FORMATION AND DEVELOPMENT OF THE WELFARE STATE IN THE REPUBLIC OF KOREA: PROCESS OF REFORM OF THE PUBLIC ASSISTANCE SYSTEM

The legal framework for social security in the Republic of Korea began to be formed in the early 1960s (the first period) and further progress was made during the process of democratization in the 1980s (the second period). However, it remained a “top‐down” residual system, preserving conservative elements. With the constitutional lawsuit over the right to life in 1994 as a turning point, however, there was a major shift to a universal system, supported by “bottom‐up” efforts through petitions to the National Assembly and legislation by Assembly members. This led to the enactment of the Framework Act on Social Security (1995), the National Basic Livelihood Security Act (1999) and other measures (the third period). This paper attempts to analyze the Korean‐style welfare state by tracking these institutional changes as well as the main actors.     

Sequential Solutions to Capacity‐Planning and Pricing Decisions*

Ideally, firms should jointly solve capacity‐planning and product‐pricing problems. In practice, informational limitations and cognitive bounds may force firms to sequentially solve the two problems. For example, a firm may plan capacity using limited demand information, and update prices subsequently once additional demand information becomes available. In a simple setting, we characterize the economic loss due to such sequential planning. We use simulation experiments to assess the extent of this loss in more complex settings. We find a relatively low loss if the firm plans for capacity using limited demand information and subsequently adjusts product prices to reflect realized market conditions. However, even “reasonable” restrictions on the subsequent price adjustment (e.g., constraining adjusted prices to always exceed full cost) lead to significant economic loss.     

Teaching Preparation and Placement in “Non‐top‐tier” Ph.D. Programs

In a recent article, Jacobson (2015) provides an invaluable economics job market guide for economics Ph.D. candidates from “non‐top‐tier” programs in the United States. Her treatment is detailed and, to a large extent, thorough. However, Jacobson fails to discuss the development of effective lead teaching experience in graduate school as a (potentially central) aspect of job market preparation. In the present comment, we develop and summarize a job posting and placement data set that focuses on Ph.D. candidates from non‐top‐tier programs. The data strongly suggests that the development of lead teaching experience in graduate school, rather than an optional line on one's vita, is an often pivotal element of realized job placement for Ph.D. candidates of non‐top‐tier programs. These findings corroborate with List's (2000) finding that, “a candidate's teaching portfolio was highly influential in the academic market” (p. 197). We also discuss the acquisition of lead teaching experience and benefits of early teaching experience that may extend beyond first job placement.     

保守主义思想回归与特朗普政府的网络安全战略调整

特朗普执政后,保守主义思想的回归引领了美国网络安全战略的转向。“美国优先”和传统共和党保守主义两种思想自上而下的调整与“黑客干预大选”事件自下而上的驱动共同推动形成了保守主义网络安全战略。联邦政府各部门并以此为指导制定了“全政府”的网络安全政策。主要表现为网络军事力量发展更加激进,并且试图突破“主权”限制,通过“持续交手”“前置防御”将行动空间拓展到他国主权范围;网络外交地位明显弱化,美国与主要大国之间网络外交陷入低谷,并消极对待网络空间国际治理进程;国土安全防御一改过去“虚大于实”的状况,定位得到了明显提升;信息与通信技术政策成为网络安全战略的新领域,引发了大国之间围绕供应链安全的激烈博弈。保守主义网络安全战略调整能否获得预期的战略收益还很难说,但一系列负面效应已经开始显现,单边主义让美国陷入了双重网络安全困境,进攻性网络行动增加了大国冲突风险。对外交和网络空间国际治理地位的弱化则加剧了国际秩序失范。作者旨在从特朗普政府保守主义网络安全战略调整入手,通过分析其背后的保守主义战略思想源流,并结合网络军事、外交、国土安全、信息与通信技术政策等领域的实际政策调整进行论证,对特朗普政府网络安全战略调整的影响进行评估。     

An Economic Analysis of Audit and Nonaudit Services: The Trade‐off between Competition Crossovers and Knowledge Spillovers*

