Why do low-educated workers invest less in further training?

Several studies document that low-educated workers participate less often in further training than high-educated workers. This article investigates two possible explanations: low-educated workers invest less in training because of (1) the lower economic returns to these investments or (2) their lower willingness to participate in training. Controlling for unobserved heterogeneity, we find that the economic returns to training for low-educated workers are positive and not significantly different from those for high-educated workers. However, low-educated workers are significantly less willing to participate in training. We show that this lesser willingness to train is driven by economic preferences, and personality traits.     

Why is U.S. direct investment in China so small?

While the United States is the largest source of foreign direct investment (FDI) in the world, and China is the largest FDI recipient among developing countries, U.S. direct investment (USDI) in China has been surprisingly small. This article investigates the determinants of USDI through a relative-demand model with time-series data. Evidence presented in this article indicates that the small USDI cannot be fully appreciated without understanding differences between USDI and Hong Kong direct investment (HKDI), the latter being the dominant source of FDI in China. Empirical results suggest that the USDI in China was primarily motivated by market access and that the HKDI was export oriented. The small USDI thus is a result of U.S. investors' preference for market access and China's export-promotion FDI regime, along with the troubled Sino-U.S. relations and political instabilities in China.     

Natural or unnatural selection? The end of lending relationships for small businesses

We investigate the situation where small business borrowers and banks end their lending relationships. If credit allocation is efficient, banks terminate their relationships with risky borrowers. Alternatively, small business borrowers are more likely to end their relationships when they have poor investment opportunities and do not require borrowed funds. However, if the soft budget constraints of banks or credit crunches are a significant problem, banks are likely to continue their relationships with risky firms or end their relationships with nonrisky firms, which is representative of an unnatural credit allocation. Using Japanese firm-level data, we show empirically that these relationships end naturally, with natural credit allocation supported even during the recent global financial crisis.     

Does Gibrat's Law hold among young,small firms?

According to Gibrat's Law of Proportionate Effect, the growth rate of a given firm is independent of its size at the beginning of the examined period. Aimed at extending this line of investigation, the present paper uses quantile regression techniques to test whether Gibrat's Law holds for new entrants in a given industry: that is for new small firms in the early stage of their life cycle. The main finding is that for some selected industries in Italian manufacturing Gibrat's Law fails to hold in the years immediately following start-up, when smaller firms have to rush in order to achieve a size large enough to enhance their likelihood of survival. Conversely, in subsequent years the patterns of growth of new smaller firms do not differ significantly from those of larger entrants, and the Law therefore cannot be rejected.JEL Classification: L11, L60Previous versions of this paper were presented at the 27th Annual EARIE Conference (Lausanne, 7-10 September 2000) and at seminars held between 2000 and 2003 at the Economics Department of Harvard University, the Catholic University of Milan, the University of Ferrara, the University of Bologna, the Bank of Italy, and Athens University of Economics & Business. We would like to thank Carlo Bianchi, Giuseppe Colangelo, Giovanni Dosi, Steven Klepper (Editor), Stephen Martin, Ariel Pakes, Aman Ullah and, in particular, Helen Louri and two anonymous referees for their valuable comments on earlier drafts. Financial support from MIUR (Year 2000; protocol #MM13038538_001; project leader: E. Santarelli) is gratefully acknowledged.Correspondence to: E. Santarelly     

Why culture in economics?

This article responds to the points raised by Deirdre McCloskey, Emily Chamlee-Wright, Rob Garnett and Solomon Stein in the symposium on my book Understanding the Culture of Markets (Routledge 2013).     

Should Portuguese economy invest in defense spending? A revisit

In this paper, we investigate the causal relationship between defense spending and economic growth in Portugal during the period of 1980–2010. We apply the ARDL bounds testing approach in the presence of structural break. The ARDL–ECM estimation results disclose that the relations between defense spending, capital, labor and economic growth are country specific. The interesting finding of this study is that there is a U-shaped relationship that exists between defense spending and economic growth. In addition, the unidirectional causality from defense spending to economic growth exists in the case of Portugal. Therefore, defense spending can play an important role in economic development of Portugal.     

Why does monetary policy respond to the real exchange rate in small open economies? A Bayesian perspective

To estimate how monetary policy works in small open economies, we build a dynamic stochastic general equilibrium model that incorporates the basic features of these economies. We conclude that the monetary policy in a group of small open economies (including Australia, Chile, Colombia, Peru, and New Zealand) is rather similar to that observed in closed economies. Our results also indicate, however, that there are strong differences due to the shocks from the international financial markets (mainly risk premium shocks). These differences explain most of the variability of the real exchange rate, which has important reallocation effects in the short run. Our results are consistent with an old idea from the Mundell–Fleming model: namely, a real depreciation to confront a risk premium shock is expansive or procyclical, in contradiction to the predictions of the balance sheet effect, the J curve effect, and the introduction of working capital into RBC models. In line with this last result, we have strong evidence that only in one of the five countries analyzed in this study does not intervene the real exchange rate, the case of New Zealand.     

Sustainability and Stability? Australian Fiscal Policy in the Twentieth Century

This paper examines data on Australian fiscal policy going back to federation to answer two questions. First, has the conduct of Australian fiscal policy been consistent with the government's intertemporal budget constraint? Second, have there been major structural changes in the conduct of Australian fiscal policy and if so, when did these changes occur?     

Policies to stimulate growth: should we invest in health or education?

Empirical studies in the literature on economic growth have focused on the affect of education and yet Knowles and Owen (1995, 1997) found health, proxied by life expectancy, to be highly statistically significant with education having a modest role. This study extends their model and employs variables that are more conducive to policy formulation: calorific intake and school enrolment ratios. Results suggest that reducing undernutrition would only make a modest contribution to economic growth while increasing enrolment ratios, especially secondary, has a positive and more significant effect. Policies to increase economic growth should favour investments in education over health.     

