Efficiency wages and union-firm bargaining with private information

We consider efficiency wage effects in a union-firm bargaining model with private information. We show that an increase in the efficiency wage effects does not necessarily increase the wage level at equilibrium, even when the wage bargaining with private information is close to one with complete information. However, if it is commonly known that the firm is stronger than the union and the demand is sufficiently elastic, then an increase in the efficiency wage effects increases for sure the wage at equilibrium.JEL Classification: J41, J50, J52We thank Juan Dolado and two anonymous referees for valuable comments. Vincent Vannetelbosch is Chercheur Qualifié at the Fonds National de la Recherche Scientifique. The research of Ana Mauleon has been made possible by a fellowship of the Fonds Européen du Développement Economique Régional (FEDER). Financial support from the Belgian French Communitys program Action de Recherches Concertée 99/04-235 (IRES, Université catholique de Louvain) is gratefully acknowledged.     

Analysis of Visitor Decision Making System When Visiting Natural Recreation Sites by Multinomial Logit Model

Multinomial Logit Model has analyzed the relationship between the frequency of visits to recreation areas and the motivational factors affecting the visits. Kastro Environment Preserving Site that is located in the Black Sea coast of Marmara region in Turkey, has been chosen as the site for this study. Kastro bay is a natural park that is visited only for recreational visits. The study has been conducted on a photogenic study group due to the proximity factor of Kastro bay close to Istanbul. Kastro bay is a popular recreational park due to its characteristic advantages such as a 200 m wide and approximately 2.5 km long beach and with its high quality vegetation. The vegetation type includes ash tree, oak tree, black pine, sand lily etc. Kastro bay is also the site for the Mediterranean seals (Monachus-monachus) which are at the level of extinction. Approximately 50,000 visitors visit the region during the months of July and August. It has been concluded that there is high direct correlation between the frequency of visits and the motivational factors. It has been determined that the visits are mostly based on the sea and the ecological tourism.Jel: O13, Q20, Q26, Q51, Q56, Q57     

Government Consumption and Industrial Productivity: Scale and Compositional Effects

Within a production function framework in which government spending produces public goods which enter firms production functions, empirical tests using time series data spanning eleven countries and thirty industries find both the scale and the composition of government consumption spending to affect the level and the rate of growth of total factor productivity at the industry level.Jel Classification: H50, D24     

The Case of the Missing Pollution Haven Hypothesis

One particularly vexing puzzle for economists and policymakers over the past several decades concerns the empirical significance of the theoretically predicted pollution haven hypothesis. While neoclassical theory and conventional wisdom both surmise that local economies will suffer deleterious effects from stricter environmental regulations, empirical studies have largely failed to validate such claims. This study utilizes the method of matching to show that the impact of stricter regulation is heterogeneous spatially, varying systematically based on location-specific attributes. Previous studies that assume a homogenous response may therefore inadvertently mask the overall impact of more stringent regulations by pooling unaffected and affected regions.JEL Classification: Q25, Q28, H00, L51, R1The authors wish to thank to Michael Crew, Anthony Heyes, an anonymous referee, Werner Antweiler, Randy Becker, Wayne Gray, Shelby Gerking, Michael Greenstone, Vern Henderson, and Arik Levinson. Participants at various university seminars and conferences also lent useful insights to this line of research.     

Volatility in the knowledge economy

Summary. We seek to explain the economic volatility of the last 6 years, in particular the rapid expansion and contraction of the knowledge sectors. Our hypothesis is that these sectors amplify the business cycle due to their increasing returns to scale, growing faster than others in an upswing and contracting faster in a downswing. To test this hypothesis we postulate a general equilibrium model with two sectors: one with increasing returns that are external to the firm and endogenously determined - the knowledge sector - and the other with constant returns to scale. We introduce a new measure of volatility of output, a real beta, and derive a resolving equation, from which we prove that the increasing return sectors exhibit more volatility then other sectors. We validate the main results on US macro economic data of real GDP by industry (2-3 digits SIC codes) of the 1977-2001 period, and provide policy conclusions.Received: 18 March 2002, Revised: 16 February 2004, JEL Classification Numbers: D5, D58, E10, L50, L52, O38, O51.Correspondence to: Graciela Chichilnisky     

The Economics and Bioeconomics of Folk and Scientific Classification

Synopsis This paper is the product of a collaboration between a biologist (Ghiselin 1997) who works on the philosophy of classification and an economist (Landa 1981, 1994) who works on the ‘Economics of Identity’: how and why people classify people based on identity in the context of a theory of ethnic trading networks. In developing the ‘bioeconomics’ (the synthesis of economics with biology) of classification, we crossed a number of disciplinary boundaries—anthropology, economics, sociology, biology, and cognitive psychology including evolutionary psychology’s ‘fast and frugal’ heuristics. Using a bioeconomics approach, we argue that folk classifications—the classifications used by ordinary persons—have much in common with scientific classifications: underlying both is the need for economy of information processing in the brain, for the efficient organization of knowledge, and for efficiency of information acquisition and transmission of information to others. Both evolve as a result of trial and error, but in science there is relatively more foresight, understanding, and planning.     

The Application of Mathematical Programming Approaches to Estimating Container Port Production Efficiency

Container terminal production is both an important and complicated element in the contemporary global economy. This paper aims to evaluate the efficiency of the world’s most important container ports and terminals using the two alternative techniques of Data Envelopment Analysis (DEA) and the Free Disposal Hull (FDH) model. The results give an insight into the current efficiency ranking of the world’s major container ports and terminals. They also confirm expectations that the available mathematical programming methodologies lead to different results and that appropriate variable definition of input and output factors is a crucial element in meaningful applications of DEA and FDH. It is also concluded that the availability of panel data, rather than cross-sectional data would greatly improve the validity of the efficiency estimates derived from all the mathematical programming techniques applied.JEL Classification:C61, D24, E23, L23, L25, L92     

Revisiting managerial perspectives on dividend policy

We survey managers of Nasdaq firms that consistently pay cash dividends to determine their views about dividend policy, the relationship between dividend policy and value, and four common explanations for paying dividends. The evidence shows that managers stress the importance of maintaining dividend continuity and widely agree that changes in dividends affect firm value. Managers give the strongest support to a signaling explanation for paying dividends, weak to little support for the tax-preference and agency cost explanations, and no support to the bird-in-the-hand explanation. The study provides new evidence about how managers view dividend life cycles and residual dividend policy. The authors would like to thank two anonymous referees for helpful comments and suggestions, and Maheshan Fernando and Sumeet Chawla for providing research assistance.     

Characterizations of distributions via linearity of regression of generalized order statistics

Let X (r, n, m, k), 1 r n, denote generalized order statistics based on an absolutely continuous distribution function F. We characterize all distribution functions F for which the following linearity of regression holds E(X(r+l,n,m,k) | X(r,n,m,k))=aX(r,n,m,k)+b.We show that only exponential, Pareto and power distributions satisfy this equation. Using this result one can obtain characterizations of exponential, Pareto and power distributions in terms of sequential order statistics, Pfeifers records and progressive type II censored order statistics. Received July 2001/Revised August 2002