Rational stability of choice functions

Two independent approaches have been used to analyze choices. A prominent notion is rationalizability: individuals choose maximizing binary relations. An alternative is to analyze choices in terms of standards of behavior with the notion of von Neumann–Morgenstern (vNM)-stability. We introduce a new concept ($r-$stability) that in turn extends the notion of stability and rationality. Our main result establishes that every rationalizable choice function is $r-$stable and every vNM-stable choice has an $r-$stable selection. An appealing property of $r-$stability is that well-known solution concepts (top cycle, uncovered set, …) are $r-$stable, while they are neither rationalizable nor vNM-stable.     

The valuation of water for conservation projects in South Africa

A number of water development and conservation programmes are currently being undertaken in South Africa, one of the most notable being the Working for Water Programme. The economic rationale underlying the programme in selected mountain catchments in the Western Cape was presented by Van Wilgen et al. (South African Journal of Science, 93: 404–11, 1997 VAN WILGEN, BW, LITTLE, PR, CHAPMAN, RA, GÖRGENS, AHM, WILLEMS, T and MARAIS, C. 1997. The sustainable development of water resources: history, financial costs, and benefits of alien plant control programmes. South African Journal of Science, 93: 404–11. [Web of Science ®] [Google Scholar]) and Marais (Unpublished, PhD thesis, University of Stellenbosch, 1998 MARAIS C 1998 An economic evaluation of alien plant control programmes in the mountain catchment areas of the Western Cape province, South Africa Unpublished PhD thesis. Stellenbosch: University of Stellenbosch  [Google Scholar]). A cost–benefit analysis of the Working for Water Programme in the Mgeni catchment in KwaZulu‐Natal was conducted by Gillham & Haynes (Unpublished paper presented at Tenth South African National Hydrology Symposium, 2001 GILLHAM S HAYNES M 2001 Evaluating a riparian clearing programme as a water management strategy Unpublished paper presented at the Tenth South African National Hydrology Symposium, Pietermaritzburg, 26–28 September  [Google Scholar]). Cost–benefit analysis has also been conducted in the Eastern Cape by Hosking & Du Preez (South African Journal of Science, 95: 442–8, 1999 HOSKING, SG and DU PREEZ, M. 1999. A cost–benefit analysis of removing alien trees in the Tsitsikamma mountain catchment. South African Journal of Science, 95: 442–8. [Web of Science ®] [Google Scholar]). There are, however, aspects of these assessments which merit more attention than they have been given thus far. One of these aspects is the value of water benefits, and this article examines it from the perspectives of marginal cost and willingness to pay. It is shown that different approaches are appropriate for different project locations, and that significantly different results are being obtained using these approaches. It is concluded that great care is needed in relating the value of water benefits to the specifics of the various locations where the conservation project is being implemented.     

An Econometric Analysis of the Determinants of Fertility for China, 1952–2000

This study investigates the determinants of the fertility rate in China over the 1952–2000 period. Consistent with theory, the key explanatory variables in our fertility model are real per capita income, infant mortality rate, female illiteracy and female labour force participation rates. The long-run results and the test for cointegration are based on the Johansen (1988 Johansen, S. 1988. Statistical analysis of cointegration vectors. Journal of Economic Dynamics and Control, 12: 231–254. [Crossref], [Web of Science ®] , [Google Scholar]) and Johansen & Juselius (1990 Johansen, S and Juselius, K. 1990. Maximum likelihood estimation and inference on cointegration – with applications to the demand for money. Oxford Bulletin of Economics and Statistics, 52: 169–210. [Crossref], [Web of Science ®] , [Google Scholar]) approach. Our long-run results conform to theory in that all variables appear with their expected signs, and the dummy variable used to capture the effects of the family planning policy indicates that in the years of the policy, fertility rates have been falling by around 10–12%. Our results suggest that socio-economic development – consistent with the traditional structural hypothesis – played a key role in China's fertility transition.     

