Attracting private investment: Tax reduction,investment subsidy,or both?

This paper uses a real-option model to examine the net benefit to a government from using tax cut and/or investment subsidy as incentives to induce immediate investment. Although earlier papers generally concluded that investment subsidy dominates tax cut, it is observed that many governments use a combination of subsidy and tax cut. We show that, when the government uses a different discount rate from private firms, and when it has to borrow money to provide an investment subsidy, it is possible to get an internal optimum; that is, it might be optimal for the government to provide an investment subsidy as well as charge a positive tax rate on the profits from the project. Thus, we provide an explanation for the puzzling fact that many governments provide an investment subsidy to a firm while simultaneously taxing its profits.     

Does advertising increase labour supply? Time series evidence from the UK

Wages in industrialized countries have risen considerably during the last 50 years, whereas hours worked, for manual workers at least, have decreased only marginally. In Europe, one policy response has been to attempt to protect workers from pressure to work long hours by placing legal restrictions on the amount of hours that may be worked each week. This paper examines the possibility that, in fact, observed hours may be the result of a desire of workers to work longer due to a shift in their preferences from leisure to increased consumption, caused by the huge increase in mass media advertising. A cointegrating VAR framework is used to test this hypothesis on UK time series data for both males and females from 1952 to 1997. Advertising is shown to be positively associated with hours worked for both male and female series. Causality tests indicate unidirectional causality, for males and females, from advertising to hours worked. These results suggest that the European policy response is more likely to restrict employee rather than employer discretion over hours.     

Stepping-stones, dead-ends, or both? An analysis of Swedish replacement contracts

The paper studies whether temporary jobs in the form of fixed-term replacement contracts reduce the risk of future unemployment among job-seekers. Using matching on detailed information on labour market history and personal characteristics we find positive average effects of having a replacement contract. Our second focus is on whether the duration of the contract matters. We use data on replacement contracts with information on the ex ante duration of the contract which is determined by the individual on leave and find no significant effect on the subsequent unemployment risk of the replacement worker. However, the longer the replacement contract the higher is the probability of having an open ended contract at the same site 2–2.5 years after the start of the contract. Overall, the results suggest that replacement contracts may reduce the risk of future unemployment, but that longer contracts only improve the position within the workplace and not necessarily on the labour market in general.     

Public–private wage differentials in Turkey: public policy or market dynamics?

We evaluate public–private sector wage differentials by gender in Turkey between the years 2005 and 2013. Using micro data from Household Labor Force Surveys we find a positive premium for low wage earners and a penalty of working in the public sector at the higher end of the distribution. Although the penalty has not disappeared, the price effect has increased at both ends of the distribution. The increase at the lower tail is attributed to a higher price effect in the public sector, whereas at the higher tail it has been a result of a relatively uneven wage increase in the private sector along the distribution, rather than an explicit public wage policy.     

Does the labour supply of wives respond to husbands' wages? Canadian evidence from micro data and grouped data

Abstract. Using micro data and grouped data, we assess the extent to which Canadian wives adjusted their labour supply in response to changes in husbands' wages during the period 1980‐2000. Grouped data parameters based on weighted least squares and the unbiased‐error‐in‐variables estimator developed by Devereux (2004, 2007a,b) yield cross‐wage elasticities that are substantially higher (in absolute value) than those derived from OLS regressions run on micro data. Both grouping estimators indicate that the labour supply of Canadian wives responded strongly to changes in husbands' wages during the 1980s. For the 1990s, our estimates of wives' cross‐wage elasticity display greater dispersion.     

Four factors that explain both the rise and fall of US crime, 1970–2003

Previous research has failed to explain the rise and fall of US crime since 1970. This study uses cointegration, error correction and common long-memory components analyses to demonstrate that four basic crime factors explaining both the increases in US violent and property crime between 1970 and 1991 and the dramatic declines in crime after 1991. The four factors include arrest rates, income per capita, the proportion of criminal-justice resources devoted to drug crime and alcohol consumption. Error correction models and common long-memory factors show an especially close link between crime rates and the percentage of prison resources devoted to drug offenders. Similar factors result in cointegrated models for murder, rape, robbery, assault and larceny. Additional modelling shows that effective abortion rates computed along the lines of Donohue and Levitt (2001 Donohue, JJ and Levitt, SD. 2001. The impact of legalized abortion on crime. Quarterly Journal of Economics, 116: 379–420. [Crossref], [Web of Science ®] , [Google Scholar]) do not help in explaining the rise and fall of US crime.     

