Discrimination,technology and unemployment

I study the interaction between discrimination and investment using a directed search model where firms decide the capital intensity of their production technologies before being matched. Discrimination makes some workers cheap to hire. As a consequence, some firms might save on capital costs adopting labour intensive technologies. This framework allows one to reconcile search models with three well-known facts regarding the labour market outcomes of minority workers: low wages, high unemployment and occupational segregation. Furthermore, the model questions the role of equal pay legislation in reducing inequality since removing this restriction, i.e., allowing firms to post type-contingent wages, eliminates the negative effects of discrimination on investment and wages.     

The Choice of the Working Secto in Transition: Income and non-income determinants of sector participation in Kazakhstan

This study compares the individual, household and location characteristics of private employees, the self-employed, the unemployed and the economically inactive in Kazakhstan making use of a 1996 World Bank Living Standards Measurement Survey. The purpose is to understand whether the process of transition has determined a selection of workers exiting the state sector and entering the three relatively new 'pools' of private employees, self-employed and unemployed. An 'occupational choice' model is used to explore the determinants of sector participation. It is found that income opportunities are similar between the private and self-employment sectors, that the private sector is not necessarily the workers' first choice and that non-income determinants including local economic and labour market conditions and household related factors explain better than income the choice of the working sector. Self-employment seems to be a key sector in understanding the mechanisms of sector choice and the reallocation of labour. Unemployment appears as a choice of last resort and made by truly 'rationed' individuals.     

The impossibility of compromise: some uniqueness properties of expected utility preferences

Summary. We focus on the following uniqueness property of expected utility preferences: Agreement of two preferences on one interior indifference class implies their equality. We show that, besides expected utility preferences under (objective) risk, this uniqueness property holds for subjective expected utility preferences in Anscombe-Aumann's (partially subjective) and Savage's (fully subjective) settings, while it does not hold for subjective expected utility preferences in settings without rich state spaces. Indeed, when it holds the uniqueness property is even stronger than described above, as it needs only agreement on binary acts. The extension of the uniqueness property to the subjective case is possible because beliefs in the mentioned settings are shown to satisfy an analogous property: If two decision makers agree on a likelihood indifference class, they must have identical beliefs. Received: November 15, 1999; revised version: December 29, 1999     

Strategic Interactions and Contagion Effects under Monetary Unions

This paper applies game theory and a cost‐benefit analysis to study voluntary exits and contagion effects in countries joined to a monetary union. The paper looks at two non‐core or periphery countries of a large union and examines the role of structural asymmetries and strategic interactions as determinants of equilibrium outcomes, following both country‐specific and common shocks. The paper finds that under almost symmetry between countries, country‐specific shocks are never associated with multiple equilibria and, if large enough, can spread to other countries leading to contagion. By contrast, common shocks are seen to sustain multiple equilibria if almost‐symmetric countries are considered and to have implications similar to those found in the country‐specific case if large structural asymmetries are admitted.     

Asymmetric Reaction Functions for the Euro Area

This paper offers a preliminary evaluation of ECB conduct ofmonetary policy by estimating a fairly general reaction functionfor the euro area. The specification of the policy rule embodiesa number of nonlinearities which are shown to stem from asymmetricpreferences and a convex aggregate supply curve. Asymmetricpreferences allow, but do not require, policy-makers to weightdifferently positive and negative deviations of inflation andoutput from the reference values, and translate into an asymmetricreaction function. The empirical analysis on monthly euro-areaaggregated data over the last 5 years reveals that ECB monetarypolicy is effectively described by a nonlinear policy rule accordingto which output contractions have required a larger policy responsethan output expansions. Moreover, actual movements in the eurointerest rate closely resemble the simulated path that a Bundesbank-typeof behaviour would have implied.     

A dynamic model of R&D competition

This study considers a dynamic model of R&D competition in a situation of no uncertainty with identical firms in a perfect foresight. We are going to find out about the effects of firms' absorptive capacity on R&D strategies in the presence of technological spillovers. The conditions for the existence and uniqueness of a feedback–Nash equilibrium on firms' R&D expense will be also discussed. Numerical simulations will show as the introduction of the absorptive capacity reduces the impact of spillovers degree on firms' R&D strategies.     

Logarithmic quasi-homothetic preferences

We study a class of quasi-homothetic preferences, which result in demands that are logarithmic in own prices when these have a negligible impact on aggregate prices (as in monopolistic competition models). Thus marginal revenues are computationally friendly and well behaved.     

“Just Look the Other Way”: Job Seekers’ Reactions to the Irresponsibility of Market-Dominant Employers

Journal of Business Ethics - Past research on recruitment has shown that employer image predicts job seekers’ perceptions of organizational attractiveness. We contribute to this body of work...     

Heckscher–Ohlin and agglomeration

We argue that embedding endowment-based comparative advantage within a standard NEG framework helps solve the indeterminacy due to multiple equilibria and the ambiguity concerning the relation between integration and specialisation (monotonicity versus non-monotonicity) typical of the NEG literature. In particular, we show that if endowments are in the FPE set, the process of trade integration involves an overshooting of international specialisation and relative factor prices with respect to the free trade level determined by factor abundance. In contrast, if endowments are outside the FPE set, then, even in the presence of agglomeration forces, specialisation and factor prices are monotonically related to trade costs, as implied by the standard trade theory. We argue that the model can shed light on some puzzling stylised facts.     

The Link between Institutional and Economic Integration: Insights for Latin America from the European Experience

The European experience illustrates that institutional integration interacts with economic integration at the regional level. In this paper we ask how economic and institutional integration are linked and whether there is a causal link between the two. We present an original indicator of institutional integration and study how it developed vis-à-vis diverse measures of economic integration. In particular, we ask what insights can be drawn from the European process of regional integration, which started in the 1950s, for regional integration in Latin America today. We find that Latin America is currently less economically integrated not only than the European Union today, but for certain economic variables even than the European Union in the 1960s. A VAR analysis illustrates that the link between institutional and economic integration has worked both ways throughout the European experience. There is also evidence that stronger institutional integration has indeed led to deeper economic integration.