Unemployment Insurance and the Business Cycle: What Adjustments are Needed?

During the 2007–2011 economic downturn, the duration that one could collect unemployment insurance (UI) in the United States increased to an unprecedented 99 weeks, and the UI benefit amount increased by $25. This article explores the policy of increasing the generosity of UI during recessions using a model that accounts for the insurance and moral hazard implications of UI as well as the program's impact on job creation. When limited to adjusting the duration of benefits, a more generous UI system is optimal. However, due to UI's negative impact on job creation and the increased cost of providing benefits when unemployment is high, the optimal extension is just 1.3 months. When the government adjusts both the benefit amount and its duration, the optimal policy during downturns is a reduction in the replacement rate. This mitigates the decline in job creation and funds a UI extension of 4.3 months.     

Does Land Rent between Acquaintances Deviate from the Reference Point? Evidence from Rural China

This paper theoretically and empirically investigates whether acquaintance networks influence the deviation of land rent from the reference point advanced by Hart and Moore. The coefficient of variance and the range of land rent are used to represent the degree of deviation from the reference point. Based on village‐level data from the 2015 China Household Finance Survey, the estimated results indicate that land rent between acquaintances is more likely to significantly deviate from the reference point. Although rental transactions are conducted between acquaintances, larger deviations from the reference are also associated with a longer time to close deals. Our analysis using household‐level data further supports our findings, indicating that land rental markets embedded in the acquaintance networks of rural China are in a transition period and have characteristics of both relational and market orientation. The policy makers should introduce more outer village lessees or other market ingredients to increase the voluntary marketization of land rentals inside acquaintance networks.     

Is the Relationship of Wealth Inequality with the Real,Financial and Housing Cycle Country-Specific?

Atlantic Economic Journal - Relying on the methodology of deviation cycle dynamics, we analyze whether the association of wealth inequality measures and the real, financial and housing cycle are...     

Deflation,Productivity Shocks and Gold: Evidence from the 1880–1914 Period

In this paper we examine the sources and impact of deflation on the growth experiences of the four dominant countries on the gold standard in the period 1880–1913: the United States, The United Kingdom, France and Germany. We distinguish between good deflation, (driven by positive aggregate supply shocks) and bad deflation (driven by aggregate demand shocks). We use an empirical Blanchard/Quah model which decomposes the behaviour of prices, output and the money stock into the impact of shocks such as a world price level shock, a domestic supply shock, and domestic demand shocks including a shock to the domestic gold stock. Our key finding is that the European economies were essentially classic in the sense that output was mainly supply driven and that money was neutral even when country specific gold stocks are included. In the United States, however, we observe both good and bad deflation.     

Cheaper and More Haircuts After VAT Cut? Evidence from the Netherlands

We study the effect of the reduction in the VAT rate on hairdresser services from 17.5 to 6% in the Netherlands in January 2000. Following Kosonen (J Public Econ 131:87–100, 2015), we use differences-in-differences to estimate the effects of this reform, with beauty salons as the main control group. In our preferred specification, we find close to full pass-through of the VAT cut into lower prices. However, we find no statistically or economically significant effect on the volume of sales or employment.     

Are the actual and intended sources of financial knowledge the same? Evidence from Japan

The recent prolonged period of low economic growth and low interest rates in Japan demands that Japanese households invest in risky assets to accumulate sufficient retirement savings. In so doing, they acquire financial knowledge on these risky assets, typically from financial experts or salespersons in financial institutions. However, they may not necessarily be content with their current sources of financial knowledge because depending on their stage in the life cycle, they require different types of financial knowledge, usually from a variety of sources. Unfortunately, because of limitations in the data available, few studies have investigated whether the actual and intended sources of financial knowledge are the same. To address this research gap, this paper uses a Japanese household survey from 2010 to 2017, which provides unique information on the actual and intended sources of financial knowledge, and obtains two interesting results. First, a household’s actual sources of financial knowledge typically differ from its intended sources. More specifically, 33 % of households choosing financial institutions and experts and 52 % of households choosing financial institutions as their actual sources have a different intended source. Second, the discrepancy between actual and intended sources appears to relate to household demographic characteristics. Among those households choosing financial institutions and experts as their actual source of financial knowledge, 14 % choosing financial institutions as their intended source tend to have a lower level of financial knowledge and educational attainment. These results suggest that they have some difficulty understanding the advice of financial advisers. Among households choosing financial institutions as their actual source of financial knowledge, 26 % choosing financial institutions and experts as their intended source tend to have a larger amount of financial assets, better financial knowledge, and a preference for investing in risky assets; however, they also tend to be younger. This suggests they might want to obtain financial knowledge from financial experts to purchase risky financial assets as they age. While the study does not provide any causal evidence, the results suggest that understanding the reasons for any discrepancy in the actual and intended sources of financial knowledge may help financial institutions provide better services to these customers.     

