FINANCIAL MARKET INTEGRATION AND BUSINESS CYCLE VOLATILITY IN A MONETARY UNION

This paper uses a dynamic general equilibrium two‐country sticky‐price model to analyze the implications of financial market integration for the propagation of asymmetric productivity and government spending shocks in a monetary union. Financial market integration has a small effect on the propagation of these shocks if households can only trade in risk‐free bonds. However, financial market integration has a more substantial effect on the propagation of these shocks in a monetary union with a complete market for state‐contingent claims. This result indicates that it may be important to account for threshold effects in empirical analyses of the impact of financial market integration on business cycle volatility in a monetary union.     

Does union membership reduce gender earnings differentials? Evidence from employer–employee matched data in China

This paper examines whether union membership reduces gender earnings differentials in the Chinese labour market using an employer–employee matched data set. We have three main findings. First, union membership helps reduce the gender differentials in hourly wage and monthly allowance, but not in monthly basic wage and yearly bonus. Second, ensuring that female workers receive overtime pay is one way by which union membership helps reduce the gender earnings differentials. Third, controlling for firm fixed effects reduces the effect of union membership on the gender gap in hourly wage and monthly allowance, which means that the unobserved firm characteristics might impact the effect of union membership on gender earnings differentials.     

SOCIAL ANIMAL HOUSE: THE ECONOMIC AND ACADEMIC CONSEQUENCES OF FRATERNITY MEMBERSHIP

We exploit changes in the residential and social environment on campus to identify the economic and academic consequences of fraternity membership at a small Northeastern college. Our estimates suggest that these consequences are large, with fraternity membership lowering student grade point average by approximately 0.25 points on the traditional 4‐point scale, but raising future income by approximately 36%, for those students whose decision about membership is affected by changes in the environment. These results suggest that fraternity membership causally produces large gains in social capital, which more than outweigh its negative effects on human capital for potential members. Alcohol‐related behavior does not explain much of the effects of fraternity membership on either the human capital or social capital effects. These findings suggest that college administrators face significant trade‐offs when crafting policies related to Greek life on campus. (JEL I23, J24, I12)     

A Theoretical Analysis of Trade Union Membership Fees, Bargaining Power, Wage Rate and Unemployment

The positive effect of membership fees on trade unions' cohesion and commitment and the adverse effect of these fees on trade unions' density imply that the effects of membership fees on trade unions' bargaining power, wage rate and unemployment can be depicted by inverted U-shaped curves whose upper bounds are reached when membership fees are set at half the ratio of the upper-bound on members' level of satisfaction from the trade union services to their disposable income rate. The implications of these effects for membership fees are analysed for a trade union that sets its membership fee so as to minimise the loss stemming from missing wage rate and unemployment targets.     

Income inequality and economic growth in an open economy

Income inequality has a strong impact on fiscal policy when majority voting enables those individuals with less-than-average income to decide on tax rates. This study analyzes the impact on economic growth of income inequality in an open economy where tax revenues are partially used for international transfers. In any case, income inequality is harmful for growth. In an economic union, positive effects of international integration raise the growth rate as long as net transfers do not grow proportionally. In a political union, unionwide voting makes distributive politics depending on the union's median voter. In this case, additional output growth on aggregate level is a necessary, but not sufficient condition for a majority of voters to accept union membership.     

Fiscal consolidation under imperfect credibility

This paper examines the effects of expenditure-based fiscal consolidation when credibility as to whether the cuts will be long-lasting is imperfect. We contrast the impact limited credibility has when the consolidating country has the means to tailor monetary policy to its own needs, with the impact when the country is a small member of a currency union with a negligible effect on interest rates and on nominal exchange rates of the currency union. We find two key results. First, in the case of an independent monetary policy, the adverse impact of limited credibility is relatively small, and consolidation can be expected to reduce government debt at a relatively low output cost given that monetary policy provides more accommodation than it would under perfect credibility. Second, the lack of monetary accommodation under currency union membership implies that the output cost may be significantly larger, and that progress in reducing government debt in the short and medium term may be limited under imperfect credibility.     

Prospective NATO or EU membership and institutional change in transition countries1

This article quantifies the impact of incentives related to potential membership on institutional change as measured by the World Bank Governance Indicators. Based on a panel of 25 transition countries for the period from 1996 to 2008, we show that pre‐accession incentives provided by EU and NATO clearly matter for institutional development. In addition, path‐dependency determined by cultural norms may be overcome by economic liberalization, while foreign aid hampers institutional development.     

