of reality, involving numerous judgements, which are often not transparent. The different methods have different implications for policy, and also, to the extent that they point to different people as being poor, for targeting. Empirical work in Peru and India shows that there is significant lack of overlap between the methods with, for example, nearly half the population identified as in poverty according to monetary poverty but not in capability poverty, and conversely. This confirms similar findings elsewhere. Hence, the definition of poverty does matter for poverty eradication strategies.     

DECENTRALIZING EQUALITY OF OPPORTUNITY*

In a global justice problem, equality of opportunity is satisfied if individual well‐being is independent of exogenous irrelevant characteristics. Policymakers, however, address questions involving local justice problems. We interpret a collection of local justice problems as the decentralized global justice problem. We show that controlling for effort locally, which is not required by the global justice objective, is sufficient for decentralizing equality of opportunity. Moreover, under some conditions, equalizing rewards to effort is not only sufficient but necessary. This implies in particular that most affirmative action policies may not contribute to providing equality of opportunity.     

Predictive Strength of Lending Technologies in Funding SMEs

Using a proprietary database of lending decisions (N = 9,898) for small and medium‐sized enterprises (SMEs), the paper investigates how banks cope with the adverse selection dilemma. Based on an intertemporal framework, we qualify incorrect and correct lending decisions of banks and investigate the power of lending technologies to predict errors and correct choices. Findings suggest that adverse selection can be better controlled by a durable bank–firm relationship, as well as by an atomistic loan decision process, at the local level. By contrast, a loan decision‐making process based exclusively on hard financial information about SMEs may lead to adverse selection errors.     

Modeling model selection in model pluralism

ABSTRACT

In his recent book, Rodrik [(2015). Economics rules. Why economics works, when it fails, and how to tell the difference. Oxford University Press] proposes an account of model pluralism according to which multiple models of the same target are acceptable as long as one model is more useful for one purpose and another is more useful for another purpose. How, then, is the right model for the purpose selected? Rodrik roughly outlines a selection procedure, which we formalize to enhance understanding of his account of model pluralism and to advance the critical discussion.