In this paper, I present a model in which both markets for audit services and nonaudit services (NAS) are oligopolistic. Accounting firms providing both audit services and NAS will employ oligopolistic competition in each of these markets. In addition to auditors' gaining “knowledge spillovers” from auditing to consulting or vice versa, oligopolistic competition in one market will influence the counterpart in the other market ‐ what I call “competition crossovers”. Although scope economies due to knowledge spillovers (for example, cost savings) are always beneficial to auditors, such benefits can entice accounting firms to adopt strategies (for example, price reductions) to compete aggressively in the audit market so that some, or all, firms become worse off. A trade‐off arises between these two economic forces in the two oligopolistic markets. Given the trade‐off between competition crossovers and knowledge spillovers, accounting firms may not reduce their audit prices, even though supplying NAS enables firms to decrease auditing costs — a nontrivial impact of oligopolistic competition in two markets on audit pricing. The empirical implication of my results is that because of competition‐crossover effects between the auditing and consulting service markets, finding empirical evidence for knowledge‐spillover benefits is likely to be difficult. Control variables for “audit‐market concentration” concerned with competition‐crossover effects and “auditor expertise” concerned with knowledge‐spillover benefits should be included in audit‐fee regressions to increase the power of empirical tests. With regard to policy implications, my analyses help explain the impact of the Sarbanes‐Oxley Act on “market segmentation” and, hence, the profitability of accounting firms.     

Labor Market Inefficiency and Economic Restructuring: Evidence from Cross-Sectoral Data

The U.S. business cycle that began with the recession of 2001 featured both a “jobless recovery” and substantial structural change, leading some to ponder the “Sectoral Shift Hypothesis,” whereby restructuring purportedly creates labor market inefficiencies. Previous studies have analyzed aggregate time series, but new data permit a cross-sectoral comparison between restructuring and increased labor market inefficiency (as measured from sector Beveridge curves). This paper develops an estimation method and quantifies substantial increases in inefficiency during this period. However, contrary to the hypothesis, the increased inefficiency bears little relationship to the extent of sectors' structural change.     

An economic analysis of transplant organs: A comment and extension

The recent paper by B-R should be applauded for bringing to light an extremely important and controversial public policy issue. The authors of this note have been students of antitrust, regulation, and related microeconomic policy issues for over fifteen years. Yet, they can safely say that they have never encountered a single policy that is more at odds with the public welfare than is the current organ procurement policy. As economists, it is easy to describe and analyze the tremendous inefficiencies, waste, and market distortions created by the current altruistic system. But as human beings, they authors are incensed at the unnecessary suffering and loss of life that is caused by the current policy and is so poorly revealed in formal diagrams. Hopefully, B-R's paper, along with this corrective note, will help to spawn a more rational public policy toward cadaveric organ procurement.     

Determinants of Managerial Earnings Guidance Prior to Regulation Fair Disclosure and Bias in Analysts' Earnings Forecasts*

Prior to Regulation Fair Disclosure (“Reg FD”), some management privately guided analyst earnings estimates, often through detailed reviews of analysts' earnings models. In this paper I use proprietary survey data from the National Investor Relations Institute to identify firms that reviewed analysts' earnings models prior to Reg FD and those that did not. Under the maintained assumption that firms conducting reviews guided analysts' earnings forecasts, I document firm characteristics associated with the decision to provide private earnings guidance. Then I document the characteristics of “guided” versus “unguided” analyst earnings forecasts. Findings demonstrate an association between several firm characteristics and guidance practices: managers are more likely to review analyst earnings models when the firm's stock is highly followed by analysts and largely held by institutions, when the firm's market‐to‐book ratio is high, and its earnings are important to valuation but hard to predict because its business is complex. A comparison of guided and unguided quarterly forecasts indicates that guided analyst estimates are more accurate, but also more frequently pessimistic. An examination of analysts' annual earnings forecasts over the fiscal year does not distinguish between guidance and no‐guidance firms; both experience a “walk‐down” in annual estimates. To distinguish between guidance and no‐guidance firms, one must examine quarterly earnings news: unguided analysts walk down their annual estimates when the majority of the quarterly earnings news is negative; guided analysts walk down their annual estimates even though the majority of the quarterly earnings news is positive.     

