EDUCATIONAL EXPANSION: THE WORMS IN THE APPLE

Expansion of higher education can undermine rather than enhance the value of education for low income families. Less well qualified children of higher income families are the main beneficiaries of the expansion and the value of the qualifications of those who do not participate in higher education can be undermined. The most obvious practical policy that would expand educational opportunity for all would be to treat all adult students equally and give further education institutions and universities comparable, as well as greater, freedom from government control.     

Book Reviews

Books reviewed:
Mark A. Lause, Young America: Land, Labor, and the Republican Community.
Jesse C. Ribot, Waiting for Democracy: The Politics of Choice in Natural Resource Decentralisation.
Jesse C. Ribot and Anne M. Larson (eds.), Democratic Decentralisation through a Natural Resource Lens.
David Keen, Conflict and Collusion in Sierra Leone.
Costas Lapavitsas, Social Foundations of Markets, Money and Credit.
Ricardo Salvatore, Wandering Paysanos: State Order and Subaltern Experience in Buenos Aires during the Rosas Era.
Colin Murray and Peter Sanders, Medicine Murder in Colonial Lesotho: The Anatomy of a Moral Crisis.     

A Schumpeterian North–South Growth Model of Trade and Wage Inequality*

The paper presents a dynamic general‐equilibrium model of interindustry North–South trade that is used to analyze the effects of trade liberalization on the Northern wage distribution. Both countries have a low‐tech sector where consumer goods of constant quality are produced by use of unskilled labor. The North also has a high‐tech sector that employs skilled labor and features a quality‐ladder model structure with endogenous growth. Both innovation and skill acquisition rates are endogenously determined. In a balanced trade equilibrium, it is found that Southern‐originated (Northern‐originated) trade liberalization leads to an increase (decrease) in Northern wage inequality both between skilled and unskilled workers and within the group of skilled workers. The endogenous change in the Southern terms of trade determines the direction of change in unskilled wages in both the North and the South.     

A path analysis interpretation of consumer decision-making under conditions of potential risk

This study investigates consumer decision-making processes under conditions of potential risk to personal safety. Potential risk was defined as the individual's subjective interpretation of the likelihood of exposure to hazard or danger and their estimation of the consequences of such exposure. The main concerns were to determine under what conditions consumers would choose a flame resistant apparel item over a non-flame resistant apparel item and to discover the amount of money consumers were willing to pay for the flame resistant (FR) characteristic in apparel. A model of the expected decision process was developed. The variables in the model were (i) internal/external (I/E) control (x₁), (ii) awareness of flame-resistant facts (x₂), (iii) perceived risk (x₃), (iv) buying goals (x₄), and (v) willingness to pay for the FR characteristic. Data used to test the hypothesized relationships among the variables were collected from 136 mothers of pre-school-age children. Path analysis interpretations revealed that the following were the most salient variables affecting the consumer's willingness to pay: (i) perceived risk of clothing-burn injuries; (ii) consumer's feelings of I/E control; and (iii) FR safety as a buying goal.     

A Reconsideration of Minsky's Financial Instability Hypothesis

The worst and longest depressions have tended to occur after periods of prolonged, and reasonably stable, prosperity. This results in part from agents rationally updating their expectations during good times and hence becoming more optimistic about future economic prospects. Investors then increase their leverage and shift their portfolios toward projects that would previously have been considered too risky. So, when a downturn does eventually occur, the financial crisis and the extent of default become more severe. Whereas a general appreciation of this syndrome dates back to Minsky (1992) and even beyond, to Irving Fisher ( 1933 ), we model it formally. In addition, endogenous default introduces a pecuniary externality since investors do not factor in the impact of their decision to take risk and default on the borrowing cost. We explore the relative advantages of alternative regulations in reducing financial fragility and suggest a novel criterion for improvement of aggregate welfare.     

Ein Rollenmodell zur Einbindung der Endkunden in eine smarte Energiewelt

The successful expansion of renewable energies requires a phase of change in the energy supply system. On the one hand solutions have to be found to ensure the system dependability in spite of the high volatility of the feeding-in from renewable sources. On the other hand the differences between feeding-in and demand, which also occurs on the regional level evermore, have to be equalized on the regional level, too. For this purpose, it is necessary to develop new control and modified market mechanisms. The role definition of the involved actors gets an increasing relevance because of the politically predetermined unbundling. However, only a slight attention was paid to the role of the final consumers in the past. For a successful rebuilding of the energy supply system it is nevertheless important to involve the consumers in this process. It could be demonstrated within the research project “MeRegio”, that the integration of the consumers into an incentive based demand side management can tap significant potentials to equalize differences between feeding-in and demand. Therefore, the focusing on the final consumers can have an important contribution to rebuild the energy supply system.