What Have Remittances Done to Development? Evidence from the Caribbean Community and Common Market

This paper analyzes the long-run impact of remittances on socio-economic development in the Caribbean Community and Common Market (CARICOM) between 1970 and 2013. We find that remittances have improved the health indicators, reducing infant and child mortality, and food deficit and improving life expectancy, and sanitation and water sources, especially in the rural areas. However, remittance inflows have no significant impact on education and communication infrastructure. Neither do they contribute to any demographic changes.     

Does the high- and new-technology enterprise program promote innovative performance? Evidence from Chinese firms

This study evaluates the unique high- and new-technology enterprise (HNTE) program implemented in China. The program grants a reduced corporate income tax rate to certificated HNTEs. Based on a sample of Chinese listed firms during 2006–2016, we investigate the impact of HNTE certification on firms' R&D intensity and productivity using a combination of the propensity score matching approach and difference-in-differences estimator. The results confirm the overall effectiveness of the program in promoting innovative performance among Chinese listed firms in terms of both R&D intensity and productivity. Such effects are persistent over the valid certification period. However, the overall effects mask substantial heterogeneity across different types of certification users. Positive effects are mainly driven by repeatedly certificated firms, while no significant effects are found for firms acquiring their HNTE certificate for the first time. By distinguishing one-time and highly qualified certifications, we reveal the potential existence of fraudulent HNTEs. These results imply that the effectiveness of government programs in supporting innovation could be improved through a more thorough policy design and implementation.     

Do men and women discriminate against women for the same reason? Evidence from China

In this study, we examine whether men and women form gender discrimination for the same reason. To do that, we build an experimental Chinese labor market in which employers evaluate the productivity of workers who perform a real-effort task. Before evaluation, the employer observes the worker’s personal and group information. The personal information contains gender identity and a signal of productivity. The group information reveals the productivity distributions of some other male and female workers who do not differ in average productivity. However, it shows more male workers at the very top productivity levels and more female workers at the very bottom productivity levels in one treatment than in the other. According to the belief-based theory, there will be a greater degree of discrimination against female workers in the former. We find that, however, only male employers’ evaluations are well predicted by this approach. Female employers behave oppositely: their degree of gender discrimination is smaller in the treatment emphasizing men’s advantage in the tails of the productivity distributions. To explain female employers’ evaluations, we adopt the preference-based approach. Our findings suggest that employers of different genders can have different motivations for gender discrimination, and thus call attention to the theoretical foundation of gender discrimination and policy measures aimed at reducing gender discrimination.     

What Does the `Show Case' Show? Evidence of and Lessons from Adjustment in Uganda

Uganda is often seen as an African show case for the beneficial effects of structural adjustment. High growth rates have been combined with a high degree of “ownership” of the reforms. At the same time, critics have pointed to continued aid dependence, and limited growth of the important agricultural export sector. The contribution of this paper to this debate is three-fold. First, “ownership” has not always been exemplary and is still fragile in some respects. Second, although aid has indeed been important for bringing about high growth, aid dependence has diminished over time. Third, there have been real supply responses from the agricultural export sector.     

