The effects of offshoring to low-wage countries on domestic wages: a worldwide industrial analysis

This paper extends the literature on the implications of offshoring for labour markets by investigating its effect on the wages of different skill groups in a broad global context. The analysis draws on input–output data from the WIOD project, and in the panel analysed (13 manufacturing industries, 40 countries, 1995–2009) we account for up to 96 % of the international trade in manufacturing inputs. Being particularly interested in the wage effects of offshoring to low-wage countries (LWC), we use precise LWC classifications (varying across industries and time) to decompose overall offshoring by source country. We use a decomposition of the conventional offshoring measure in order to capture its pure international component, which is further instrumented using a gravity-based strategy. According to the estimation results, the negative impact of offshoring on wages mainly concerns low and medium skilled workers. However, in terms of magnitude, the downward pressure on domestic wages exhibited by offshoring to LWC is relatively small.     

How costly are debt crises?

The aim of this paper is to assess the short and medium-term impact of debt crises on GDP. Using an unbalanced panel of 154 countries from 1970 to 2008, the paper shows that debt crises produce significant and long-lasting output losses, reducing output by about 10 percent after 8 years. The results also suggest that debt crises tend to be more detrimental than banking and currency crises. The significance of the results is robust to different specifications, identification and endogeneity checks, and datasets.     

Pay me Right: Reference Values and Executive Compensation

This paper examines the importance of reference values for executive compensation contracts. We rely on a quasi‐experimental setting (the adoption of pay guidelines), and a well‐defined measure of individual‐specific reference values to provide evidence on how a change in CEO reference compensation leads to subsequent changes of actual pay. We find that executive compensation adjusts gradually towards the new reference values, and that the speed of the adjustment depends on the corporate governance characteristics: the firm ownership structure, the role of the State and of the employees in the firm decision making. These results provide empirical support for theoretical models of bargaining that take into account reference values.     

Sentiment,Loss Firms,and Investor Expectations of Future Earnings*

This study investigates the mispricing of market‐wide investor sentiment by exploring the relation between sentiment and investor expectations of future earnings. Prior research argues that sentiment‐driven mispricing should be most pronounced for hard‐to‐value firms, such as those reporting losses (Baker and Wurgler 2006). Using investor expectations of future earnings, we provide empirical results consistent with this behavioral finance theory. We predict and find that investors perceive losses to be more (less) persistent during periods of low (high) sentiment; that (in contrast) investors perceive profit persistence to be lower (higher) during periods of low (high) sentiment; and that the effects appear stronger for loss firms relative to profit firms. We also document predictable cross‐sectional variation within losses (with the mispricing mitigated for losses associated with activities expected to generate future benefits), R&D, growth, large negative special items, and severe financial distress. Overall, our results document a new and important channel—investor expectations of future earnings—to explain sentiment‐driven mispricing.     

Twin Deficits in Developing Economies

Open Economies Review - This paper provides new evidence of the existence and magnitude of the “twin deficits” in developing economies. It finds that 1 % of GDP unanticipated increase...     

Reduction of child poverty in Serbia: Benefit or employment strategy?

Based on the Serbian Survey of Income and Living Conditions (SILC) and tax benefits and structural microsimulation models, we evaluate the labour supply and distributive effects of several reform strategies concerning two major social transfers in Serbia: child allowance and social monetary assistance. Our results show that, in a context of a low labour participation rate, and high unemployment and informality rates, a benefit strategy is by far the more cost‐effective option for reducing child poverty than an employment strategy that aims to raise the work incentives for parents. Both proposed reforms are found to be progressive.     

The Effects of Social Spending on Economic Activity: Empirical Evidence from a Panel of OECD Countries*

The aim of this paper is to assess the short‐term effects of social spending on economic activity. Using a panel of OECD countries from 1980 to 2005, the results show that social spending has expansionary effects on GDP. In particular, we find that an increase of 1 per cent in social spending increases GDP by about 0.1 percentage points, which, given the share of social spending in GDP, corresponds to a multiplier of about 0.6. The effect is similar to that of total government spending, and it is larger in periods of severe downturns. Among spending subcategories, social spending on health and on unemployment benefits have the greatest effects. Social spending also positively affects private consumption, while it has negligible effects on investment. The empirical results are economically and statistically significant, and robust.     

‘Sweet deals’: State-owned enterprises,corruption and repeated contracts in public procurement

We show how a price analysis of stable relations between customer and supplier in the public procurement of homogeneous goods can help differentiate opportunistic from honest behaviour among economic agents. We consider two types of stable relations: repeated procurements and connections based on the state ownership of suppliers. On the basis of a large dataset on the procurement of granulated sugar in Russia from 2011 to 2013, we find that for private suppliers, prices of repeated contracts were lower compared to one-time deals when procured through more transparent procedures and higher when procured through non-transparent procedures. For non-transparent procedures, we observe significant overpricing of contracts with state-owned suppliers compared to private suppliers, especially in the case of repeated contracts, whereas for competitive e-auctions, there is only a small difference between the contract prices of state-owned suppliers and private suppliers.     

Amateur choral singing and its implications for the emotional sphere of adult life – a case study

This research note aims to address the lack of research that focuses on the significance of amateur choral singing in the emotional sphere of adult life from an individual’s perspective and over a longer period. The majority of the published research results concerning amateur choral singing refer to choristers as a community; there is a lack of in-depth studies focused on the individual involved in this type of activity. The objective of the study was to identify the ways in which the amateur performance of art may influence the emotional sphere of an individual’s life over many years. The research problem was formulated as the following question: What possible consequences for the emotional sphere of life result from an individual’s practising choral singing? The single case study was chosen as the most appropriate method for answering this question. The respondent was a member of an amateur choir in Cracow, Poland. The data were gathered by means of a semi-structured, in-depth interview. The study conducted provides important insights into the significance of amateur group singing in the emotional sphere of an adult. It leads to the conclusion that amateur choral singing can significantly improve the quality of life of an adult.