An estimate of aggregate supply response in South African agriculture

Agricultural supply has traditionally been assumed to be relatively inelastic. Time series estimates have generally supported this hypothesis. Estimates based on cross‐sectional observations have generally yielded higher elasticities. It has been argued that cross‐sectional analyses are more appropriate than time series analyses for estimating long‐run elasticities. A cross‐sectional analysis was done on South African data. Quantity supplied was shown to be a function of output/input price ratios, land quality, average rainfall and time. The long‐run supply elasticity appears to be approximately 0,92. This has important implications for agricultural price policy. Policies based on the assumption of very low supply elasticities are likely to distort markets and production.     

Inducing political action by workers

A firm aiming to influence a governmental policy may benefit from political action by its stakeholders, such as workers. This article studies the behavior of such a firm, showing that workers will have a greater incentive to engage in costly political activity against the governmental policy the greater their number and the higher the wage. The firm may, therefore, profit from paying above‐market wages and from hiring what might appear to be an inefficiently large number of workers. And because unions may overcome free‐rider problems of uncoordinated political effort, a firm may favor unionization, or be less opposed to unionization than it would otherwise be. The results of this article can also explain why firms may little reduce wages in a recession, and why the higher wages paid by unionized firms do not reduce survival rates of these firms.     

Impact of RMB Appreciation on Trade and Labor Markets of China and the USA： A Multi-country Comparative General Equilibrium Model

Since the recent economic crisis, the undervaluation of China's exchange rate has been a focus in the debate on the global policy mix. Using a non‐competitive input–output table, we establish a comparative‐static general equilibrium model to simulate the impact of real exchange rate changes on Sino–US trade and labor markets. The simulation shows that the impacts of a 10‐percent RMB revaluation on the trade surplus of China and the labor market of the USA are more modest than is generally perceived, and the negative impact on the output of the non‐processing industry in China is more significant than that on the processing industry. The Sino–US trade imbalance will continue to deteriorate, China's non‐processing trade surplus will decline and the processing trade will increase, with the combined effect being small. For the USA, labor‐intensive goods imported from China will shift to different Asian countries instead of transferring back to the US market. The simulation results indicate that the impacts of an RMB revaluation on both Chinese and US labor markets would be limited.     

Market Performance Implications of the Transfer Price Rule

The “transfer price rule” (TPR) defines a vertical price squeeze as an input price, output price combination set by a vertically‐integrated firm monopoly producer of an essential input that would not allow the firm's downstream unit to earn at least a normal rate of return on investment in the “as‐if” case that it had to purchase the input at the price charged independent firms. In its 2009 linkLine decision, the U.S. Supreme Court rejected the TPR for the purpose of enforcing the anti‐monopolization prohibition of Section 2 of the Sherman Act. In contrast, a vertical price squeeze, defined by a TPR‐like standard, is an abuse of a dominant position under Article 102 of the Treaty on the Functioning of the European Union. In this article, we model the impact of the TPR on market performance. We find that the TPR increases consumer surplus and net social welfare if all firms remain active in the downstream market. It sometimes induces the upstream firm to refuse to supply the downstream firm, and in such cases, consumer surplus and net social welfare are reduced. The impact of the TPR on market performance thus depends on whether or not an upstream firm can refuse to supply downstream firms on terms that would offer it at least a normal rate of return on investment.     

Estimating Firm Behavior under Rationing: a Panel Data Study of the Chinese Manufacturing Industry

The purpose of this paper is to investigate the impacts of rationing on firm behavior. A virtual price approach is adopted to derive the rationed elasticities of variable input demands and output supply under a translog profit function. To illustrate the difference between the rationed and unrationed elasticities, we conduct an analysis using a firm-level annual survey data of China over the period 1985–88. Our estimation results indicate that the values of most elasticities would have been affected significantly if the government had imposed rationing on material inputs. The behavior of Chinese firms would have been seriously distorted in a complicated way. The firms would have over-responded to market signals in making some of their input or output decisions and, at the same time, might have under-reacted, or would have not changed their reaction, in making the other input or output decisions, under a rationing regime.     

