EU Enlargement, Migration, and Lessons from German Unification

The paper studies the role of international implications after EU enlargement. Based on a formal model with migration costs for both capital and labor, it predicts a two-sided migration from the new to the old EU countries which is later reversed. As the migration pattern chosen by market forces turns out to be efficient, migration should not be artificially reduced by means of legal constraints or subsidies to the new member countries. The paper draws the parallel with German unification and points out the lessons to be learned by Europe. The analysis concludes with a brief discussion of the second-best problem posed by the existence of welfare states in the old member countries.     

Self-employment,financial development,and well-being: Evidence from China,Russia, and Ukraine

This study investigates the association between financial development and entrepreneurs’ well-being in China, Ukraine, and Russia. We find that Chinese and Russian entrepreneurs have a higher level of well-being, while Ukrainian self-employed individuals have more dissatisfaction. The link between financial development and the utility of entrepreneurs varies as well. The utility differences between the self-employed and paid workers in Russia reduce with financial development and the effect is stronger for job satisfaction. However, financial development barely correlates with Ukrainian entrepreneurs’ happiness while having no correlation with life satisfaction of Chinese self-employed. Further investigation suggests that the financial development – entrepreneurial utility association works through both monetary and non-monetary channels.     

Spillovers from Taiwan, Hong Kong, and Macau Investment and from Other Foreign Investment in Chinese Industries

In its analysis of the impact of foreign investment on China's productivity, this article develops two empirical models: one using labor productivity and the other using total factor productivity (TFP). Using cross-provincial data on Chinese industries for 1993, 1994, and 1997 to regress the empirical models, it is concluded that the impact of investment differed depending on its source, with that from these overseas Chinese enterprises contributing to the spillover effect in regions with a high technology gap, whereas that from other foreign enterprises tending to improve productivity and TFP primarily in regions with a low technology gap. (JEL D24 , F13 , F15 , L60 )     

Consumption,Income, and Wealth: Evidence from Age,Cohort, and Period Elasticities

This paper examines the relationship between non‐durable consumption, income, and wealth (housing and financial) allowing explicitly for generational heterogeneity. A framework is proposed to disentangle cohort, age, and period effects and the empirical analysis is based on the U.S. Consumer Expenditure Survey data. We find that there are significant generational differences and the results highlight the range of elasticities implicit in results presented, thus far, by age groups. Moreover, we find supporting evidence of humped shaped age profiles for the elasticity of consumption with respect to income and the importance of financial wealth for those aged 60+. The framework also allows us to generate cohort profiles which draw attention to the negative role of housing wealth for generation X, and period profiles which reinforce the role of financial wealth for the baby‐boom generation.     

Combat,casualties, and compensation: Evidence from Iraq and Afghanistan

Our research examines the effect of combat deployments to Iraq and Afghanistan on casualties and combat exposure compensation policy. We use restricted data from the Defense Manpower Data Center (DMDC) and Social Security Administration (SSA) to construct a panel of all US Active Duty service members having served at some point during the years 2001–2012. Casualties disproportionately occur at higher rates among (i) young, white, males, (ii) enlisted personnel, (iii) less educated personnel, and (iv) those in combat job types. Our estimates indicate that overall US military personnel who deployed in an individual year to Iraq or Afghanistan had a 45 per 100,000 higher probability of death than non-deployed military personnel who remained stateside. The increased fatal injury risk of deployed US military personnel is 15 times higher than the national average civilian workplace fatality rate, but roughly equal to the fatal injury risk faced in some of the most dangerous civilian occupations. Our estimates suggest a compensating wage differential equal to $861 per month would be appropriate in comparison to the current average of $1238 per month in danger pay provided to US military personnel deployed into combat zones. We recommend a revenue-neutral approach in adjusting the pay structure for military members. For example, the military should consider increasing bonuses or base pay while simultaneously decreasing danger pay by an equivalent amount. Furthermore, it may be beneficial to adjust danger pay by service or job type to reflect fatality risk more accurately.     