The cause of Danish unemployment: Demand or supply shocks?

We study the Danish unemployment experience 1905–92 using a common trends model with cointegration constraints. To justify the identifying assumptions about the cointegration vectors and the common trends we present a simple macroeconomic model of the labor market. The model determines the long run behavior of labor productivity, employment, unemployment, real product and real consumer wages. The empirical results give support for three cointegration relations and two common trends. Based on the economic model the trends are interpreted as representing labor productivity (technology) and labor supply. With unemployment being nonstationary, the common trends analysis indicates that labor supply shocks is the primary source for explaining the behavior of unemployment. First Version Received: August 1999/Final Version Received: June 2000     

Who provides the capital for Chinese growth: the public or the private sector?

We focus on the role of the government in the provision of investment in China, through the medium of a Dynamic Stochastic General Equilibrium model of the economy in which the form of the production function reflects this governmental role. Using indirect inference, we estimate and test for the elasticity of substitution between government and nongovernment capital in both Constant Elasticity of Substitution (CES) and Cobb–Douglas technologies. The results underscore the strong substitution relationship between government and nongovernment capital from 1949, supporting CES rather than the Cobb–Douglas technology. They also show that the orientation of public investment changed after the start of the ‘Socialist Market Economy’ in 1992: government capital became more complementary to nongovernment capital as it focused more on infrastructure and withdrew from industrial production, intervening only in times of crisis, for stabilization purposes, indirectly via the state banks.     

Capital as in capitalism,or capital as in capital goods,or both?

The Review of Austrian Economics - Austrian economists employ two different concepts of capital. Sometimes they treat capital as a universal phenomenon of human action as such. Capital is then...     

Analysis of factors influencing the development of transport infrastructure until the year 2030 — A Delphi based scenario study

In this paper, we present the findings of a web-based real-time Delphi study concerning the factors which will influence the future development of the transport infrastructure until the year 2030. Intensifying globalization, increased urbanization, ongoing shortages in public finances, and the requirements of a more demanding and growing world population are some of the challenges, which global transport will face. This research identifies, assesses, and integrates long-range developments of various factors, such as supply and demand, financing, competitiveness, and sustainability, which will affect the future of the transport industry and its infrastructure. Results are presented in a final probable scenario, which is divided into four different scenario aspects. Moreover, managerial and governmental implications for strategy and policy development are discussed.     

Issuing bonds,shares or staying private? Determinants of going public in an emerging economy

The Warsaw Stock Exchange is one of Europe’s largest exchanges by the number of initial public offerings. In this study, we use a large data-set to explore firms’ decisions to issue equity on the main or alternative market, and debt on the bond market. We observe that, in general, larger, more profitable firms are more likely to go public, although in contrast to developed economies these firms tend to be younger. Moreover, we find that current market valuation positively affects the decision to go public on the main market, and we establish that highly leveraged companies are more likely to issue either shares on the alternative market or bonds. At the same time, however, we observe that firms issuing shares on the alternative market are most likely to manipulate their profitability prior to going public.     

Optimal regulation under imperfect enforcement: Permits,tickets, or both?

Economic activity is often regulated through both permits and tickets (subsequent inspections). We study the effectiveness of such policies where corruption and an underground economy make enforcement imperfect. In the theoretical model, asymmetric information justifies regulatory action which is enforced by corruptible bureaucrats. We find that regulation through permits alone is useless when corruption exists, while tickets still offer some benefit. Surprisingly, we also find that a system with both permits and tickets achieves welfare that is higher than that which can be achieved with only tickets—that combining the two mechanisms has an effect that is greater than the “sum of the parts.”     

Do Austrian men and women become more equal? At least in terms of labour supply!