Entry deterrence when the potential entrant is your competitor in a different market

In this article, we present a two‐period model in which one firm operates in two markets: a monopoly and a duopoly. Assuming that this firm has private information on the cross‐price elasticity of demand between the products sold in both markets, it limits its quantity supplied in the monopoly market in order to make its rival in the other market believe that entry into the monopolized market is unprofitable. As a result of this strategy, the average prices observed in both markets increase. This result suggests that the detrimental effects of entry deterrence on consumers' welfare are stronger than those predicted by previous literature.     

Prostitutes,Pimps, and Brothels: Intermediaries,Information, and Market Structure in Prostitution Markets

Prostitution is a multi‐billion dollar, globally distributed, low‐concentration service industry that is receiving increasing attention in the economics literature. This article focuses on a widespread, but little studied, feature of this environment—the role of intermediaries (pimps or brothel owners) on market outcomes. Prostitution laws and markets are perhaps unique in that transactions between principals (prostitutes and johns) are legal in many countries, while intermediary activity (pimping) is illegal. After surveying the varying cross‐country legality of agents we develop a simple theoretical model to analyze how the presence or absence of intermediaries shifts the distribution of market surplus. We show that eliminating pimps and brothels may shift surplus in non‐obvious ways, depending on the precise function they perform and on whether equilibrium is pooling or separating across “high quality” and “low quality” market segments. The implications of alternative policy regimes (intermediaries legal or illegal) are considered.     

DEVELOPING EMPLOYMENT EFFECTS OF INNOVATIONS: MICROECONOMETRIC EVIDENCE FROM TAIWAN

This paper aims to identify the effects of innovation on employment and labor composition in Taiwan. Using a new and detailed firm‐level data set, the empirical results determine that innovations, measured by R&D investments or patent counts, have a positive impact on employment. Both of the estimated employment effects of product and process innovations are overall significantly positive. Although the effects of process innovations differ between high and low R&D‐intensive industries, the process innovation tends to expand the firms’ output and then increase employment for high R&D‐intensive industries. However, it frequently results in laborsavings in terms of production work and reduces jobs in low R&D‐intensive industries. Moreover, technological innovations are found to be non‐neutral, leading to a shift in labor composition in favor of skilled and more educated workers.     

Financial distress and non‐executive director compensation: Evidence from state‐owned enterprises in South Africa post King III

Using a sample of South African state‐owned enterprises (SOEs), we examine the pre‐ and post‐period impact of King III on non‐executive director (NED) compensation with emphasis on financially distressed SOEs. This paper adopts a difference‐in‐differences analysis technique with repeated measures as the basis for testing the hypotheses. The revised Altman Z‐score model which incorporates features unique to emerging markets is used to measure financial distress. Our findings indicate that SOEs that adopted King III will increase NED compensation when the firm has a positive performance and will severely penalize NED when the firm faces financial distress. This study highlights the importance of well‐crafted corporate governance policies. It further sheds light on the importance of King III and how its implementation may prove vital for the success of an enterprise.     

The Stagnant Export Upgrading in Northeast China: Evidence from Value‐added Tax Reform

China's 2004 value‐added tax (VAT) pilot reform in the Northeast region, which changed the VAT from production type to consumption type, introduced a sizable tax credit for fixed investment in manufacturing industries, leading to more investment and higher productivity at firm level. This paper, however, uses difference‐in‐difference estimation and finds a negative structural effect; that is, the VAT pilot reform leads to a reduction in the export sophistication of Northeast cities relative to other cities in China, and the results hold for a battery of robustness checks. It is found that resources are reallocated towards less‐sophisticated industries. As the products with higher export sophistication are more skill and research and development (R&D) intensive, the shortfalls of skilled labor and R&D spending hinder the upgrading process. With a new round of revitalization plans in the Northeast, policymakers should be cautious with similar structural effects and focus on increasing skilled labor supply and R&D investment.     