Social capability deficits and productivity behaviour of African manufacturing firms: Evidence from Lesotho garment producers

Despite attempts to induce strong competitiveness in African manufacturing firms, poor productivity performances continue to hinder their ability to operate successfully in international markets. This paper argues that, while many plausible explanations can be put forward for this failing, analysis of the firms' social and institutional contexts can provide useful insights into why they have continued to perform badly. Adopting the technological catch-up framework proposed by Abramovitz (1986) Abramovitz, M. 1986. Catching up, forging ahead and falling behind. Journal of Economic History, 46(2): 385–406. [Crossref], [Web of Science ®] , [Google Scholar], the paper uses the case of Lesotho garment producers to illustrate how an environment characterised by significant social capability deficits has a negative impact on local firms' competitiveness. Strategic interventions to improve the quality of infrastructural services deliveries are suggested as urgently needed remedial measures.     

Race and land ownership in Rhodesia: trajectories of conflicting nationalisms in Shimmer Chinodya's Dew in the morning (2001)

This paper analyses Shimmer Chinodya's novel Dew in the morning in order to demonstrate that fiction has the capacity to reveal patterns of meaning that comment on race relations and to show how these are related to the issue of land ownership in Rhodesia. The novel questions the assumption that bitterness and anger over economic dispossession necessarily leads to rebellion. Dew in the morning recounts different kinds of resistances that emphasise the ‘peasant option’ (Ranger, 1985 Ranger, T. 1985. Peasant consciousness and guerrilla war in Zimbabwe, Harare: Zimbabwe Publishing House.  [Google Scholar]) in which Africans developed groups to stave off the possibility of being absorbed as full-time wage earners. The novel adds complexity to the notions of the armed political struggle and the peasant option by showing that these routes produced differentiated African subjectivities based on race, class and gender nationalisms. The movements or trajectories of these forms of peasant consciousnesses produced conflict-ridden nationalisms characterised by moments of resistance, incorporation and obeisance to colonial rule.     

Equity and efficiency in unemployment insurance

Summary This paper is concerned with equity and efficiency in unemployment insurance. It examines the rationales for unemployment insurance, or more generally, social security. It stresses that social security is a second-best solution, since, in practice, taxes that do not distort economic decisions and benefits without moral hazard are impossible. The paper determines a relation between the feasible levels of equity and efficiency,i.e., the output possibilities curve. Three typical views on equity are confronted with this output possibilities curve: the extreme liberal view, the moderate liberal view and the egalitarian view. We construct two output possibilities curves for unemployment insurance in The Netherlands: one curve, assuming that the Dutch labour market is characterized by excess supply and another curve, assuming that the Dutch labour market is instantaneously cleared by flexible wages. The equilibrium model yields substantially higher efficiency costs of Dutch unemployment insurance than the disequilibrium model. Finally, we calculate the output gains of a mini-system of unemployment insurance. Again, the results indicate that much depends on what is in the eye of the beholder.At the time of writing research fellow at the Applied Labour Economics Research Team (ALERT) of the Vrije Universiteit, Amsterdam and the Tinbergen Institute. The author thanks an anonymous referee ofDe Economist, Frank den Butter, Bernard Compaijen, Edmond Malinvaud, Christopher Pissarides, Niels Westergaard-Nielsen, Rob van de Wijngaert, Gerrit Zalm and the participants of the ALERT/Tinbergen Institute workshops Modelling the Labour Market (6–8 January 1992 at the Vrije Universiteit, Amsterdam) and Dutch Thoughts on Unemployment (18 March 1992 at the Vrije Universiteit, Amsterdam) for their useful comments on earlier versions of this paper. The usual disclaimer applies.     

Short and Long Effects of Productivity on Unemployment

Okun’s (1962) seminal paper is an important study on economic growth and unemployment but a detailed exploration of the effect of productivity growth on unemployment has been left aside. Yet, the relationship between productivity growth and unemployment has been debated since long. In this paper we present stylized facts on the link between productivity growth and unemployment for the short and long run, and present model variants that demonstrate that in the short run productivity growth may increase unemployment while in the long run the relationship between productivity growth and unemployment are likely to co-vary negatively. Using US data, empirically we decompose the time series of unemployment rate and productivity growth into long run and short run components and show empirical evidence that the long run and short run components co-vary as predicted by some theories.     

