Free Entry under Uncertainty

When focusing on firm’s risk-aversion in industry equilibrium, the number of firms may be either larger or smaller when comparing market equilibrium with and without price uncertainty. In this paper, we introduce risk-averse firms under cost uncertainty in a model of spatial differentiation and show that the impact of uncertainty will increase the number of firms in an industry. With increased uncertainty, the risk premium of the marginal buyer increases by more than the risk premium of the average buyer, so that the price increases by more than the risk premium. When turning to the free entry game, we find that the market generates too many firms.     

Insecure old-age security

In this paper, we examine the old-age security hypothesis accordingto which parents rear children because they expect the latterto care for them in their later years. In developing countrieswhere there are no perfect capital markets, children are usuallyviewed as a potential source of income and as a time-relatedsupport in old age. However, investing in children remains risky.By focusing on uncertainty about the parental consumption duringold age, we show that there exists a precautionary motive forthe demand for children so that fertility of prudent parentsis expected to increase.     

Dynamic Law Enforcement with Learning

This article modifies a standard model of law enforcement toallow for learning by doing. We incorporate the process of enforcementlearning by assuming that the agency's current marginal costis a decreasing function of its past experience of detectingand convicting. The agency accumulates data and information(on criminals, on opportunities of crime), enhancing the abilityof future apprehension at a lower marginal cost. We focus onthe impact of enforcement learning on optimal compliance rules.In particular, we show that the optimal fine could be less thanmaximal and the optimal probability of detection could be higherthan otherwise. It is also suggested that the optimal imprisonmentsentence could be higher than otherwise.     

Dual Labor Markets And Strategic Efficiency Wage *

We consider a dual labor markets model in which the primary sector requires the presence of eMiciency wage, while the secondary sector is competitive. We show that the Solow condition does not hold in a Stackelberg equilibrium where the primary sector acts as a leader and the secondary one as a follower.[J41]     

Evidence on the glass ceiling effect in France using matched worker-firm data

In this article, we investigate the relevance of the glass ceiling hypothesis in France, according to which there exist larger gender wage gaps at the upper tail of the wage distribution. Using a matched worker-firm data set of about 1 30 000 employees and 14 000 employers, we estimate quantile regressions and rely on a principal component analysis to summarize information specific to the firms. Our different results show that accounting for firm-related characteristics reduces the gender earnings gap at the top of the distribution, but the latter still remains much higher at the top than at the bottom. Furthermore, a quantile decomposition shows that the gender wage gap is mainly due to differences in the returns to observed characteristics rather than in differences in characteristics between men and women.