Income and Price Elasticities of China＇s Exports

The appearance of new product varieties and improvements in the quality of goods have both played key roles in the rapid growth of China's exports. However, these two important elements have not been formally integrated into the demand equations for China's exports. As we demonstrate in this paper, income elasticity will be underestimated if new varieties of goods and quality improvements are omitted in price index and quantity index calculations, which are necessary for estimating the export demand function. Moreover, the faster new product varieties enter export markets, the greater the underestimation will be. In this paper, we develop an export demand equation that takes into account new product varieties and improvements in quality, and then calculate the demand function for China's exports using the data from 1992 to 2006. According to our estimation, the short‐term income elasticity of demand for China's exports is approximately 2.34, and the short‐term price elasticity is approximately –0.65. Our estimation predicts an increase in China's export value in the case of an RMB appreciation or export rebate rates reduction in the short term, due to the low price elasticity of China's exports, whose absolute value is less than 1. Our findings are novel and could have significant policy implications.     

The Effect of Local Area Unemployment on Compensating Wage Differentials for Injury Risk

Compensating wage differential (CWD) theory assumes that workers can always find a job without undesired characteristics, which forces firms with disamenities to pay a CWD. However, a simple theoretical variation of standard CWD theory shows that if there is a probability of job loss due to involuntary unemployment, the CWD is lower. When this probability is proxied by local unemployment rates, we find a downward bias in typical estimated CWDs using cross‐sectional data that span many local labor markets. Estimates from the Current Population Survey data show that the bias can be quite large, which in turn impacts the implicit value of injury estimates.     

Integrated rural development in Malawi and socio‐economic change: The Karonga project

Where regional rural development initiatives in Malawi fail to achieve their larger objectives, this may be because they overlook the production decision‐making of the peasantry. Given high‐level irrigation production conditions, peasant households will hire labour needed to maximise production only to the extent that it increases income. Unsatisfactory producer income and the absence of alternative markets lead to intolerable drudgery levels and so even to withdrawal from production, with adverse consequences for rural welfare and broader economic development     

论厂商停止营业点与要素合理投入区间的关系

运用数学推理的方式说明厂商的停止营业点和要素合理投入区间的关系,可得出如下的结论:只有当产品市场和要素市场都完全竞争时,厂商的停止营业点才会位于要素合理投入区间的起点;两个市场中只要有一个为不完全竞争,厂商的停止营业点就会位于要素合理投入区间起点的左方(即生产的第一阶段);如果两个市场都不完全竞争,则厂商的停止营业点向要素合理投入区间起点左偏的效应将会叠加.     

Corruption and firm growth: Evidence from China

Corruption is one of the most pervasive obstacles to economic and social development. However, in the existing literature it appears that corruption seems to be less harmful in some countries than in others. The most striking examples are well known as the “East Asian paradox”: countries displaying exceptional growth records despite having thriving corruption cultures. The aim of this paper is to explain the high corruption but fast economic growth puzzle in China by providing firm-level evidence of the relation between corruption and growth and investigating how financial development influences the former relationship. Our empirical results show that corruption is likely to contribute to firms' growth. We further highlight the substitution relationship between corruption and financial development on firm growth. This means that corruption appears not to be a vital constraint on firm growth if financial markets are underdeveloped. However, pervasive corruption deters firm growth where there are more developed financial markets. This implies that fast firm growth will not be observed until a later stage of China's development when financial markets are well-functioning and corruption is under control. Furthermore, the substitution relationship exists in the private and state-owned firms. Geographically, similar results can be seen in the Southeast and Central regions.     

