How Subprime Borrowers and Mortgage Brokers Shared the Pie

We develop an equilibrium model for origination fees charged by mortgage brokers and show how the equilibrium fee distribution depends on borrowers' valuation for their loans and their information about fees. We use noncrossing quantile regressions and data from a large subprime lender to estimate conditional fee distributions. Given the fee distribution, we identify the distributions of borrower valuations and informedness. The level of informedness is higher for larger loans and in better educated neighborhoods. We quantify the fraction of the surplus from the mortgage that goes to the broker, and how it decreases as the borrower becomes more informed.     

The association between transformational leadership in German hospitals and the frequency of events reported as perceived by medical directors

This paper aimed to evaluate how transformational leadership behaviour is associated with patient safety culture in a hospital context. In line with findings from other high-hazard industries, we predicted that in hospitals, executives’ perceived emphasis on transformational behaviour would positively influence the frequency of events reported by staff on the front line of service provision. Our hypothesis was confirmed by fitting a multivariable regression model to a sample of 507 medical directors of German acute-care hospitals. Results revealed transformational leadership in hospitals was a significant predictor of the reporting frequency of safety events, as perceived by medical directors. Our findings highlighted the critical role that executive behaviour plays in staff participation in patient safety initiatives. Preventing patients from unintended harm can then be traced back to the organisational level that is the farthest away from direct patient interaction. Consequently, these findings may provide guidance for hospitals aiming to raise employees’ awareness of patient safety and prevent unintended patient harm prospectively.     

Mapping Research Topics and Theories in Private Regulation for Sustainability in Global Value Chains

The globalization of production and trade has contributed to the rise in complex global value chains where the reach of state regulation is limited. As an alternative, private regulation, developed and administered by companies, industry associations, and nongovernmental organizations, has emerged to safeguard economic, environmental, and social sustainability in producer countries and along the value chain. The academic literature on private regulation in global value chains has grown over the last decade, but currently few major reviews of the research have been undertaken. This paper examines peer-reviewed research in the relevant disciplines published in academic journals up to December 2011. Our goal is to identify and classify the topics and theories in the global value chain literature. We conclude that the number of articles explicitly examining private regulation, in a global value chain context, is relatively small when considering the importance and growth of these chains in the world’s economy. We also conclude that agriculture, forestry, and apparel manufacturing are the most often studied economic sectors; in contrast, other sectors, such as the information, communication and technology, with their complex global value chains, and often problematic environmental and social conditions, are understudied.     

Optimal execution strategies in limit order books with general shape functions

We consider optimal execution strategies for block market orders placed in a limit order book (LOB). We build on the resilience model proposed by Obizhaeva and Wang (2005 Obizhaeva, A and Wang, J. 2005. Optimal trading strategy and supply/demand dynamics, Preprint Available online at: http://www.rhsmith.umd.edu/faculty/obizhaeva/OW060408.pdf (accessed 16 February 2009)[Crossref] , [Google Scholar]) but allow for a general shape of the LOB defined via a given density function. Thus, we can allow for empirically observed LOB shapes and obtain a nonlinear price impact of market orders. We distinguish two possibilities for modelling the resilience of the LOB after a large market order: the exponential recovery of the number of limit orders, i.e. of the volume of the LOB, or the exponential recovery of the bid–ask spread. We consider both of these resilience modes and, in each case, derive explicit optimal execution strategies in discrete time. Applying our results to a block-shaped LOB, we obtain a new closed-form representation for the optimal strategy of a risk-neutral investor, which explicitly solves the recursive scheme given in Obizhaeva and Wang (2005 Obizhaeva, A and Wang, J. 2005. Optimal trading strategy and supply/demand dynamics, Preprint Available online at: http://www.rhsmith.umd.edu/faculty/obizhaeva/OW060408.pdf (accessed 16 February 2009)[Crossref] , [Google Scholar]). We also provide some evidence for the robustness of optimal strategies with respect to the choice of the shape function and the resilience-type.     

Overeducation,undereducation, and the theory of career mobility

The theory of career mobility (Sicherman and Galor, Journal of Political Economy, 98(1), 169–92, 1990) claims that wage penalties for overeducated workers are compensated by better promotion prospects. Sicherman (Journal of Labour Economics, 9(2), 101–22, 1991) was able to confirm this theory in an empirical study using panel data. However, the only retest using panel data so far (Robst, Eastern Economic Journal, 21, 539–50, 1995 Robst, J. 1995. Career mobility, job match, and overeducation. Eastern Economic Journal, 21: 539–50.  ) produced rather ambiguous results. In the present paper, random effects models to analyse relative wage growth are estimated using data from the German Socio-Economic Panel. It is found that overeducated workers in Germany have markedly lower relative wage growth rates than adequately educated workers. The results cast serious doubt on whether the career mobility model is able to explain overeducation in Germany. The plausibility of the results is supported by the finding that overeducated workers have less access to formal and informal on-the-job training, which is usually found to be positively correlated with wage growth even when controlling for selectivity effects (Pischke, Journal of Population Economics, 14, 523–48, 2001).     

Training Systems and Labor Mobility: A Comparison between Germany and Sweden*

The mobility effect of general and specific training is a key issue in the debate on the design of educational systems. Using data from two retrospective life‐history surveys, we compare general school‐based vocational training and specific apprenticeship training with regard to inter‐firm, inter‐occupational and inter‐industrial mobility. The results show that workers with school‐based degrees display greater occupational mobility, while no difference in firm and industrial mobility can be discerned. This suggests that apprenticeships do not eliminate job search at labor market entry, that they reduce occupational mobility, and that responsiveness to structural change is similar under both training systems.     

Multi-skilling in small and medium-sized engineering firms: evidence from Wales and Germany

A cross-national empirical study of forty-six engineering SMEs in Wales and two regions of Germany analyses the extent to which multi-skilling of staff is occurring, the underlying reasons for such developments, and how well placed firms are in relation to prevailing labour-market and training infrastructures strategically to develop hybrid occupations. We identify four types of skill accretion, only some of which presage net enhancements of the order of skills exercized. New quality assurance or continuous improvement programmes, and organizational restructuring, were the main reasons for multi-skilling. A majority of companies encouraged skill expansion on an ad hoc basis, yet strategic exploitation of multi-skilling incorporating comprehensive training support remained infrequent, especially in Germany. Nevertheless, a minority of the German multi-skilling leads to the award of innovative 'hybrid' qualifications fusing two skilled occupations. The breadth of German initial craft training both facilitates and inhibits potential for further multi-skilling in practice. In Wales, greater flexibility in occupational and training structures provides largely unrealized potential advantages over Germany in developing multi-skilling, especially as a means to resolve recurrent shortages of skilled workers. Welsh SMEs have preferred tentative, incremental, 'bolt-on' approaches to multi-skilling that facilitate only limited external transferability.