Is labour market training a curse for the unemployed? Evidence from a social experiment

In 1994 a social experiment was conducted in Denmark, where unemployed applicants for classroom training were randomised into treatment and control groups. The data are contaminated by the presence of no‐shows and crossovers, biasing the traditional experimental estimator. We interpret our experiment within an economic model of agents maximising outcomes facing different cost regimes and present results interpretable within this model. Surprisingly, we find that classroom training significantly increases individual unemployment rates and decreases employability. We discuss possible reasons for this finding and some related policy issues. Copyright © 2009 John Wiley & Sons, Ltd.     

Do landlords discriminate in the rental housing market? Evidence from an internet field experiment in US cities

This paper tests for racial discrimination in the rental housing market using matched-pair audits conducted via e-mail for rental units advertised on-line. We reveal home-seekers’ race to landlords by sending e-mails from names with a high likelihood of association with either whites or African Americans. Generally, discrimination occurs against African American names; however, when the content of the e-mail messages insinuates home-seekers with high social class, discrimination is non-existent. Racial discrimination is more severe in neighborhoods that are near “tipping points” in racial composition, and for units that are part of a larger building.     

Job creation and labour market flexibility: miracle or mirage on the Polish labour market?

Poland's post‐communist economic performance has been generally good. However, for many years, its growth was jobless; it exhibited very high unemployment rates and made little progress towards the targets set for EU Member States and accession countries. Unexpectedly, in 2003, the country's labour market began to exhibit a new dynamism, with employment growing strongly and unemployment tumbling. This apparent improvement coincided with a liberalisation of its Labour Code. Unfortunately, the measures introduced to increase flexibility are at variance with the EU's Fixed‐term Work Directive and will likely need to be modified, which may conceivably reverse the recent developments that form the focus of this article.     

Do liberal cities limit new housing development? Evidence from California

Traditional explanations for why some communities block new housing construction focus on incumbent home owner incentives to block entry. Local resident political ideology may also influence community permitting decisions. This paper uses city level panel data across California metropolitan areas from 2000 to 2008 to document that liberal cities grant fewer new housing permits than observationally similar cities located within the same metropolitan area. Cities experiencing a growth in their liberal voter share have a lower new housing permit growth rate.     

Is the Quarter of Birth Endogenous? New Evidence from Taiwan,the US,and Indonesia

Recent evidence based on US data suggests that the quarter or month of birth (QOB or MOB) may be endogenous, since family characteristics can explain up to 50% of the effects of QOB on the education outcomes and earnings of adult males. In this study, based on a sample of one million Taiwanese siblings, we examine university admission at age 18 as our outcome variable and find that at school entry, the oldest (September born) children are 31–38% more likely to be admitted into university at age 18 than the youngest (August born) children, indicating strong seasonality in university admission. The inclusion of controls for family background is found to explain only a small portion of these effects, particularly for males. Given that such results are at odds with the recent US evidence, we revisit the US Census data and find that when racial differences are properly controlled for in the estimation, even a rich set of family characteristics is capable of explaining only a minor proportion of the QOB effects. Furthermore, using data from the US and Indonesia, we find that seasonal temperature variation is unlikely to be an important contributor to the US‐Taiwan disparity. Our findings imply that the validity of using QOB or MOB as an instrumental variable may be dependent on the population being studied and the sample selected.     

Is the housing market set to fall?

Some analysts have suggested that house prices are set to collapse, particularly in the London area. These conclusions are generally based on a rather simple analysis of house price to income ratios. We argue that this is misleading and there is little evidence to suggest a collapse in the market.     

Assessing the impact of liberalisation policies on the Greek labour market: an insider–experts' view from the perspective of the varieties of liberalisation

During the recent Great Recession (2008–2018), Greece has become the prototype example of the implementation of austerity policies in Europe. Contrary to public discourse, these austerity policies were complemented by substantial labour market reforms that promoted employment and wage flexibility. This article aims to present a theory-driven understanding of the implementation and the effects of these reforms. For this purpose, we employ a qualitative study consisting of semi-structured interviews with 50 labour market experts—government officials and labour lawyers, academics, labour union representatives and employer association representatives. Using Thelen's framework on the Varieties of Liberalization, we conclude that, contrary to the initial aims of the reforms, Greece followed a trajectory of direct deregulation, reducing considerably the level of both coordination between employers and workers, and coverage of employment protection. The interviews show that the dismantling of collective bargaining system was the most decisive move in this path.     

Service sector SMEs and essential skill provision in the 16–25 year old labour market: Evidence from Northern Ireland

This paper uses an employer survey of Northern Ireland (NI) service sector small and medium-sized enterprise (SMEs) to assess the nature and extent of labour market shortages arising from a lack of basic skills among the 16–25 year old workforce. Relative to literacy and numeracy skills, employers were found to place a slightly heavier weight on the more generic skills of attitude, communication and motivation. The rate of skills related to unfilled vacancies among service sector SMEs was found to exceed that of high-tech/ high value-added sectors which have traditionally been the focus of policy makers; it was also found that in instances where such skill shortages were due to a lack of basic literacy/ numeracy skills they exerted a negative impact on productivity performance. While employers were found to be highly supportive of existing delivery frameworks they were also open to alternative methods of basic skill acquisition based around the interests of young people and delivered outside the traditional qualifications framework. Finally, the lack of awareness among employers of a number of basic skills accreditation schemes and awarding bodies raises serious questions with respect to the effectiveness of such programmes.     