Semi-unionized bargaining with endogenous membership and management opposition

This paper develops a model of open shop unions and efficient bargain, in which there is a social custom to unionize and the firms can pay wage premiums to dissuade union membership. If firms actively oppose unions, the union density turns out to be affected by changes of the product price and the reservation wage, and it is not always positively correlated with the workers' income share. Moreover, the model provides a rationale for higher union density in centralized as opposed to decentralized bargaining systems.I would like to thank Robert Boyer, Hans Peter Grüner, Roger Guesnerie, and two referees for helpful comments and suggestions. All remaining errors are mine. Financial support from the Commission of the European Communities (SPES-915028) is gratefully acknowledged.     

Union Wage Effects and the Probability of Union Membership*

This paper uses Lee's (1978) model to determine the wage gains associated with trade union membership and the reasons individuals join trade unions in Australia The data are derived from the 1984 Australian National Social Science Survey. A major conclusion is that unions secure a 17.22 per cent wage gain for their members, other things the same. This expected wage premium is shown to have an important positive impact upon the union membership decision. The welfare loss associated with the union wage premium is argued to be relatively minor about one half of one per cent of gross domestic product     

Optimal Currency Areas Scottish Economic Society/Royal Bank of Scotland Annual Lecture, 1999

Microeconomic efficiency and market transparency argue in favour of UK membership in EMU and for Scotland’s membership in the UK monetary union and also in EMU. UK seigniorage (government revenues from money issuance) would be boosted by EMU membership. Lender of last resort arrangements would not be substantially affected by UK membership in EMU. The UK is too small and too open to be an optimal currency area. The same point applies even more emphatically to Scotland. The ‘one‐size‐fits‐all’, ‘asymmetric shocks’ and ‘cyclical divergence’ objections to UK membership are based on the misapprehension that independent national monetary policy, and the associated nominal exchange rate flexibility, can be used effectively to offset or even neutralise asymmetric shocks. This ‘fine tuning delusion’ is compounded by a failure to understand that, under a high degree of international financial integration, market‐determined exchange rates are primarily a source of shocks and instability. Instead, opponents of UK membership in EMU view exchange rate flexibility as an effective buffer for adjusting to asymmetric shocks originating elsewhere. I know of no evidence that supports such an optimistic reading of what exchange rate flexibility can deliver under conditions of very high international financial capital mobility. The economic arguments for immediate UK membership in EMU, at an appropriate entry rate, are overwhelming. Monetary union raises important constitutional and political issues. It involves a further surrender of national sovereignty to a supranational institution, the ECB/ESCB. It is essential that this transfer of national sovereignty be perceived as legitimate by those affected by it. In addition, the citizens of the UK have become accustomed to a high standard of openness and accountability of their central bank since it gained operational independence in 1997. The ECB/ESCB must be held to the same high standard, and, while there are grounds for optimism, there still is some way to go there.     

Risk Aversion and Trade‐Union Membership*

If trade unions provide only their members with insurance against income variations, as a private good, this insurance will provide a stronger incentive for more risk‐averse employees to become union members. Using data from the German Socio‐Economic Panel (SOEP) and various direct measures of individual risk attitudes, we find robust evidence of a positive relationship between risk aversion and the likelihood of union membership for full‐time employees. This association is particularly strong for males and in West Germany.     

The Fear of Exclusion: Individual Effort when Group Formation is Endogenous*

To secure their membership in a popular group, individuals may contribute more to the group's local public good than they would if group formation were exogenous. Those in the most unpopular group do not have this incentive to contribute. This may result in substantial differences in individual effort level between groups. Our model thus provides one explanation for the existence of group‐specific behavioral norms. A principal will prefer exogenous or endogenous group formation depending on whether he prefers high or low levels of the local public good. We analyze two stylized examples: social interaction in schools, and multiple‐task teamwork.     

Young people and trade union membership: a longitudinal analysis

This paper suggests that major explanations of union membership have been flawed by the free rider paradox. It outlines a recent British theory which claims to overcome this dilemma and draws from the model hypotheses which are tested by an analysis of a longitudinal survey of London school-leavers. The findings seem to offer support for the model in its categorization of core and remainder members, and further investigation is encouraged.     

