Kenyan Supermarkets, Emerging Middle-Class Horticultural Farmers, and Employment Impacts on the Rural Poor

Are the rural poor excluded from supermarket channels in developing countries? We analyzed the farm-level impact of supermarket growth on Kenya’s horticulture sector, which is dominated by smallholders. The analysis reveals a threshold capital vector for entrance in the supermarket channel, which hinders small, rainfed farms. Most of the growers participating as direct suppliers to that channel are a new group of medium-sized, fast-growing commercial farms managed by well-educated farmers and focused on the domestic supermarket market. Their heavy reliance on hired workers benefits small farmers via the labor market.     

Information technology and the Japanese economy

In this paper we compare sources of economic growth in Japan and the United States from 1975 through 2003, focusing on the role of information technology (IT). We have adjusted Japanese data to conform to US definitions in order to provide a rigorous comparison between the two economies. The adjusted data show that the share of the Japanese gross domestic product devoted to investment in computers, telecommunications equipment, and software rose sharply after 1995. The contribution of total factor productivity growth from the IT sector in Japan also increased, while the contributions of labor input and productivity growth from the non-IT sector lagged far behind the United States. Our projection of potential economic growth in Japan from for the next decade is substantially below that in the United States, mainly due to slower growth of labor input. Our projections of labor productivity growth in the two economies are much more similar. J. Japanese Int. Economies 19 (4) (2005) 460–481.     

Interindustry effects of productivity growth in Japan: 1960–2000

Combining conventional sectoral growth accounting and the static open input–output price model, we analyze the sources of growth of product prices in Japan during the period 1960–2000. Using the input–output framework, we take into account not only the effects of factor costs and productivity within a sector, but also their impacts outside of the sector. We find that Japan's deflation in the 1990s was characterized by low growth of wage rates, low productivity growth, and a low rate of return on capital. Until 1990, productivity improvements compensated for factor cost pressures on output price, especially the rapid growth of labor cost. In contrast, during the 1990s, decreasing rates of return on capital, not productivity improvements, canceled out the inflationary effect of wage growth. J. Japanese Int. Economies 19 (4) (2005) 568–585.     

Children’s Work and Mothers’ Work––What is the Connection?

This paper examines the relationship between the employment of children and their mothers, with the aim of informing discussion on efforts to reduce child labor in Brazil. The analysis builds on the largely separate literatures on children’s time use and mothers’ work in two ways—by examining characteristics of employment which are often not available in survey data, and by modeling both children’s work and mothers’ employment. The results suggest that the relationship between children’s and mothers’ work is complex, with substantial evidence of positive correlation. The findings are consistent with the argument that anti-poverty programs that target women’s employment could result in increased child labor. This possibility warrants further analysis in order to better inform policy regarding child labor.     

Inflation,expectations, and cyclical aggravations

Summary The negative relationship between output and producers' expectations and the positive relationship between output and consumers' expectations, as hypothesized by Brunner and Meltzer, is very sensitive to the choice of the model. These Brunner-Meltzer predictions would not be supported by the results derived from a Fisherian model with or without a Phillips curve specification, such as the models presented in this paper.Within the context of the Fisherian model, an increase in the degree of adjustment by one or both sectors will lead to greater price stability. For policy purposes, this result suggests that the increase in available information or significant reduction in the costs of acquiring information may yield greater price stability. A welfare gain may also be achieved if the parameters are interdependent such that information conveyed to one sector effectively leaks to the other. In the latter case, the policy approach may be to try to influence the exogeneous expectations parameters and the lag adjustment between them.Recent studies have proposed that the labor market—or the market for new entrants and transitory workers—is the arena in which all firms participate. Hence, most of the information regarding price movements could be efficiently gathered in this market. If this is an accurate presumption, thenB* would, to some extent, be a function then of the labor market adjustment parameterA*. Further amendments to the model presented in this paper would, however, be necessary to incorporate this alternative.     

Polluters and Collective Action: Theory and Evidence

We suggest a new perspective on firms' ability to organize collective action. We argue that industries that face a greater number of regulations have an easier time forming a lobby group and sustaining joint lobbying efforts. In particular, firms in industries that are pollution intensive, and therefore incur abatement costs, face an extra policy issue compared with other industries. The prediction that emerges from the theory is that more polluting industries should have greater levels of lobbying contributions. Using U.S. manufacturing sector data, we find empirical support for this hypothesis.     

Fluctuations in Unemployment and Industry Labor Markets

Throughout the 1990s, and particularly in the mid- to late-1990s, the Japanese employment situation went from bad to worse. We investigate the causes of rising unemployment in Japan, using data on individual workers from the “Special Survey of the Labor Force” between 1988 and 1999. This research focuses on the effect of labor market segmentation by industry on labor flows. Our findings reveal that unemployment in the construction industry and, more recently, in the service industry has contributed greatly to the national unemployment rate. We also find that most successful job transfers occur within the same industry, even though workers may experience some periods of unemployment. Finally, our results show that labor market conditions in each industry affect the probability that a worker will fall into unemployment as well as the probability that an unemployed worker will find new employment. These findings suggest that the Japanese labor market is segmented by industry and this segmentation contributed to the worsening unemployment in Japan. J. Japan. Int. Econ., December 2001, 15(4), pp. 437–464. Department of Economics, Dokkyo University, 1-1 Gakuen-cho, Soka-shi, Saitama 340-0042, Japan; Graduate School of Economics, Nagoya University, Furo-cho, Chikusa-ku, Nagoya, 464-8601, Japan. © 2001 Elsevier Science (USA).Journal of Economic Literature Classification Numbers: J63, J64.     