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.     

China＇s Economy in 2007/2008： Coping with Problems of Runaway Growth

Fuelled by high domestic investment and rapid export expansion, China ＂s economy grew by ll.4 pereent in 2007, the highest increase since 1994 and the fifth eonseeutive year of double-digit growth. Such spectacular growth performance is unprecedented in the world＇s economic history. However, the Chinese Government is again worried about a possible ＂hard landing＂for the economy, as no economy can sustain very strong growth for extremely long period without overheating. Cracks in China ＂s economy are indeed emerging. The eonsumer priee index shot up to 6.9percent in November 2007, the highest level in a decade, with the annual inflation for 2007 rising to 4.S pereent, well above the government＇s ＂comfort level＂ of 3 percent. This prompted China＇s top leadership to declare that reducing economic overheating and curbing inflation would be the top poliey priorities for 2008. To contain such cost-push inflation, the government has to tackle its root causes, such as excessive liquidity, which is caused by the undervaluation of the renminbi, which in turn is attributable to China＇s chronic external and internal maeroeeonomie imbalances~ High growth is likely to continue in 2008, at around l O pereent, with inflation of S-6 pereent expected, despite the anticipated tighter maeroeeonomie control measures and the more troubled external economic environment （e.g. the expected US economic slowdown）. Regardless, China ＂s fundamental problems associated with runaway growth will largely remain. In addition, if the US economy slips into a serious recession, the Chinese economy will not be able to deeouple from it and escape unscathed.     

“高端服务”供给行为的经济学分析

公共利益的实现要允许市场行为的介入,“高端服务”的供给行为恰是价格机制甄选作用的具体体现。“高端服务”存在着3个层次的效率:稀缺资源配置效率的改进、公共产品供给的技术效率和公共服务的分配效率。因此,提供“高端服务”是一种经济理性行为,并未挤占公共利益。     

The external and domestic side of macroeconomic adjustment in China

This paper sheds new light on the external and domestic dimension of China’s exchange rate policy. It presents an open-economy model to analyse the macroeconomic adjustment process in China under both flexible and fixed exchange rate regimes. The model-based results indicate that persistent current account surpluses in China cannot be rationalized, under general circumstances, by the occurrence of permanent technology or labour supply shocks. As a result, to understand the macroeconomic adjustment process in China it is necessary to mimic the effects of potential inefficiencies, which induce the subdued response of domestic absorption to permanent income shocks, thereby causing the observed positive unconditional correlation of the trade balance and output. The paper argues that these inefficiencies can be potentially seen as a by-product of the fixed exchange rate regime, and can be approximated by a stochastic tax on domestic consumption or a time-varying transaction cost technology related to money holdings. Our results indicate that a fixed exchange rate regime with financial market distortions, as defined above, might induce negative effects on GDP growth in the medium term compared with a more flexible exchange rate regime.     

Black-White Inequality in Reading and Math Across K-12 Schooling: A Synthetic Cohort Perspective

While much has been written on the racial gap in achievement, few national studies have assessed the gap’s trajectory over K-12 schooling. The reason for this is understandable—most national data sets do not contain respondent information for this entire educational period. I utilize survey data from three national data sets containing White and Black students to document the trajectory of reading and math inequality between school entry and the end of high school. An attempt to clarify these observed patterns is made by assessing changes in the score distributions of these students across grade level, and examining how Black score distributions would fare if held to the White score distributions. Findings suggest that efforts to equalize achievement disparities must not only focus on “bringing the bottom up”, but also on keeping the top Black achievers on pace with the top White achievers across grade level.     

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.     

论推进农业工业化的制度创新

农业工业化是农业生产逐渐市场化、规模化和深度开发渐次高度化的一个过程,是一种自下而上的、内生的制度变迁。制度的合理性将导致农业工业化的制度创新。     

The Entrepreneurial Market Process—An Exposition

The title of this article embraces three implicit, distinct claims: (i) that market phenomena are governed by definite chains of cause and effect, (ii) that these chains of cause and effect constitute and generate a definite process, and (iii) that what drives this systematic process is (not the pattern of mutual constraints which reflect the maximizing decisions of market participants, but) the outside‐the‐box, “daring,” hunches of entrepreneurs. The first of these three claims are fully consistent with the central thrust of economic science for over two centuries. The second of these claims will require us to clarify what we mean by “process.” The third of these claims challenges, as we shall see, the conventional wisdom of mainstream micro‐economic thought of the past century.     