Wage vs. industry subsidies: coping with technology related unemployment in a globalized economy

In the past, economic policy has largely adopted a sectoral approach to technology-related unemployment. More recently though, wage subsidies have gained attention as an alternative means of reemployment, with the dispute on how best to cope with unemployment still unsettled. However, despite the fact that results may differ, research mostly assumed a closed-economy setting. Based on a HOS model with factor-augmenting technical change and labor-market rigidities, the paper examines the differences of these two subsidization schemes on output and employment. Since both schemes work through different channels, namely the demand versus the supply side, effects differ not only in magnitude. The paper includes a comparative calibration exercise for the case of Germany.

Real Exchange Rates,the Trade Balance and Net Foreign Assets: Long-Run Relationships and Measures of Misalignment

In this paper we estimate equilibrium exchange rates for 23 OECD countries and four less mature economies in a panel data setting. Our empirical analysis demonstrates significant links between the trade balance and net foreign assets, and between real exchange rates and the trade balance, rather than between real exchange rates and net foreign asset, as predicted by the model of Lane and Milessi-Ferretti (2002). Our study indicates that, in terms of the association between real exchange rates and trade balance, there is heterogeneity between the emerging market economies and the OECD countries. Finally, we construct various measures of exchange rate misalignment for all the exchange rates included in our panels.     

Redefining the Human Development Index to Account for Sustainability

Earlier measures of growth like Gross Domestic Product per capita, or even more recent measures like the Human Development Index (HDI), failed to consider the ‘environmental’ aspect of development. Currently, countries that have accepted the sustainability challenge are finding ways to determine if they are making progress in a sustainable way by addressing the environmental aspect of development. This paper attempts to improve the HDI by adding an ‘ecological footprint to total bio-capacity ratio’ as an indicator of environmental resource use. This new index, the Environmentally Stressed Human Development Index (ESHDI) while trying to account for sustainable development, dramatically alters the original HDI rankings of countries. Some ‘high’ and ‘medium’ income countries are enduring excessive environmental stress to sustain economic development.     

Ludwig Von Mises’ Neoclassical Analysis of Dumping

The paper explores similarity in the analysis of dumping by Ludwig von Mises, which he labels as margin monopoly, in Human Action: A Treatise on Economics (1949), and by Joan Robinson in The Economics of Imperfect Competition (1933). Mises, though, does not admit to similarity with Robinson, and five reasons are suggested why he was unwilling to acknowledge Robinson. Robinson’s analysis is neoclassical, and so is that of Mises, which is an anomaly for Mises, an Austrian economist who generally focuses on activity in disequilibrium.     

Do Trade Unions Deteriorate International Competitiveness? Reconciliation of the Discrepancy Between Theory and Practice

Brander and Spencer (Journal of International Economics 24:217–234, 1988) and Mezzetti and Dinopoulos (Journal of International Economics 31:79–100, 1991) provide different theoretical viewpoints on the following issue: Do trade unions deteriorate international competitiveness? Some discrepancies have been found to exist between their arguments and empirical findings. This paper attempts to provide plausible explanations and solutions to reconcile these discrepancies.     

Swedish trade unions and the social democratic party: The formative years

Abstract

The history of labour movements in many countries of the Western world includes a period in which the relationship between the trade-union arm and the political arm undergoes significant change. This formative period is conditioned in an immediate way by the political framework and more generally by the economic and social milieu. In respect of the actors themselves—trade unions and party organisations—latter-day interpreters have frequently regarded developments of union-party relationships as a process in which the unions, to the extent they are successful and true to their character and objectives as trade unions, free themselves from party domination. ¹ The most obvious example is found in the works of the late Professor Selig Perlman, especially his A Theory of the Labor Movement, (New York, 1928). It is recognised here that Perlman did not discuss Swedish developments. The historical fragment which follows is intended to demonstrate that, for the Swedish experience, such an interpretation leaves much to be desired.