The labour market and the distribution of earnings: an empirical analysis for Italy

Using four waves of data from the Participation Labour Unemployment Survey, a database of information on the Italian labour market supply, we address the question of earnings dispersion by applying a ‘nested’ decomposition procedure of the Theil inequality measure, which combines into a unified framework the standard decompositions by population subgroups and income sources. The empirical evidence obtained points to the key role played by the self-employees in shaping labour income inequality, especially at the upper extreme of the earnings distribution, and the emergence of non-standard forms of employment as an important feature of the contemporary workplace.     

Optimal Exit Policy with Uncertain Demand*

In a framework where entrants must make sunk investment decisions with uncertain returns and have private demand information, we show that the relationship between innovation and exit value is non-monotone and features an inverted U-shaped pattern. Consumer surplus is maximised at the lowest exit value that incentivises the investment. These insights are applied to optimal merger policy. An entrant is more willing to innovate to be acquired afterwards, even if it has no bargaining power. This innovation-for-buyout effect implies that an entrant is less likely to leave the market under a lenient than a strict merger policy.     

Endogenous institutions in bureaucratic compliance games

We consider a set-up where two governments have either conflicting or matching preferences on the provision of differentiated (local) goods supplied by a common monopoly bureau. We develop a two-stage game. At stage-1, the two governments decide whether or not to merge into a single institution. At stage-2, all players simultaneously and independently take their decisions in terms of production and rents, with perfect knowledge of the other players' strategies. We solve the subgame perfect Nash equilibrium of this game, and show that, if the bureau immediately updates its objective function to institutional changes, then the governments always prefer merging. However, if there is an initial bureaucratic inertia in adjusting the bureau's objective function to the institutional change, then ruling politicians may prefer decentralisation to centralisation, depending on the strategic properties of the compliance game and on their own discounting. Received: May 1999 / Accepted April 2000     

A pragmatic model to estimate journal quality in accounting

This article presents a model to estimate the relative quality of publication outlets based on objective journal characteristics. Our model improves upon the one proposed by Bean and Bernardi [Bean, D. F., & Bernardi, R. A. (2005). Estimating the ratings of journals omitted in prior quality ratings. Advances in Accounting Education, 7, 109–127.] in three important ways. First, we develop a dependent variable that is a composite score based on five prior journal perception studies. Second, our model considers different independent variables; audience, journal availability, inclusion in the Social Sciences Citation Index (an independent measure of quality), and the journal’s submission fee. This combination of variables increases the model’s explanatory power by 21% compared to Bean and Bernardi’s average R². Finally, the results of our model are more consistent with those of prior perception studies. We also apply the model to recent accounting faculty publications, which provides a comparative rating of more than 200 journals. We expect our model for estimating journal quality to help faculty, promotion and tenure committees, and university administrators evaluate the quality of journals where accounting faculty publish, an important aspect of assessing research productivity.     

A Note on Dynamic Optimization,Maintenance Expenditure and Quality of Capital

The dynamic interaction between investment–maintenance decisions and uncertainty about the capital's future productivity status is considered. Maintenance influences the flow of services provided by a stock of capital, affecting the firm's technological knowledge of capital productivity. In a simple Lerner–Haavelmo–Jorgenson framework with constant returns to scale and linear homogeneous cost of adjustment, two closed forms for the firm's market value are presented and the impact of uncertainty on investment–maintenance policy is analyzed. The optimal management strategy uses maintenance to sustain the profitability of existing capital. This smooths out investment fluctuations and lengthens the periods of time in which the firm invests. Nevertheless, since the random movement of quality of capital makes the marginal revenue products of capital decline over time and maintenance cannot offset this tendency, a stochastic switching time emerges at which the firm will find it optimal to stop investing and let the stock deplete.     

Insurance fraud detection: A statistically validated network approach

Fraud is a social phenomenon, and fraudsters often collaborate with other fraudsters, taking on different roles. The challenge for insurance companies is to implement claim assessment and improve fraud detection accuracy. We developed an investigative system based on bipartite networks, highlighting the relationships between subjects and accidents or vehicles and accidents. We formalize filtering rules through probability models and test specific methods to assess the existence of communities in extensive networks and propose new alert metrics for suspicious structures. We apply the methodology to a real database—the Italian Antifraud Integrated Archive—and compare the results to out-of-sample fraud scams under investigation by the judicial authorities.     

Vertical Contract Disclosure in Three-Tier Industries*

Consider a three-tier industry with a monopolist supplying a manufacturer which sells its product to final consumers through two retailers. Contracts are linear and secret. Hence, upon receiving an out-of-equilibrium offer, each retailer must form a belief about the identity of the deviating upstream firm. This beliefs' specification problem wipes out if an Open Book Accounting (OBA) policy is implemented, whereby the input price is disclosed to retailers. Under Cournot (Bertrand) competition, OBA increases industry profits and consumer surplus if retailers believe that any out-of-equilibrium offer is more likely to reflect a deviation by the upstream supplier (by the manufacturer).     

Cooperative movement and widespread prosperity across Italian regions

Our goal is to participate in the debate on regional well-being. To this end, we explore the relationship between prosperity and the cooperative movement at the regional level in Italy between 2010 and 2019. We summarize prosperity through an index originally proposed by Amartya Sen and we apply it to classify Italian regions. We then perform panel analyses showing that there is a positive and significant association between such an index and the cooperative presence. We detect that, and explain why, the cooperative movement contributes to the regional prosperity more through its employment than in terms of the added value it generates.     

Can optimism solve the entrepreneurial earnings puzzle?*

In this paper, we apply a general equilibrium occupational choice model to the study of the impact of optimism on the earnings of entrepreneurs and workers. We extend the work of Lucas (1978 Bell Journal of Economics 9, 508–523) by assuming a fraction of individuals are optimistic about their ability as entrepreneurs. The model shows that optimism leads to a misallocation of talent and inputs, which raises input prices and lowers output. The model is calibrated to match salient features of the UK economy and the British Household Panel Survey. The calibration shows that optimism can account for more than half of the size of the entrepreneurial earnings puzzle in the UK.