Deriving the new quantity equation: an approach for a closed and an open economy

This theoretical contribution shows a simple way in which the quantity equation can be derived as a long-term equilibrium solution for the case of a closed economy and an open economy, respectively. It is shown first for the case of a closed economy which parameters stand behind “velocity” and that indeed there are arguments why velocity should be constant over time – assuming a specific parameter set of the goods market. It is noteworthy that the quantity equation can be derived both in a demand-side context and in a long run supply-side approach. Moreover, a new derivation is presented for the case of an open economy and it is shown that trade as well as foreign direct investment should be expected to have an influence on the price level and the inflation rate, respectively. Finally, the analysis suggests that financial market activities should have an impact on the price level.I gratefully acknowledge technical support by Murat Ismail and David Hanrahan. Moreover I appreciate discussions with Jens Perret (Schumpeter School of Business and Economics) and Thomas Gries, University of Paderborn. The usual disclaimer applies.     

Meso-Economic Filters Along the Policy Chain: Understanding the Links Between Policy Reforms and Rural Poverty in Latin America

The paper clarifies the “meso-economy” concept by defining it as comprising both the market mechanisms and administrative procedures through which policy decisions and market signals trickle down to the household level. Three main bodies of literature are reviewed: the policy-oriented literature in which the meso-economy was initially considered; the transaction cost approach analyzing market and policy failures, and the “micro-economy” level of agricultural household models. The paper develops a synthesis of macro-, meso- and micro-economic perspectives, which focuses on the roles played by three levels of filters intervening along the policy chain. Implications for policy and research are drawn.     

Labor Market Distortions in Côte d'Ivoire: Analyses of Employer‐Employee Data from the Manufacturing Sector*

Abstract: This paper investigates the extent and nature of distortions in the labor market in the Republic of Côte d'Ivoire by using quantile regression analysis on employer‐employee data from the manufacturing sector. We found that the labor markets in Côte d'Ivoire do not seem to be much distorted. Unions may influence employment through tenure but do not seem to influence wages directly except for vulnerable minorities that seem protected by unions. Establishment‐size wage effects are pronounced and highest for white‐collar workers. This may be explained by the efficiency wage theory, so that, even in the absence of unions, segmentation and inefficiencies will still be present as long as firms seek to retain their employees by paying wages above the market clearing level. The inefficiency arising from establishment‐size wage effects can be mitigated by education. Furthermore, the premium to education is found highly significantly positive only for higher education, and not for basic education, indicating that educational policies should also focus on higher education.     

Development of the township‐village enterprises and the re‐instttutionalization of the family in China*

Small farms, which have maintained flexibility throughout history, have long existed in China and the so‐called “family household system as a cooperative organization” comprehensively playing a diverse socio‐economic function has developed. In addition, trust derived from a unique environment based on a village structure where a few families dwell not to mention “everyone knows each other well” has also become institutionalized. In this setting, a complex and multi‐dimensional property rights could have developed. Moreover, the Confucian order, historically institutionalized in China, has differentiated the respective roles of the public from the private and the center from the local through a network intertwined by relationships (guanxi‐based network), allowing them to be relatively autonomous from each other (embedded autonomy). This institutional tradition of the Chinese society has re‐emerged with the coming of the reform age. The reform reintroduced the revival of the traditional family household, as a cooperative unit for the insiders and, at the same time, as a competitive unit against the outsiders; and its renewed close relationship with the local governments have given birth to the township‐village enterprises. Based on reforms of this nature, which have occurred from the bottom and approved by the center state ex post, China was able to experience the implementation a new form of transition to capitalism, i.e., rural industrialization. In this process, China's guana‐based township‐village enterprises were able to secure the fitness to react to market competition despite their collective ownership nature.