Sri Lanka’s Rural Non-Farm Economy: Removing Constraints to Pro-Poor Growth

We use a survey of rural enterprises from Sri Lanka to explore characteristics of the informal non-farm sector and identify obstacles to its expansion and productivity. Value added in this sector amounts to 80% of agricultural GDP participating households’ incomes are significantly higher than those of households who do not participate. Barriers to entry are low and the impact of non-farm development on inequality modest, implying a large potential contribution to growth and poverty reduction. Infrastructure constraints negatively affect new startups, investment in, and productivity of existing enterprises, with small enterprises being particularly affected.     

Privatization and Labor Cost Savings: Evidence from Health Care Services

This study examines whether privatization is associated with low public sector health care wages and with low probability of public sector employment for health care providers. Findings suggest that privatization contributes significantly to low wages of union health care providers in the public sector. Privatization also contributes to a low probability of public sector employment in this industry, especially to unionized workers. These results indicate that competition enhancing policy can promote lower labor costs even in a service sector that employs a highly skilled work force.

The micro-economic effects of financial market structure: evidence from 20th century North American steel firms

This paper analyzes the historical relationship between domestic financial institutions, firm level financing decisions, and average capital costs in a sample of US and Canadian firms from a large and economically important manufacturing industry—primary steel production. We find that national capital market characteristics and firm specific characteristics were important determinants of 20th century US and Canadian steel firms’ financing decisions. We also show that, despite source-specific price differences, average capital costs were approximately equal in the two countries, and the firms’ financing decisions were important determinants of these average capital costs. We conclude that firms structured their balance sheets in an effort to exploit the idiosyncratic features of their domestic financial institutions, and thereby, minimize their average capital costs.     

Corporatism, Trade Liberalization and Sectoral Responses: The Case of Venezuela, 1989–99

The Venezuelan manufacturing sector, unlike agriculture, cooperated with state’s efforts to liberalize trade in the 1990s, despite the economic costs it absorbed and the political opportunities to sabotage the reforms. This paper offers two explanations for this, which modify and conciliate traditional interest-based and corporatist theories of state-society relations. High levels of sectoral autonomy from the bureaucracy and political parties (and hence Congress), together with low levels of involvement in profit-making on the part of the associations representing the sector, encourage sectoral cooperation with costly and risky state policies. In addition, traditional corporatist instruments used by states—inducements and constraints—hurt rather than enhance state-sector cooperation.     

Flexibility versus Commitment in Personnel Management

This paper compares human resources (HR) policies embedded in the Japanese and U.S. management systems. We adapt a model from the literature on irreversible investment and use it to examine the trade-off between flexibility to adjust the labor force and higher productivity stemming from the greater commitment of the firm to its employees. In the model, two types of contracts with otherwise identical workers can coexist. One possibility is for firms to commit to a permanent employment contract that precludes dismissal at will. The alternative is a temporary employment contract that allows flexibility to adjust the firm's labor force during demand downturns, but involves higher labor cost per unit of output. Using an example, we illustrate the possible magnitude of the value of flexibility and suggest that adopting long-term contracts in the wrong environment can significantly reduce firm value. The model yields predictions for the optimal labor force composition and its relation to the characteristics of the firm's market. We also consider practices that develop to complement permanent employment. The predictions are then examined in light of evidence on the HR practices in Japan and the United States in the past 50 years and are found to be consistent with the stylized facts in the literature. J. Japan. Int. Econ., December 2001, 15(4), pp. 515–556. Hebrew University, Jerusalem, Israel, and University of Illinois at Urbana-Champaign, Urbana, Illinois. © 2001 Elsevier Science (USA).Journal of Economic Literature Classification Numbers: J31, J33, J41, J64.     

To Spend the U.S. Government Surplus or to Increase the Deficit? A Numerical Analysis of the Policy Options

This paper provides a numerical analysis of the likely benefits from adopting alternative ways of reducing the projected fiscal surplus (as of the summer 2001) in the United States economy. Calibrating a small growth model, our results suggest that investing the surplus in public capital is likely to yield the greatest long-run welfare gains, although decreasing the capital income tax is only marginally inferior. Both these options dominate increasing government consumption expenditure or decreasing the tax on labor income. By shifting resources from consumption toward capital the two superior policies involve sharp intertemporal tradeoffs in welfare; significant short-run welfare losses are more than compensated by large long-run welfare gains. By contrast, the two inferior options are gradually welfare-improving through time. A crucial factor in determining the benefits of reducing the government surplus through spending is the size of the government sector relative to the social optimum. We find that the second-best optimum is to increase both forms of government expenditure to their respective social optima, while at the same time restructuring taxes by reducing the tax on capital and raising the tax on wage income to achieve the targeted reduction in the surplus. J. Japan. Int. Econ., December 2002, 16(4), pp. 405–435. Department of Economics, University of Washington, Seattle, Washington; and Department of Economics, Terry College of Business, University of Georgia, Atlanta, Georgia. © 2002 Elsevier Science (USA).Journal of Economic Literature Classification Numbers: E62, O41.     

