The Impacts of Technology, Trade and Outsourcing on Employment and Labor Composition

Empirical studies of skill-biased technological change are typically based on a simple production or cost function framework and limited information on technology and labor composition. In contrast, we simultaneously assess the impacts of trade, technology, and outsourcing on shifts in labor demand using a dynamic cost function framework and comprehensive measures of workforce composition and investment in technology. Our findings indicate that technological change has had the largest impact on changes in labor composition. However, the indirect impact of trade on shifts in employment augments its direct impact because trade stimulates computerization, which further exacerbates skill-biased technological change.     

The Impact of Product Market Competition on Employment Determination in Unionised and Non-Unionised Firms: Firm Level Evidence for the U.K.

In this paper we investigate the effect of increasedcompetition on employment inunionised andnon-unionised firms. We model product and labourmarket imperfections, and their interactions, in Nashequilibrium. The model predicts that employment lossin unionised firms in the face of increasedcompetition will be lower compared with non-unionisedfirms. This paradoxical outcome results from anoffsetting beneficial employment effect ofcompetition, which eliminates wage mark-ups inunionised firms. We find empirical support for thetheoretical prediction using U.K. firm level data overthe period 1985–1989.     

Spurious Rejections by Perron Tests in the Presence of a Break

In this paper, we concentrate on the case of an exogeneously chosen break date, but entertain the possibility that an incorrect choice is made. In fact, the Perron test statistics considered are invariant to any break in the generating process at the assumed break date. Our results therefore apply equally to the case of a generating process with two breaks, only one of which is specifically accounted for in the analysis. As in Leybourne et al . (1998), we find that a neglected relatively early break can lead to spurious rejections of the unit root null hypothesis. Moreover, for all but one of the tests analyzed, spurious rejections now also arise if a true break occurs relatively soon after the assumed break date.     

Mental Health and Wellbeing and Unemployment

This article examines the relationship between mental health and wellbeing and unemployment utilising the 1995 National Health Survey (1995 NHS) and the 1997 National Survey of Mental Health and Wellbeing of Adults (1997 SMHWB) data sets. Three indicators of mental health and wellbeing are adopted. The first is a psychological wellbeing measure derived from responses to questions included in the 1995 NHS on time felt down, happy, peaceful, and nervous (the SF-36 mental health scale). The second indicator relates to diagnoses of mental disorders including substance use disorders, affective disorders and anxiety disorders. Our final indicator relates to suicidal thoughts and plans and (unsuccessful) suicide attempts. On the basis of these measures, unemployed persons exhibit poorer mental health and wellbeing outcomes than the full-time employed.     

An Evaluation of Inertia Models of Unemployment

Two approaches have been used to model unemployment. The first, conventional, approach involves linking the unemployment outcome to observed indices of productivity, structural factors and discrimination such as educational attainment, location and birthplace. The second approach, the inertia model, involves using a person's labour market history as a way of including in unemployment models information on the 'unobservables' that influence employability. This paper evaluates the performance of both models of unemployment. The results provide unambiguous support for the inertia model when modelling unemployment. The inertia model has higher explanatory power, higher within-sample prediction rate success and fewer out-of-sample forecasting errors than the conventional model. The estimates from the inertia model can be used to provide quite accurate predictions of the risk of becoming unemployed. This is important if individuals at high risk of becoming unemployed are to be targeted for labour market assistance.     

The Effect of Pricing on Demand and Revenue in Federal Reserve ACH Payment Processing

Because the automated clearinghouse (ACH) has been found to have lower social costs than paper checks, the Federal Reserve has been promoting more widespread use of ACH by lowering ACH processing fees. In this paper, we have obtained the first numerical estimates of ACH demand elasticities, a measure of the responsiveness of ACH demand to price changes. Various methods are employed to estimate the demand elasticities to determine how robust the estimates are. During the period 1985–1996, the Federal Reserve lowered the per-item price of interregional ACH, while the per-item price of intraregional ACH stayed constant. We take advantage of this unique pattern of historical price changes implemented by the Federal Reserve to estimate the effect of price changes on demand for ACH.We find that the volume of ACH processed by the Federal Reserve responds to changes in per-item fees, but the increase in volume that results from a price decline is very small and not statistically significantly different from 0, except in the case of debit origination. The results suggest that the Federal Reserve cannot expect to generate substantial additional volume by lowering its prices further. However, commercial banks may be able to increase the volume demanded by lowering their own ACH fees. We also examine how volume growth initiated by a price cut affects unit costs. Given the relatively large-scale economies found for ACH, volume growth leads to lower unit costs. However, to outweigh the revenues lost as a result of a price decline, ACH volume would have to increase by an amount much greater than our estimates indicate is likely. Consequently, a decline in per-item ACH fees likely would lead to lower net revenues.     

Tax Incidence in Madagascar: An Analysis Using Household Data

This article discusses tax incidence in Madagascar and askswho pays the taxes that finance government spending. Its mainconcern is to identify the progressivity of different taxeslevied in Madagascar, based on the consumption and income patternsfound in the 1994 Enquête Permanente auprès desMénages, a nationally representative survey. The resultssuggest that most taxes are progressive, meaning that wealthyhouseholds pay proportionately more of these taxes relativeto their expenditures than do poor households. Two notable exceptionsare taxes on kerosene and export duties on vanilla, both ofwhich are regressive. These results are consistent with thoseof a study of Ghana, the only other comparable research on taxincidence in Africa. That study found taxes on kerosene andcocoa exports to be the most regressive taxes in Ghana. Making firm policy recommendations for tax reform would requirean analysis of the economic efficiency and administrative efficacyof different taxes to complement this article's work on theirequity implications. Nevertheless, the results suggest thatthe movement away from trade taxes, especially export duties,and toward broadly based value added or income taxes would bemore equitable and more economically efficient. The only legitimateimpediment to such reforms in Madagascar is administrative,that is, the government's ability to collect different taxeseffectively. Although administrative efficiency may be a problemfor value added or income taxes, taxes on petroleum products(except kerosene) are highly progressive and provide a goodtax handle.     

An Interpretation of SDF Based Performance Measures

This note discusses stochastic discount factor (SDF) measures of mutual fundperformance. It shows that the most common SDF performance measures can beinterpreted as Jensen's ``alphas'.     

The Chinese steel industry in transition: industry perspective on innovation policy

There is little empirical research on how the Chinese Government should function in innovation management, particularly during its critical period of economic transition. This study explores and investigates the Chinese Government's innovation management structure, procedures and functions by interviewing government R&D management officials and industrial innovation managers and users. Questionnaires were distributed to industrial innovation practitioners and users of new steel products to solicit their perspectives on innovation policy issues. Findings indicate that current government innovation management procedures have received a tepid welcome from the industries. While there was general agreement that the government should maintain some involvement in industrial innovation, opinions regarding just how the government should intervene differed significantly between producers and users. Producers generally favoured more indirect government involvement. Policy implications are discussed.