How Important Is Trade and Foreign Ownership in Closing the Technology Gap? Evidence from Estonia and Slovenia

This paper focuses on the impact that the different methods of privatization implemented in Estonia and Slovenia might have had on the pattern of technology transfer to domestic firms through either FDI or international trade. We develop an empirical model that looks at three aspects of the problem: the importance of direct and indirect effects of FDI; the role of local absorptive capacity; and the role of trade in technology transfer. The study finds that the method of privatization does influence the way a firm obtains technology from abroad: Estonia, which attracted a considerable amount of FDI through its privatization programme, used this channel to gain direct access to global markets for technology, while Slovenia discouraged sales of state enterprises to multinational firms and inclined domestic firms to use trade flows to gain access to these markets. JEL no. D24, F14     

Is the relationship between foreign direct investment and trade different across developed and developing countries? Evidence from Korea

Empirical studies that pool data from developed and developing countries may conflate the separate roles played. The pooled coefficient estimates may significantly misrepresent the true relationships. This paper analyses the impact of outward and inward foreign direct investment (FDI) flows between Korea and developed and developing countries on Korean exports in 12 manufacturing sectors over the 1988–2006 period. The evidence suggests that the outward FDI to developing countries is likely to increase Korean exports to those countries than FDI to developed countries likely to increase exports to developed countries. Thus, pooling investment flows can lead to incorrect inferences.     

Does foreign direct investment cause long run economic growth? Evidence from the Latin American and the Caribbean countries

The empirical evidence about the temporal precedence between foreign direct investment (FDI) and economic growth in open developing economies is mixed. In this research effort, we explored the FDI-growth nexus for 16 developing countries of Latin American and the Caribbean countries during the last three decades, a period in which many of these countries introduced various economic and financial reforms. As a departure from many previous studies, the current analysis uses the Granger noncausality test procedure recently developed by Toda and Yamamoto (J Econ 66:225–250, 1995), and Dolado and Lutkepohl (Econ Rev 15:369–386, 1996)–TYDL. Our results suggest that the null hypothesis that ‘FDI does not Granger cause economic growth’ is rejected for all countries except Dominican Republic, Trinidad and Tobago, and Jamaica. There is also evidence of unidirectional causality from growth to FDI for all countries except Bolivia, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala, and Jamaica. We found bidirectional causality for Argentina, Brazil, Mexico, Peru and Venezuela.     

Is There any Threshold in the Relationship Between Mother's Education and Child Health? Evidence from Nigeria

The literature on mother's education and child health casually observes some nonlinearities and also a threshold in the relationship. Even though this nonlinearity or threshold has significant bearing on policy matters such as quality of education, any rigorous attempt to address this issue is missing in the literature. With height for age z‐score as a proxy for long‐run child health capital, regression results reveal that there are significant effects of mother's education on child health if mothers do not continue past primary school. Rather, poor quality of education at the primary level, especially literacy, is argued to have given rise to this threshold. It indicates that greater public investment in improving quality of education at the primary level is essential for maximizing the nonmarket outcomes of girls’ education in developing countries.     

Reflections on the Business History Tradition: Where has it Come from and Where is it Going to?

The question of what constitutes the discipline of business history has been the focus of ongoing debate for several decades. The output of business history researchers is diverse ranging from company histories to the application of theoretical frameworks used to interpret the many facets of business development. This article, in introducing this special edition of the Australian Economic History Review, provides an overview of the development of the business history discipline and the contribution it has made to understanding the operation of business enterprises and the markets in which they operate.     

Does Public Country-by-Country Reporting Deter Tax Avoidance and Income Shifting? Evidence from the European Banking Industry*

In this study, we examine the effect of increased tax transparency on the tax planning behavior of European banks. In 2014, the European Union introduced public country-by-country reporting requirements to the banking industry. Treating this new requirement as an exogenous shock, we find limited evidence consistent with a decline in income shifting by the banks' financial affiliates in the post-adoption period (starting from 2015). We do not, however, find robust evidence of a significant change in the consolidated book effective tax rates among the affected banks. Our findings suggest that increased transparency from public country-by-country reporting can deter tax-motivated income shifting but that it did not appear to materially influence the banks' overall tax avoidance. Our findings have policy implications for the ongoing debate between the European Parliament, the Organisation for Economic Co-operation and Development, and accounting standard-setting bodies on whether to require multinationals to publish country-by-country reports.