Union membership in the Netherlands: A cross-sectional analysis

In this paper we analyze the determinants of union membership in the Netherlands. Not only the unionization decision is studied, but also the decision which confederation the workers will join. Furthermore, a test is presented to determine the nature of the decision process; we ask whether the decision to join a union and the decision which confederation to join are sequential or simultaneous decisions. The answer is not only of consequence for the model specification, but also affects the conclusions drawn from the estimations. In our analysis we find a considerable number of significant variables, most of them with the expected sign. If a variable has an effect contrary to expectation this can largely be attributed to specific Dutch circumstances. This shows that a general theory on the determinants of union membership can never be wholly universal, but always has to allow for nationally determined exceptions. Our results further demonstrate the importance of careful specification of the structure of the decision process. The comparison of the results of the multinomial and the sequential logit model show that misspecification of the decision structure can lead to false conclusions. In the Netherlands, the decision to become a union member is taken prior to the decision which particular union to join.     

Optimal Redistribution with Endogenous Social Norms

In this paper, we examine the effect of social norms on redistributive policies, where social norms are reflected in the degree of work participation among the different skill classes. Participation is driven both by the material incentives and heterogeneous preferences for leisure of each skill class, and by an endogenous social norm. Results for optimal redistributive taxation show that when the social norm enters as a benefit or cost for participants, participation taxes are generally lower than in its absence. Multiple participation equilibria can occur, and an engineered shift from a low‐ to a high‐participation equilibrium can be Pareto‐improving in the long run.     

WHAT DETERMINES VACATION LEAVE? THE ROLE OF GENDER

Vacation leave is introduced in workplaces to improve the working environment. Surprisingly, it has been observed that a large number of workers do not use all of their entitled vacation days. This paper provides a novel set of facts about the gender differences in taking vacation time using the Canadian Workplace Employee Survey, which is a linked longitudinal employer‐employee dataset. The results show considerable differences between men and women in the estimated effects of some demographic characteristics after controlling for job and workplace characteristics. However, they reveal significant implications of work arrangements (e.g., part‐time work, flexible work schedules, and home‐based work), job promotion, supervisory tasks, and union membership for vacation use, for both men and women. This paper provides further insights on the use of fringe benefits that may be useful to policymakers and businesses.     

CURRENCY UNIONS, TRADE FLOWS AND CAPITAL FLOWS

Abstract.  Trade within currency unions is much larger than outside of currency unions, even after factoring in many relevant variables. The existing empirical evidence is based on reduced form models of trade, and therefore indicates correlation between but neither causality nor mechanism. This paper argues that the causal relationship runs from currency unions to trade, and then considers two possible mechanisms behind this: currency union membership: reduces trade resistance or reduces investment resistance. We argue that both mechanisms are required to explain the observed economic impact of currency union membership.     

农民工加入工会的会费问题

采用VNM效用函数对农民工加入工会的会费问题进行了研究,得出农民工意愿的会费水平与侵权概率及被侵权的工资份额正相关的结论,并指出这一会费水平使工会实现了利润最大化却对农民工没有任何助益。工会是一种非盈利的公共组织,其会费水平的确定应遵循公平会费原则。公平会费使工会的期望利润为零,而农民工的福利却得到了最大化的增进。由于不同行业具有不同的公平会费,所以在实行统一的会费水平的情况下,应逐步建立起不同行业工会之间的转移支付制度,同时政府也应对侵权问题严重的行业给予更多关注和资金支持,以利于这些行业顺利组建工会及开展维权工作。     

It's a Sin—Contraceptive Use,Religious Beliefs,and Long‐run Economic Development

This study presents a novel theory on the interaction of social norms, fertility, education, and their joint impact on long‐run economic development. The theory takes into account that sexual intercourse is utility enhancing and that the use of modern contraceptives potentially conflicts with prevailing social norms (religious beliefs). The theory motivates the existence of two steady states. At the traditional steady state, the economy stagnates, fertility is high, education is minimal, and the population sustains a norm according to which modern contraceptives are not used. At the modern steady state, the population has abandoned traditional beliefs, modern contraceptives are used, fertility is low and education and economic growth are high. Social dynamics explain why both equilibria are separated by a saddlepoint‐equilibrium (a separatrix), i.e. why it is so hard to transit from the traditional regime to the modern regime.     

Trade in intermediate inputs,customs unions,and global free trade

In a three‐country customs union (CU) formation game, I introduce international trade in intermediate inputs and rules of origin (RoO) restrictions. In the case of symmetric countries, I show that as countries become more involved in global supply chains, global free trade is less likely to be a stable equilibrium outcome. RoO can help solve this problem. In the case of asymmetry, depending on the degree of the globalization, free riding (for high degree) or exclusion motive (for low degree) prevents global free trade. Correspondingly, I show that RoO can have helpful or detrimental effects on attaining global free trade.