Volatile multinationals? Evidence from the labor demand of German firms

Does more FDI make the world a riskier place for workers? We analyze whether an increase in multinational firms' activities is associated with an increase in firm-level employment volatility. We use a firm-level dataset for Germany which allows us to distinguish between purely domestic firms, exporters, domestic multinationals and foreign multinationals. Employment in multinationals could be more volatile than employment in domestic firms if multinationals were facing more volatile demand or if they react more to aggregate developments. We therefore decompose the labor demand of firms into their reaction and their exposure to aggregate developments. We find no above-average wage and output elasticities for multinational firms.     

Is the nonlinear hedge of options more effective?—Evidence from the SSE 50 ETF options in China

The linear hedging of the options ignores the characteristic of the nonlinear change of option prices with the underlying asset. This paper establishes the nonlinear hedging strategy followed the study by Hull and White (2017) to investigate the effectiveness on the Shanghai Stock Exchange (SSE) 50 ETF options. The results show that the nonlinear hedge of the Chinese option market is less effective than the U.S option market because of the short history and the lower activity of the Chinese option market. The effect of nonlinear hedging strategy is better than the linear hedging strategy for calls in China. But for puts, the effect of the nonlinear hedging strategy is not as significant as it for calls. The difference in the trading volume between calls and puts and the high short-selling cost in the Chinese market are the main factors leading to the difference in hedge effectiveness. This paper suggests that the stock exchange could reduce margin standard of 50 ETF securities lending, promote a more flexible shorting mechanism, and accelerate the process of index options listed, so as to achieve hedging the risk of options more directly and efficiently.     

Is the secondary loan market valuable to borrowers?

In recent years, the secondary loan market has developed into an over-the-counter market where loans are not only sold but also subsequently traded. This shift away from traditional banking is altering the business of lending. Loan sales are valuable to banks because they free up capital, generate fee-based income and facilitate risk management; but they may be costly to borrowers because they negatively affect bank monitoring incentives. In this paper, however, we argue that there is another potential benefit to borrowers from loan sales. Borrowers with trading loans, in particular those with liquid loans, may “demand” a share of bank benefits from loan sales when they take out new loans as it will be easier for banks to sell these loans afterwards. We investigate this potential benefit of the secondary loan market by comparing the interest rates borrowers pay before their loans start to trade with the interest rates they pay on loans originated post-trading. Our results show that, on average, borrowers pay higher spreads on the loans they take out after the onset of trading on their loans. Importantly, our results also show that borrowers with liquid trading loans are able to borrow at lower interest rates after the onset of trading on their loans. Thus, while the banks’ decision to sell loans may initially impose a cost on borrowers, those whose loans enter the secondary loan market and become liquid benefit from an interest rate discount on their subsequent loans.     

Can crude oil drive the co-movement in the international stock market? Evidence from partial wavelet coherence analysis

In this paper, we employ partial- and multiple-wavelet coherence analyses to examine co-movement between international stock markets by considering the influence of crude oil in a time domain perspective. Overall, we find that crude oil is a major factor driving co-movement between international stock markets in the median and long term. However, when considering the oil-importing and oil-exporting countries differently, we still find that crude oil is a driver for interdependence between oil-importing and oil-exporting countries. In contrast, the crude oil has relative lower impact on the co-movement in oil-importing or in oil-exporting countries, which indicates its co-movement is caused by other factors. In addition, Gulf Cooperation Council stock market may lead the stock markets of oil-importing countries in the long term. Our empirical results provide meaningful information for investors and policymakers.     

Are the effects of minimum wage on the labour market the same across countries? A meta-analysis spanning a century

The effects of the minimum wage (MW) on the labour market have been studied for almost a century, but the results remain inconsistent. To review what is known until now, a global, multilingual database of 588 articles on MW effects is constructed spanning more than a century, from 1900 to 2020. Most of the studies belong to developed countries, and less than a third come from developing countries. The most researched subject during the period under review is the impact of the MW on employment, but the evidence is mixed independently of the country studied. Consequently, it is only possible to perform a meta-regression to suitably evaluate the impact of the MW on employment according to the number of studies collected on this topic. The meta-regression model is useful to explain the reasons for these differences. For this purpose, recently developed meta-analysis methods are implemented distinguishing between developed and developing countries. To the best of our knowledge, this is the first meta-analysis that reviews articles on the effect of MW without limits on the analysis period, the variables relative to the labour market or the countries under consideration. The results show a negative publication bias for developed countries but not for developing countries. The impact of the MW on employment is negative in both groups, adjusting for that bias. This adverse effect is small but robust. Characteristics related to the control variables, the demographic groups concerned, the methods implemented and the inclusion of local fixed effects, trend or time dummies account for the estimated employment effect. Public policy recommendations are proposed based on the studies reviewed.     