Ownership, institutions, and capital structure: Evidence from China

We employ a unique data set to explore the role of ownership structure and institutional development in debt financing of non-publicly traded Chinese firms. We show that state ownership is positively associated with leverage and firms’ access to long-term debt, while foreign ownership is negatively associated with all measures of leverage. Surprisingly, firms in better developed regions are associated with reduced access to long-term debt, suggesting the availability of alternative financing channels and the tightening of the lending standards under the on-going banking reform. The combination of ownership structures and institutions explains up to 6% of the total variation in firms’ leverage decisions, while firm characteristics alone explain no more than 8% of the variation. Further, we show that non-state-owned firms tend to have lower total and short-term debt than their state-owned counterparts in less developed regions. Finally, we show that state-owned firms’ easy access to long-term debt is positively associated with long-term investment and negatively associated with firm performance.     

Income, income inequality, and health: Evidence from China

This paper tests using survey data from China whether individual health is associated with income and community-level income inequality. Although poor health and high inequality are key features of many developing countries, most of the earlier literature has drawn on data from developed countries in studying the association between the two. We find that self-reported health status increases with per capita income, but at a decreasing rate. Controlling for per capita income, we find an inverted-U association between self-reported health status and income inequality, which suggests that high inequality in a community poses threats to health. We also find that high inequality increases the probability of health-compromising behavior such as smoking and alcohol consumption. Most of our findings are robust to different measures of health status and income inequality. Journal of Comparative Economics 34 (4) (2006) 668–693.     

Factors of production,productivity, institutions,and development: Evidence from Brazil

The economic growth and development literature emphasizes that investment in technology and physical and human capital is essential for achieving higher levels of development. Political and economic institutions are also relevant in this process. With a sample of 5,503 Brazilian municipalities, this study carries out a development accounting exercise and measures the effects of institutional quality on per capita gross domestic product (GDP), physical capital intensity, human capital stock, and productivity. The empirical results indicate that institutional quality affects GDP per capita mainly through human capital accumulation and total factor productivity.     

Prudence, Justice, Benevolence, and Sex: Evidence from Similar Bargaining Games

Most learning experiments involve repeated play of exactly the same situation and, hence, can not discriminate between learning to use a deductive principle and other forms of routine learning. In this paper, subjects confront a sequence of similar, but not identical, bargaining games all of which can be solved using the same deductive principles. Conventions based on these deductive principles emerge within 70 periods in 5 of 26 eight-person cohorts. We found no economically significant differences between all male and all female cohorts. Journal of Economic Literature Classification Numbers: C72, C78, C92, D83.     

Investment banks' stock ratings,call warrant issuance,and responses from heterogeneous investors: Evidence from Taiwan

We investigate the responses of the different types of investors on stock rating change announcements made by investment banks around call warrant issuances in Taiwan. The unique characteristics of the Taiwan warrants market allow investment banks to make stock rating change announcements around call warrant issuances for the same stocks they rate. In Taiwan, investment banks are also dealers of call warrants, and thus, the profit and loss results from their warrant business are potentially in conflict-of-interest for their stock ratings. Another feature of the Taiwan stock market allows us to disentangle the types of investors initiating the stock trades. We identify three types of investors: institutional investors, experienced retail investors, and ordinary retail investors. Our findings suggest that institutional investors are able to “see-through” the conflict-of-interest in investment banks; experienced investors are able to partially “see-through” the conflict-of-interest, and ordinary retail investors are unable to “see-through” the conflict-of-interest of investment banks.     

Culture,democracy, and market reforms: Evidence from transition countries

Transition countries differed widely in the extent to which they implemented market reforms. This paper empirically investigates the role of culture as a potential determinant of market reform adoption among the post-socialist economies of Eastern Europe and Central Asia. I examine an unbalanced panel of up to 21 transition countries over the period 1989–2001 and estimate the relationship between different cultural typologies and the adoption of liberalizing reforms. I report that a sense of individualism and intolerance for unequal dispersion of power within societies are robustly associated with greater market reform efforts. Only limited evidence exists for the influence of other cultural attitudes.     