Growth,resource extraction and production in a small open economy

Summary and Conclusions This paper analyzed the optimal growth of a resource exporting economy in the framework of a Ramsey-type model. Two versions of the same model are used. In the first version (where the aggregate production function uses the conventional inputs, namely labor and capital) it was shown that along the optimal paths the resource would be exhausted in finite time and that the economy approaches asymptotically the modified golden rule capital intensity, well known from one-sector growth theory. Subsequently the impact of the changes in resource prices on the rate of extraction are investigated by considering an exponentially rising price.In the second version of the model, the resource extracted is divided between domestic production (the aggregate output of the economy is produced by means of labor, capital and the resource input) and export. Under this assumption, it is demonstrated that when the relative price of the resource is constant and given exogenously, the opening of trade (i.e., resource exports) depends on the relative magnitudes of the marginal product of the resource and its price. Furthermore the paper showed that even if trade opens, resource extraction for export will come to an end in finite time. After the economy stops exporting the resource, its optimal growth will be determined simultaneously by the elasticity of substitution between capital and the resource input and the dynamic behavior of the marginal product of the resource input, as explained in detail by Dasgupta and Heal [1974]. Finally, when the resource price has an exponential trend, resource extraction will continue both for domestic production and export purposes.     

MARKET RESPONSES TO CLIMATE STRESS: RICE IN JAVA IN THE 1930S

Do markets in less-developed countries abate consequences of climate stress? Using changes in regional rice prices across the 19 regions in Java, Indonesia, during 1935–40, this paper will assess how rice markets responded to variations in rainfall, which is an important factor in rice production. It finds that rice markets were highly integrated across Java. The El Niño-induced episodes of lower than usual rainfall in 1935 and 1940 did not have a negative effect on levels and variations in regional rice prices, nor did they have adverse consequences for the supply of rice. Adaptive responses of firms specialising in the trade of rice are argued to have mitigated regional deficiencies in food production caused by climate stress.     

Market power,uncertainty, and the level of trade

We consider a set of home firms, each of which has a stochastic requirement for a particular input. High-cost home firms can produce the input themselves. Low-cost foreign firms produce the input to sell it to home firms through an international market. Efficiency requires the input to be produced by foreign firms and traded in the market. Yet, home firms will always engage in inefficient home production. By producing some of its own input needs, a home firm cuts down on aggregate input demand, thus depressing prices in the market.     

Sexual Identity,Same‐Sex Relationships,and Labour Market Dynamics: New Evidence from Longitudinal Data in Australia

Using newly collected data on sexual identity from the Household, Income and Labour Dynamics in Australia Survey, this study examines the relationship between sexual identity and labour market outcomes. Our findings show that gay males are: (i) less likely to be continuously employed than their heterosexual counterparts, and (ii) face an annual earnings penalty of 16–21%. There are also important differences in earnings dynamics for men who transition into (or out of) same‐sex versus opposite‐sex live‐in relationships. Individual fixed effects estimates show that opposite‐sex partnerships are associated with increased earnings for men, while same‐sex partnerships are associated with small declines in earnings that are statistically indistinguishable from zero. For women, we find evidence of an earnings premium for lesbians, driven largely by increased labour supply on the intensive margin.     

Do E‐verify mandates improve labor market outcomes of low‐skilled native and legal immigrant workers?

We examine the impact of the 2007 Legal Arizona Workers Act (LAWA) on employment outcomes of low‐skilled legal workers. We use the synthetic control method to select a group of states against which the labor market trends of Arizona can be compared. Our results suggest that contrary to its intent, LAWA does not appear to have improved labor market outcomes of legal low‐skilled workers who compete with unauthorized immigrants, the target of the legislation. In fact, we find some evidence of diminished employment and increased unemployment among legal low‐skilled workers in Arizona. These findings are concentrated on the largest demographic group of workers—non‐Hispanic white men. While they are less likely to find employment, those who do have on average higher earnings as a result of LAWA. The pattern of results points to both labor supply and labor demand contractions due to LAWA, with labor supply dominating in terms of magnitude.