Are venture capitalist-backed IPOs more innovative? Evidence from an emerging market

This study examines whether venture capital (VC)-backed IPOs are more innovative than otherwise equivalent non-VC-backed IPOs. Using manually collected R&D records from annual reports and patent data from the Chinese State Intellectual Property Office (CSIPO) from 2007 to 2012, we find that VC-backed IPOs have higher R&D expenditures and more patents granted in the three years after IPOs. More specifically, they have more invention, application, and design patents in post-IPO. We use a two-stage instrumental variable, propensity score matching, difference-in-differences approach to mitigate selection biases and find our results to be consistent with our hypothesis. We conclude that VCs can positively influence IPO firms to increase R&D expenditures and innovative output levels in China. In addition, we document that the government ownership adversely affects innovation of VC-backed firms. Policy implications are discussed.     

Do environmental regulations hamper small enterprises' market entry? Evidence from China

Due to the serious increase of environmental pollution in China, environmental regulations have become significantly stringent. Such regulations are playing an increasingly important role in the development of small enterprises (SEs) in China, especially in SEs' market entry. However, existing studies pay little attention to this issue. This paper investigates for the first time the effect of environmental regulations on SEs' market entry and the mechanism of environmental regulation effects in China. We consider two sets of panel data for the periods 2003–2010 and 2012–2015 in China. We also use the fixed effect model and the instrumental variable method to explore the role of environmental regulations in SEs' market entry. The results show that, overall, environmental regulations play a significantly positive and robust role in SEs' market entry. However, the mechanisms associated with the effect of environmental regulations on different innovative types of SEs differ. Environmental regulations promote the market entry of SEs with product innovation, but this impact is not significant for SEs with research and development (R&D) activities and R&D institutions. Our findings indicate that China's SEs prefer product innovation, which is a lower level innovative type, over R&D innovation, as a means to avoid the negative impact of stringent environmental regulations.     

How does FinTech affect the development of the digital economy? Evidence from China

Financial Technology (FinTech) is key to the global ascendency of China's finance, and the digital economy is a new driving force in the sustainable development and high-quality growth of China's economy. So, what is the nature of the relationship between FinTech and the digital economy. Based on the CRITIC method, this study calculates the China's 31 provinces’ (excluding Hong Kong, Macao and Taiwan) FinTech indices from 2008 to 2018 and the digital economy development indices from 2012 to 2018, and analyzes the impact of FinTech on the digital economy and its underlying mechanism. The results show that FinTech stimulates the development of the digital economy in China by promoting technological innovation and weakening the financial decentralization of local governments. Further research indicates that local financial regulatory resources have a positive moderating effect on the impact of FinTech in promoting the development of the digital economy. Increased local financial regulatory resources will enable FinTech to promote the development of the digital economy, but this regulatory role is only significant in financially developed areas. The approach of the study is relatively novel.     

Does lending behaviour of banks in emerging economies vary by ownership? Evidence from the Indian banking sector

While much has been discussed about the relationship between ownership and financial performance of banks in emerging markets, literature about cross-ownership differences in credit market behaviour of banks in emerging economies is sparse. Using a portfolio choice model and bank-level data from India for 9 years (1995–96 to 2003–04), we examine banks’ behaviour in the context of credit markets of an emerging market economy. Our results indicate that, in India, the data for the domestic banks fit well the aforementioned portfolio-choice model, especially for private banks, but the model cannot explain the behaviour of foreign banks. In general, allocation of assets between risk-free government securities and risky credit is affected by past allocation patterns, stock exchange listing (for private banks), risk averseness of banks, regulations regarding treatment of NPA, and ability of banks to recover doubtful credit. It is also evident that banks deal with changing levels of systematic risk by altering the ratio of securitized to non-securitized credit.     

Does the Capitalization of Development Costs Improve Analyst Forecast Accuracy? Evidence from the UK

It has been documented that investments in Research and Development (R&D) are associated with increased errors and inaccuracy in earnings forecasts made by financial analysts. These deficiencies have been generally attributed to information complexity and the uncertainty of the future benefits of R&D. This paper examines whether the capitalization of development costs can reduce analyst uncertainty about the future economic outcome of R&D investments, provide outsiders with a better matching of future R&D‐related revenues and costs, and therefore promote accuracy in analyst forecasts. UK data is used, because accounting rules in the United Kingdom permitted firms to conditionally capitalize development costs even before the introduction of the International Financial Reporting Standards. The choice to expense R&D rather than conditionally capitalize development costs is found to relate positively to signed analyst forecast errors. This finding is robust to controlling for the influence of other factors that may affect errors, as well as for the influence of R&D investments on forecast errors. The decision to capitalize versus expense is not observed to have a significant influence on analyst forecast revisions. The findings are interpreted as evidence that the choice to capitalize as opposed to expense may help to reduce deficiencies in analyst forecasts; hence, is informative for users of financial statements. Increased informativeness is expected to have repercussions for the effectiveness with which analysts produce earnings forecasts, and, as a result, market efficiency.