We study the development of wage elasticity of labour supply for Austrian men and women over time using comparable and representative survey data for the 1980s and 1990s. The elasticity of men is relatively low and constant over time, similar to the behaviour of single women. Most remarkable is the almost continuous reduction in the labour supply reactions of married women: while their elasticity was still several times larger at the beginning of the 1980s, they approached rapidly the much less elastic behaviour of men. These developments are important for the analysis of deadweight losses of taxation as well as the effects of tax reforms and wage subsidy programs.     

Workforce or workfare? The optimal use of work requirements when labour is supplied along the extensive margin

This paper explores the use of workfare as part of a tax mix when labour supply responses are along the extensive margin. In an economy where the government has a priori chosen any tax‐and‐benefit schedule, we show that, despite their common goal of providing additional incentives for individuals to enter the labour force, workfare and an earned income tax credit are at odds with each other. We also show that, in the presence of an optimal nonlinear income tax, introducing unproductive workfare is always suboptimal when individuals face the same disutility of being on workfare. When this disutility is heterogeneous, unproductive workfare may be a useful policy tool.     

A survey of the influencing factors and models for resident＇s household waste management behavior

The problem of household solid waste has been concerned and researched on by municipalities and researchers.At present, household solid waste has been changed to management problem from technical one. From the point view ofmanagement, the research on household solid waste is to study the factors which influence resident’s behavior ofmanaging their waste. Based on the literature review, firstly, this paper summarizes those factors which have alreadybeen identified to have impact on resident’s behavior of managing their waste. They are social-demographic variables,knowledge, environmental values, psychological factors, publicity and system design. Secondly, three typical models ofthe relationship between factors and behavior, which are factors determining task performance in waste management,conceptualization of waste management behavior and the theoretical model of repeated behavior on household wastemanagement, are analyzed and the deficiencies of these models are also analyzed. Finally, according to the currentsituation in household waste management and the culture and resident’s habits in China, this paper puts forward aresearch focus and suggestions about resident’s behavior of household solid waste management.     

International aid from the recipient perspective: public or private good input assistance?

This article proposes a theoretical model from the recipient perspective that considers what type of assistance a donor country should provide: public good assistance or private good assistance. We investigate the effects of migration and free riders under both types of assistance. We empirically apply this model to the rapidly growing economies and a large official development assistance disbursement for East Asia.     

Education and the Public Goods Type of Social Capital: Are the Well Educated Free Riding in the Provision of Public Goods?

In the previous literature, education has been found to promote the individual’s investment in social capital. However, little is known about its effect on the public goods type of social capital as many of the studies have used generalized measures of social capital. Using survey data from Japan with information on participation in neighborhood associations and community activities, we find that individuals with higher education are no more likely than those with compulsory minimum education to invest in the public goods type of social capital. Nor do we find evidence that the more educated free ride on the less educated in the provision of public goods.     

Public–private partnerships for the provision of public goods: Theory and an application to NGOs

When will a public good or service be provided by the government, when will it be provided by a NGO, and when will we see a private–public partnership? This paper provides a model where a typical public good requires different inputs which raises the possibility of partnerships to exploit comparative advantages of different parties. But hold-up problems due to contractual incompleteness in specifying tasks discourage separation of ownership and management. The fact that public goods have the property of non-rivalry and non-excludability and that NGOs tend to be non-profits drives our key results. We apply the framework to NGOs in developing countries which, in the last few decades, have been increasingly involved in various capacities in the provision of a wide range of public goods and services.     

Skilled–unskilled wage inequality,nontraded good and endogenous supply of skilled labour: A theoretical analysis

The paper develops a static four sector competitive general equilibrium model of a small open economy in which skilled labour is endogenously produced by the education sector and is mobile between a traded good sector and a nontraded good sector. Capital is also perfectly mobile among the education sector, skilled labour using traded good sector and the nontraded good sector. However, land and unskilled labour are specific to another traded good sector. We analyse the effects of change in different factor endowments and reduction in tariff rate on skilled–unskilled wage inequality. We find that the effect of a change in different parameters on wage inequality depends on the factor intensity ranking between two skilled labour using sectors and on the relative strength of the marginal effects on demand for and supply of nontraded final good. We also analyse the effects of changes in different parameters on the supply of skilled labour.