Bank ownership,performance, and the politics: Evidence from Taiwan

This paper investigates the effects of politics on the performances of financial institutions in Taiwan over the period from 1994 through 2009 using the two-stage generalized method of moments approach. We argue that politics and financial institutions are related and this relationship varies with the ownership of financial institutions. Our main findings are, firstly, during election years, the private financial institutions earned higher ROA and loan growth than the government- and foreign-owned. Secondly, government-owned institutions are not affected by current elections for all measures of performance, while foreign institutions significantly earned lower ROA, higher interest margin, and spent higher overhead costs. The finding that lendings of government-owned institutions are no longer subject to political pressures across time implies partial success of financial reforms in Taiwan.     

Immigration,Ethnic Diversity,and Political Outcomes: Evidence from Denmark

I study the impact of immigration and increasing ethnic diversity on political outcomes in immigrant‐receiving countries, focusing on immigration and election outcomes in Danish municipalities between 1981 and 2001. A novel instrumental variable strategy based on historical housing stock data addresses issues of endogenous location choices of immigrants and a rich set of control variables is employed to isolate ethnic diversity effects from those of other immigrant characteristics. Increases in local ethnic diversity lead to rightward shifts in election outcomes by shifting electoral support away from traditional “big government” left‐wing parties and towards anti‐immigrant nationalist parties. This holds for both local and national elections.     

Inspections,pollution prices,and environmental performance: evidence from China

In environmental economics, monitoring and enforcement issues have attracted relatively little research effort. Moreover, the bulk of the literature on these issues has been of a theoretical nature. Few have empirically analysed the impact of monitoring and enforcement activities on the environmental performance of polluters. Moreover, all existing studies have been performed in the context of developed countries. A purpose of the current paper is to partially fill this important gap by exploring the impact of both inspections and pollution charges on the environmental performance of polluters in China. While pollution charges represent an important pillar of the Chinese environmental regulatory system, our results indicate that inspections dominate and better explain the environmental performance of industrial polluters.     

Appropriability mechanisms,innovation, and productivity: evidence from the UK

ABSTRACT

We use an extended version of the well-established Crepon, Duguet, and Mairesse model [1998. “Research, Innovation and Productivity: An Econometric Analysis at the Firm Level.” Economics of Innovation and New Technology 7 (2): 115–158] to model the relationship between appropriability mechanisms, innovation, and firm-level productivity. We enrich this model in three ways: (1) We compare estimates obtained using a broader definition of innovation spending to those that use R&D spending. (2) We assume that a firm simultaneously innovates and chooses among different appropriability methods to protect the innovation. (3) We estimate the impact of innovation output on firm productivity conditional on the choice of appropriability mechanism. We find that firms that innovate and rate formal methods for the protection of intellectual property highly are more productive than other firms, but that the same does not hold in the case of informal methods of protection, except possibly for large firms as opposed to SMEs. We also find that this result is strongest for firms in the services, trade, and utility sectors, and negative in the manufacturing sector.     

International migration,remittances, and schooling: evidence from El Salvador

We examine the effect of remittances from abroad on households' schooling decisions using data for El Salvador. Following the massive war-related emigration of the 1980s, remittances became a significant source of household income throughout the 1990s. We use the Cox proportional hazard model to examine the determinants of school attendance. Measuring income from a source that is uncorrelated with parental schooling—remittances—, we find that remittances have a large, significant effect on school retention. We estimate that while household income net of remittances has a small, though significant, impact on the hazard of leaving school in rural and urban areas, remittances have a much larger impact on the hazard of leaving school. In urban areas, the effect of remittances is, at its smallest, 10 times the size of the effect of other income. In rural areas, the effect of remittances is about 2.6 times that of other income. Our finding is of interest in that it suggests that subsidizing school attendance, particularly in poor areas, may have a large impact on school attendance and retention, even if parents have low levels of schooling.