Performance Pay and Productivity: A Note on the Moderating Role of a High‐wage Policy

Using panel data from German establishments, this study finds that performance pay is associated with increased productivity only when it is coupled with a high‐wage policy. This holds for individual‐based performance pay, group‐based performance pay, and profit sharing. Copyright © 2016 John Wiley & Sons, Ltd.     

Knowledge spillovers through FDI and trade: the moderating role of quality-adjusted human capital

The paper extends the findings of the Coe and Helpman (Eur Econ Rev 39(5):859-887, 1995) model of R&D spillovers by considering foreign direct investment (FDI) as a channel for knowledge spillovers in addition to imports. Deeper insights on the issue are provided by examining the inter-relationship between knowledge spillovers from imports and inward FDI. Furthermore, human capital is added to the discussion as one of the appropriability factors for knowledge spillovers, with special focus on its quality-content, using journal publications and patent applications. Applying cointegration estimation method on 20 European countries from 1995 to 2010, the direct effects of FDI-related as well as import-related spillovers on domestic productivity are confirmed. Furthermore, a strong complementary relationship is found between knowledge spillovers through the channels of imports and inward FDI. When considering quality-adjusted human capital, countries with better human capital are found to benefit not only from direct productivity effects, but also from absorption and transmission of international knowledge spillovers through imports and inward FDI. Finally, technological distance with the frontier does not appear to play a role in the absorption of import and FDI related knowledge spillovers.     

(When) Should cointegrating regressions be detrended? The case of a German money demand function

If an economic relationship is superimposed by a linear time trend, the regression without detrending is misspecified. The estimators of such a regression do not converge to the true parameter values. First, the asymptotic limit arising from such misspecified regressions is characterized. Second, we observe with data before 1975 a significant time trend but no cointegrating relation between real money (M1), income and a long-term interest rate. The price level as a significant omitted variable is considered as an economic explanation for this feature. We find a price elasiticity larger than one. Third, with data after the breakdown of Bretton Woods (and the beginning of monetary targeting by the Bundesbank), real money, income and the interest rate alone are cointegrated. The long-run estimates seem to be fairly stable with data after the German union provided a step dummy accounts for a break in the mean. First version received: November 1996/final version received: June 1998     

Factors affecting farmers’ acceptance of conservation measures—A case study from north-eastern Germany

Intensive forms of agriculture have been proven to cause severe environmental effects, such as soil erosion by water and wind, or the pollution of ground and surface water with nutrients and pesticides contributing to the deterioration of natural habitats and the loss in biodiversity. In order to avoid or mitigate these detrimental environmental effects, a number of conservation measures can be undertaken by farmers. However, the adoption of these measures is highly dependent on the assumed benefits and risks attached as well as the personal perception and attitude of the individual farmer.This paper presents the outcome of a survey conducted in north-eastern Germany aimed at analysing farmers’ acceptance of different conservation measures. Eleven farmers, managing more than 80% (about 13,000 ha) of the agricultural land in the chosen case study region were interviewed. Respondents were asked about their personal experiences with different environmental measures and requested to assess these measures, e.g., regarding costs, time and labour demands, attached risks, or effectiveness. They also ranked these factors in terms of importance for decision making on adoption or rejection of a new measure. The findings show that, despite of the general assumption that farmers’ decisions are mostly driven by economic rationality, costs were not the most important factor. Other factors, like associated risks, effectiveness, or time and effort necessary to implement a certain measure were equally or even more important depending on the specific situation.     

Assessing Consumer and Producer Preferences for Animal Welfare Using a Common Elicitation Format

We assess pig farmers’ willingness‐to‐accept (WTA) higher farm animal welfare (FAW) standards and consumers’ willingness‐to‐pay (WTP) for thus enhanced standards. The analysis is based on discrete choice experiments with nearly identical choice sets for both farmers (N=140) and consumers (N=554). Based on preference estimates from a random parameter logit (RPL) model, supply and demand curves for high‐welfare pork in Germany are estimated and market equilibria are derived for alternative levels of FAW. We find that estimates of consumer WTP are significantly positive for all FAW attributes: consumers value more surface space per pig, more bedding and manipulable material, less surgical interventions and shorter transportation times. In contrast, our model revealed significant producer WTA estimates only for surface area per pig and the amount of bedding material on offer, but not for the other FAW attributes. Farmers who expect to continue farming and engage in direct marketing are more likely to adopt higher FAW standards. Male consumers and those who find price more important than brand, origin or taste are less likely to buy high‐welfare pork, as are consumers who never purchase organic meat products. Market simulations for high‐welfare pork indicate increasing divergence between demand and supply with rising FAW standards. We estimate a market share of 44.6% for pork produced in compliance with an entry‐level FAW programme with standards only slightly above the legal minimum. Programmes with more demanding standards are estimated to gain much smaller market shares.     

Will digital technologies transform agriculture in developing countries?

Mobile phones and the internet have significantly affected practically all sectors of the economy and agriculture is no exception. Building on a recent World Bank flagship report, this article introduces a concise framework for describing the main benefits from new information and communication technologies. They promote greater inclusion in the broader economy, raise efficiency by complementing other production factors, and foster innovation by dramatically reducing transaction costs. The article reviews the recent literature on corresponding technology impacts in the rural sector in developing countries. Digital technologies overcome information problems that hinder market access for many small‐scale farmers, increase knowledge through new ways of providing extension services, and they provide novel ways for improving agricultural supply chain management. While there are many promising examples of positive impacts on rural livelihoods—or “digital dividends”—these have often not scaled up to the extent expected. The main reason is that technology can always only address some, but not all of the barriers faced by farmers in poorer countries.     

The Dynamics of Bank Concentration,Competition and Efficiency in the East African Community

Journal of Industry, Competition and Trade - The paper examines whether increased bank concentration and lack of competition lead to inefficiency within the East African Community (EAC) banking...