An empirical analysis of the unit labor cost-product price relation in the U.S. economy

This article tests for cointegration between unit labor costs and the level of product prices in four sectors of the U.S. economy: the aggregate business sector, the nonfinancial corporate sector, durable manufacturing, and nondurable manufacturing. A finding of cointegration for most specifications supports the existence of long-run labor market equilibrium for producers and suggests estimation of error-correction models to examine the dynamic relationships. In every sector except nondurable manufacturing, error-correction model estimates indicate there is a mutual feedback relationship between unit labor costs and prices. Controlling for deviations from full employment, oil price shocks, and the Nixon wage and price controls, the results also provide evidence of significant nominal wage indexation in U.S. labor markets. Throughout the economy there appears to exist both effective neoclassical wage and price adjustment mechanisms to maintain labor market equilibrium and short-run rigidities which may contribute to deviations from full employment outcomes.     

China's transition towards the market: “Socialization” of the safety net

Reform of the state-owned enterprise sector is probably the most strategic area of reform during China's transition towards a market economy. For efficiency improvements to be possible, stateowned enterprises must be able to adjust the size and nature of their operations in response to market signals, adding or shedding workers as necessary. However, given that housing, pensions, and healthcare, among a myriad of social welfare services, are tied to the enterprise, labor mobility is highly constrained. This makes it difficult to reallocate redundant labor across occupations, enterprises, and locations. Clearly, for more efficiently-operating labor markets to emerge, worker access to housing and other welfare benefits must be delinked from employment in the enterprise. This paper discusses the possible ways of breaking the link and strengthening the social safety net. The emphasis here being on the urban sector, issues related to safety net provisions in the rural areas, albeit of great importance, will not be discussed at length.     

Structural Changes in the Demand for Labor

This paper investigates why labor demand has shifted away from low-skilled toward high-skilled labor in The Netherlands. We focus on the role of changes in relative wages and technological progress. A flexible functional form, proposed by Diewert and Wales, the Symmetric Generalized McFadden cost function, is estimated for the exposed and sheltered sectors. The estimates are based on time-series data for the period 1972–1993, which recently became available. Labor-saving technological change explains most of the displacement of low-skilled workers. The computed elasticities suggest that substitution between labor as a whole and capital is small. However, substitution plays a modest role in the shift from low-skilled toward high-skilled labor, especially in the sheltered sector. Skill-capital complementarity seems relevant in both sectors.     

Quantitative easing and Japanese bank equity values

One of the primary motivations offered by the Bank of Japan (BOJ) for its quantitative easing program—whereby it maintained a current account balance target in excess of required reserves, effectively pegging short-term interest rates at zero—was to maintain credit extension by the troubled Japanese financial sector. We conduct an event study concerning the anticipated impact of quantitative easing on the Japanese banking sector by examining the impact of the introduction and expansion of the policy on Japanese bank equity values. We find that excess returns of Japanese banks were greater when increases in the BOJ current account balance target were accompanied by “non-standard” expansionary policies, such as raising the ceiling on BOJ purchases of long-term Japanese government bonds. We also provide cross-sectional evidence that suggests that the market perceived that the quantitative easing program would disproportionately benefit financially weaker Japanese banks. J. Japanese Int. Economies 20 (4) (2006) 699–721.     

Why was Australia so rich?

Between 1870 and 1890 Australian incomes per capita were 40 percent or more above those in the United States. About half this gap is attributable to Australia’s higher labor input per capita, and half to its higher labor productivity. The higher labor input is due in part to favorable demographic attributes and partly to a favorable workforce participation rate. The higher productivity results from an advantageous natural resource endowment. By 1914 the income lead over the U.S. had all but disappeared due to declines in Australia’s advantages both in labor input per capita and in labor productivity.     

Exchange Rate Volatility, Nominal Rigidities, and Persistent Deviations from PPP

It is shown how nominal exchange rate volatility can cause persistent deviations in the real exchange rate. The key to nominal rigidities is a capital market imperfection implying that agents cannot hedge perfectly against consumption risks. As a consequence, nominal changes have real effects by both affecting the ex post real purchasing power of savings and by affecting the ex ante incentives in savings and labor supply. The consequences of exogenous changes in the nominal exchange rate are considered in an OLG version of a two sector small open economy with competitive product and labor markets.J. Japan. Int. Econ.,December 1997,11(4), pp. 584–609. Department of Economics, University of Aarhus, 8000 Aarhus, Denmark.     

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.