Why Are Women Delaying Motherhood in Germany?

Abstract

German fertility trends show that the average age at which women have their first child has increased in recent decades. Moreover, researchers have argued that delayed maternity is an important factor in reduced fertility. Using data from the German Socio-Economic Panel (SOEP), this paper contributes to the debate about maternity timing and reduced fertility in Germany by analyzing some of the factors determining the delay of motherhood. The results suggest that German women who have accumulated more years of education and longer work experience at the time of marriage delay motherhood more. On the other hand, women with higher labor income and a higher contribution to household income delay motherhood less. The results confirm that women consolidate their careers before motherhood in order to reduce career costs. Therefore, if fertility rates are to be increased in Germany further policies that aim to combine women's careers and motherhood need to be developed.     

Can women's performance in elections determine the engagement of adolescent girls in politics?

Women are responsible for important results in the public sector, but their participation as politicians is still small. One possible way of correcting this situation in the future will be to increase the degree to which adolescent girls participate in politics. The literature about women's empowerment has identified that adolescent girls participate more in politics when role model women are elected. Unlike this literature, however, we run a regression discontinuity design and we show that the defeat of a woman also leads to other women being discouraged from participating. Our main idea is that the performance of female politicians has an influence on the engagement in politics of adolescent girls. Our measure of this engagement is not generated by measuring the perception of the aspirations of adolescent girls, but is taken from net registration to vote between Brazilian municipalities with victorious and defeated female leaders (mayors). Two mechanisms are important for explaining our results: the exchange of experiences between adolescent girls of different ages, and informal (through the Internet and public Wi-Fi) and formal (through the municipal anti-discrimination program) information.     

From less promising to green? Technological opportunities and their role in (green) ICT innovation

This article aims to shed light on the role of technological opportunities for green innovation by studying the case of Green ICT innovation. We test whether firms active in low-opportunity technological areas are less likely to be innovative and whether they are more likely to change their direction of technical change. To do so, we construct a firm-level panel data set for the years 1992–2009 combining patent data from the European Patent Office with firm-level data from the German Innovation Panel (Mannheim Innovation Panel). The results are based on dynamic count data estimation models applying General Methods of Moments estimators. Our results support our hypotheses: firms active in low-opportunity technological areas are less innovative but are more likely to switch from pure ICT innovation to Green ICT innovation.     

Which research in converging technologies should taxpayers fund? Exploring societal aspects

Contributions of social sciences and humanities to the debate on converging technologies at the nanoscale are mostly seen as conservative and pessimistic about the potential of science and technology to bring anything good to society. In this paper, it is argued that our global society cannot do without the contributions of nano-scientists and engineers to ensure the long-term sustainable development to the benefit of humanity. However, the community of traditional stakeholders in research policy (researchers, research policy-makers and industry) should take further steps outside its 'ivory tower' or 'old boys' 'network' and focus on a research agenda set by all stakeholders in public. The argument will be developed in a case study of converging technologies used in combating infectious diseases, comparing the priorities in current research programmes in Europe to the priorities identified by the World Health Organization.     

Left behind but doing good? Civic engagement in two post-socialist countries

The fall of socialism in Central and Eastern Europe restored ordinary citizens’ rights and freedoms and ended their political and social isolation. While the freedom of movement was quickly embraced, civil society revival lagged due to the eroded civic norms, declining social capital, and worsening economic conditions. In this paper, we examine the link between the out-migration of relatives and friends and the pro-social behavior of the left behinds in two post-socialist countries—Bulgaria and Romania—the EU's poorest, and among the least happy and most corrupt member states. We show that having close contacts abroad is consistently positively associated with civic engagement and that the cultural transmission of norms from abroad could be driving the results. Specifically, the strength of the civic engagement culture of the family or friend's destination matters for the pro-social behavior of respondents in the home countries. Our results imply that the emigration of family and friends may have positive but previously undocumented consequences for the individuals and communities left behind in Bulgaria and Romania. Given civil society's role for development in post-socialist Europe and the socio-economic and institutional challenges that Bulgaria and Romania face compared with the rest of the EU, understanding the channels fostering civil society and well-being are important for national and EU policymakers.     

Why are interest spreads so high in Uganda?

Using international comparisons and a unique bank-level dataset on the Ugandan banking system over the period 1999 to 2005, we explore the factors behind consistently high interest rate spreads and margins. International comparisons show that the small size of Ugandan banks, persistently high T-Bill rates and institutional deficiencies explain large proportions of the high Ugandan interest rate margins. The Ugandan bank panel confirms the importance of macroeconomic factors, such as high inflation, high T-Bill rates and exchange rate appreciation. There is also evidence for the small market place and high costs of doing business explaining persistently high spreads and margins; smaller banks and banks targeting the low end of the market incur higher costs and therefore higher margins. Spreads and margins also vary significantly with the sectoral loan portfolio composition of banks, while there is little evidence for foreign bank entry, privatization or changes in market structure explaining variation in spreads or margins over time.     

Why is money important in Jean-Baptiste Say's analysis?

Jean-Baptiste Say dedicated a significant part of his work to monetary questions, as much to explain the monetary practices of his period and to propose concrete measures to improve certain elements, as to develop theoretical reflections on the role of money in the mechanisms that political economy sheds light upon. His thought for that matter is not always devoid of contradictions when it comes to reconciling the results of observation with certain dimensions of his analysis. The article explains his conception of money. A variation in its quantity has an impact not only on prices, but also on the real economy, favourable when this issue is slow and moderate, but negative, on the other hand, when it is fast and large-scale. This leads to the measures of monetary policy recommended by Say.