Were there no returns to education in the USSR? Estimates from Soviet-period household data

The relation between wages and schooling in the USSR is studied, by estimating log–linear wage-equations for a sample of a Russian city in 1989. Estimates, made separately for men and women, show that there were rewards to education, contrary to claims by many Soviet and Western scholars. The low wages of some professionals, relative to skilled workers, were partly caused by gender differentials, partly by excess demand for manual labour. In addition, private costs of schooling were low and there were important non-monetary incentives connected with higher education.     

Are you running out of time?

In a perfect world we would all have a written daily plan of action that would be inviolate. Every task, every action, every conversation would be precisely timed to move us toward our ultimate personal goals. No one would trespass on our sacred schedule. But this is most definitely not a perfect world.     

How does the sensitivity of consumption to income vary over time? International evidence

This paper studies how the sensitivity of consumption to income has changed over time as the degree of financial integration has risen. In standard theory, greater financial integration facilitates international borrowing and lending, helping to reduce the sensitivity of consumption growth to fluctuations in income. We examine the empirical validity of this prediction using an array of indicators of financial integration for a large sample of advanced and developing countries over the period 1960–2011. We report two main results. First, the sensitivity of consumption to income has declined over time as the degree of financial integration has risen. The decline has been more pronounced in advanced economies than in developing ones. Second, our regression analysis indicates that a higher degree of financial integration is associated with a lower sensitivity of consumption to income. This finding is robust to the use of a wide range of empirical specifications, country-specific characteristics and other controls, such as interest rates and outcome-based measures of financial integration. We also discuss other potential sources of the temporal changes in the sensitivity of consumption to income.     

Predictable returns and asset allocation: Should a skeptical investor time the market?

We investigate optimal portfolio choice for an investor who is skeptical about the degree to which excess returns are predictable. Skepticism is modeled as an informative prior over the R²$R^2$ of the predictive regression. We find that the evidence is sufficient to convince even an investor with a highly skeptical prior to vary his portfolio on the basis of the dividend-price ratio and the yield spread. The resulting weights are less volatile and deliver superior out-of-sample performance as compared to the weights implied by an entirely model-based or data-based view.     

Why do merger premiums vary across industries and over time?

We identify time-varying industry and macroeconomic factors that explain the observed variation in takeover premiums over time. Results support our hypotheses that some industry and economic factors can increase the growth prospects in an industry, which boosts expected synergies and/or demand for the target firm, and therefore increases the merger premiums. Merger premiums are higher when the target's corresponding industry experiences higher growth, has more research and development (a proxy for expected growth), and has less dispersion in performance among firms within the industry. Merger premiums are also positively related to capital liquidity, which can enhance economic growth and competition for target firms, and positively related to volatility in economic growth, which affect merger waves and the demand for target firms over time.     

Are betting returns a useful measure of accuracy in (sports) forecasting?

In an economic context, forecasting models are judged in terms not only of accuracy, but also of profitability. The present paper analyses the counterintuitive relationship between accuracy and profitability in probabilistic (sports) forecasts in relation to betting markets. By making use of theoretical considerations, a simulation model, and real-world datasets from three different sports, we demonstrate the possibility of systematically or randomly generating positive betting returns in the absence of a superior model accuracy. The results have methodological implications for sports forecasting and other domains related to betting markets. Betting returns should not be treated as a valid measure of model accuracy, even though they can be regarded as an adequate measure of profitability. Hence, an improved predictive performance might be achieved by carefully considering the roles of both accuracy and profitability when designing models, or, more specifically, when assessing the in-sample fit of data and evaluating out-of-sample forecasting performances.     

Are Sunk Costs a Barrier to Entry?

The received wisdom is that sunk costs create a barrier to entry—if entry fails, then the entrant, unable to recover sunk costs, incurs greater losses. In a strategic context where an incumbent may prey on the entrant, sunk entry costs have a countervailing effect: they may effectively commit the entrant to stay in the market. By providing the entrant with commitment power, sunk investments may soften the reactions of incumbents. The net effect may imply that entry is more profitable when sunk costs are greater.     

Are emergers a threat to the global recovery?

Last year the emergers led the global recovery with the advanced economies lagging, but in recent months there has been a range of positive indicators across the advanced economies, most notably the PMI surveys, with the US non‐manufacturing index reaching an eight‐year high in August and the UK composite index recording its highest ever reading in the same month. By contrast, the indicators from emerging economies have been more mixed and while some of the Chinese data have been better in recent months, the PMI surveys point to stagnation or contraction across a number of other emergers. While emerging economies will continue to make a large contribution to world growth, the global upturn is now being driven by strengthening domestic demand in the advanced economies.…     

Identifying the best companies for leaders: does it lead to higher returns?

Since 2002, Chief Executive magazine, in conjunction with the Hay Group, has published a list of the Top 20 Companies for Leaders. In this paper, we examine the performance of those companies listed as being the best for leaders. We examine the announcement impact on share price associated with the press releases for firms included in the list and holding period returns between subsequent survey releases. While we generally do not find a significant difference in the performance of the Best Leader sample compared with either the market or the matched sample, we do find that the Best Leader sample outperforms other benchmarks on a raw and risk‐adjusted basis during times of high market volatility. Copyright © 2009 John Wiley & Sons, Ltd.     

Are Suburban Firms More Likely to Discriminate against African-Americans?

This paper assesses whether African-Americans are more likely to experience employment discrimination in the suburbs relative to the central city. We compare central city–suburban differences in racial hiring outcomes for firms where whites are in charge of hiring to the comparable difference for firms where blacks are in charge of hiring. Both suburban black and white employers hire fewer blacks than their central-city counterparts. This geographic gap among black employers is at least as large as that of white employers. Assuming no discrimination by black employers in any location, this implies that the probability of experiencing discrimination does not vary over space. Black firms, however, are substantially more likely to hire black workers regardless of location.     

Are specific skills an obstacle to labor market adjustment?

This paper shows that specialized education reduces workers’ mobility and hence their ability to cope with economic changes. We illustrate this point using labor force data from two countries having experienced important macroeconomic turbulence; a large economy with rigid labor markets, Poland, and a small open economy with increased flexibility, Estonia. We find that holding a vocational degree is associated with much longer unemployment duration spells and higher likelihood of leaving activity for older workers. We then build a theoretical framework in which young agents’ careers are heavily determined by the type of initial education, and analyze the transition to a new steady-state after a sectoral demand shift. Quantitative exercises suggest that the over-specialization of the labor force in Poland led to much higher and persistent unemployment compared to Estonia during the period of EU enlargement. Traditional labor market institutions (wage rigidity and employment protection) lead to an increase of the unemployment gap, but to a lesser extent.     

Measures to tame credit growth: Are they effective?

This paper focuses on policy measures taken to curb bank credit growth in the private sector in the pre-crisis period 2003–2007. Our analysis is based on an original survey conducted in 2010 on eleven central banks in Central and Eastern Europe (CEE). The findings reveal substantial policy intervention: a total of 82 measures were implemented in CEE during the period considered. The paper presents a panel data analysis of the effectiveness of the policy measures adopted in the region. The overall results indicate that certain measures – particularly asset classification and provisioning rules and loan eligibility criteria – might have been effective in taming bank credit growth, especially if applied in the context of more general policy measures featuring a combination of various instruments. However, in countries in which the authorities managed to somewhat decrease the flows of bank credit into the economy, the measures were often circumvented via direct, cross-border credit from foreign banks and credit provided by domestic, non-bank financial companies.     

Female participation in parliament. Are we ever going to converge to Scandinavia?

Despite the fact that female political participation has been steadily growing over time, women’s representation in politics is substantially lower than their proportion in society. In this paper, we investigate the determinants of women’s representation using a GMM system estimation to address the possible endogeneity. We employ a unique dataset that covers data for 130 countries from 1972 to 2005 in 7 different geographical regions to estimate a dynamic model for women’s representation and calculate each region’s steady state. In general, we find that the steady state values are above each region’s current percentage of women in parliament; however, without changing other variables, no region significantly increases the percentage of women in parliament. Moreover, we find that 66–87% of the gap between each region’s steady state with Scandinavia is explained by female secondary education enrollment, labor force participation, and political and economic rights.     

What drives returns to euro area housing? Evidence from a dynamic dividend–discount model

We apply a dynamic dividend–discount model to analyse housing returns for eight euro area countries comprising over 90% of euro area GDP, both individually and as a panel. A vector autoregressive model (VAR) is estimated for four variables – excess return to housing, rents, the real interest rate and real disposable per capita income – using quarterly data over the period 1978–2009. This empirical investigation – which allows for a decomposition of house price movements into movements in rent (cash-flow) and expected return news components – indicates that the bulk of the variability of euro area house price movements can be attributed to movements in fundamentals. There remains nonetheless an important but less sizeable influence of market-wide (or expected-return) variations in house prices. Country-specific estimation indicates considerable heterogeneity around the euro area result, both for what concerns long-term impacts and dynamics. Notably, changes in expected returns play a relatively strong role in the house prices of Ireland and Spain.     

Are risk disclosures an effective tool to increase firm value?

The objective of this paper is to test the effect of risk disclosures on firm value. The results show that the disclosure of information on risks is positively associated with the value of a firm. In addition, our findings highlight that this association is mediated by corporate reputation, which improves for enhanced risk disclosure practices. This evidence is particularly important to understand the usefulness of the disclosure of information on risks in the dialogue between a firm and its stakeholders. Managers and regulators can better understand the consequences of the communication of information on risks.     

Does market attention affect Bitcoin returns and volatility?

Decisions in Economics and Finance - In this paper, we analyze the relative impact of attention measures either on the mean or on the variance of Bitcoin returns by fitting nonlinear econometric...     

How quantitative is education?

The quantitative aspects of two general subjects in education are examined and discussed. They are mass or standardized testing and teaching ability. Questions of whether each of these subjects is quantitative in some sense and the consequences of the findings are discussed and explored. On the basis of the exposition presented in the paper, the conclusion is reached that: (a) the quantitative aspects of testing are such that the consequences of testing can be evaluated; (b) one is forced to be much less sanguine about the possibility of listing the consequences associated with an evaluation of teaching ability.     

Does bank capitalization matter for bank stock returns?

We examine US bank capitalization and its association with bank stock returns, and find that the book- and market-based capital ratios show different patterns. Fama-MacBeth regressions and portfolio analyses suggest that banks’ market-based capital ratios are negatively associated with banks’ stock returns during the (tranquil) 1994–2007 period while book-based capital ratios are positively associated with banks’ stock returns during the (turbulent) 2008–2014 period. These results suggest that the effect of bank capitalization on bank stock returns depends on the capital measure used and the period considered.