Are computers driving real wages down?

The annual growth in mean employee compensation plummeted from 2.6% in 1947–73 to 0.4% in 1973–2003. Using both time-series regression and pooled, cross-section, time-series regression analysis for 44 industries over the period 1953–2000, we find that earnings growth is positively related to overall productivity growth, capital investment excluding computers, and the unionization rate. We find also that computerization has a significant negative effect on earnings growth, but no evidence that the growth of skills or educational attainment has any statistically significant effect on earnings growth. The dominant factors explaining the slowdown in wage growth are decline in the unionization rate, slowdown in both TFP growth and overall capital investment, and acceleration in computer investment.     

Different but Similar: Social Comparison of Travel Motives Among Tourists

Although previous research suggests that people prefer to think of themselves as being authentic (or individualistic) travellers rather than stereotyped tourists, there have been few studies investigating the external validity of such claim. This paper addresses this research gap by investigating tendencies to dissociate the self from typical tourists in terms of travel motivation. Findings suggest that people perceive their own travel motives to be different from those who they perceive as typical tourists and that these tendencies generalize across people involved in different forms of tourism. This paper discusses the results from a social psychological perspective and provides implications for future research and destination management alike. © 2014 The Authors. International Journal of Tourism Research published by John Wiley & Sons, Ltd.     

Foreign Direct Investment in the Enlarged EU: Do Taxes Matter and to What Extent?

Foreign direct investment is of increasing importance in the European Union. This paper estimates the effect of taxes on foreign direct investment (FDI) flows and on three sub-components of these flows for the countries of the enlarged European Union. The model in the spirit of gravity equations robustly explains FDI flows between the 25 member states. Sample selection needs to be addressed in the estimation. We show that the different subcomponents of FDI should and indeed do react differently to taxes. After controlling for unobserved country characteristics and common time effects, the top statutory corporate tax rate of both, source and host country, turn insignificant for total FDI and investment into equity. However, high source country taxes clearly increase the probability of firms to re-invest profits abroad and lower the percentage of debt financed FDI. This might reflect profit re-allocation to avoid taxes. Market size factors have the expected signs.

Annual patient and caregiver burden of oncology clinic visits for granulocyte-colony stimulating factor therapy in the US

Objective:

Prophylactic treatment with granulocyte-colony stimulating factors (G-CSFs) is indicated for chemotherapy patients with a significant risk of febrile neutropenia. This study estimates the annual economic burden on patients and caregivers of clinic visits for prophylactic G-CSF injections in the US.

Methods:

Annual clinic visits for prophylactic G-CSF injections (all cancers) were estimated from national cancer incidence, chemotherapy treatment and G-CSF utilization data, and G-CSF sales and pricing information. Patient travel times, plus time spent in the clinic, were estimated from patient survey responses collected during a large prospective cohort study (the Prospective Study of the Relationship between Chemotherapy Dose Intensity and Mortality in Early-Stage (I–III) Breast Cancer Patients). Economic models were created to estimate travel costs, patient co-pays and the economic value of time spent by patients and caregivers in G-CSF clinic visits.

Results:

Estimated total clinic visits for prophylactic G-CSF injections in the US were 1.713 million for 2015. Mean (SD) travel time per visit was 62 (50) min; mean (SD) time in the clinic was 41 (68) min. Total annual time for travel to and from the clinic, plus time at the clinic, is estimated at 4.9 million hours, with patient and caregiver time valued at $91.8 million ($228 per patient). The estimated cumulative annual travel distance for G-CSF visits is 60.2 million miles, with a total transportation cost of $28.9 million ($72 per patient). Estimated patient co-pays were $61.1 million, ～$36 per visit, $152 per patient. The total yearly economic impact on patients and caregivers is $182 million, ～$450 per patient.

Limitations:

Data to support model parameters were limited. Study estimates are sensitive to the assumptions used.

Conclusions:

The burden of clinic visits for G-CSF therapy is a significant addition to the total economic burden borne by cancer patients and their families.     

Free Entry under Uncertainty

When focusing on firm’s risk-aversion in industry equilibrium, the number of firms may be either larger or smaller when comparing market equilibrium with and without price uncertainty. In this paper, we introduce risk-averse firms under cost uncertainty in a model of spatial differentiation and show that the impact of uncertainty will increase the number of firms in an industry. With increased uncertainty, the risk premium of the marginal buyer increases by more than the risk premium of the average buyer, so that the price increases by more than the risk premium. When turning to the free entry game, we find that the market generates too many firms.     

Applying the method of simulated moments to estimate a small agent-based asset pricing model

The paper takes a recent agent-based asset pricing model by Manzan and Westerhoff from the literature and applies the method of simulated moments to estimate its six parameters. In selecting the moments, the focus is on the fat tails and autocorrelation patterns of the daily returns of several stock market indices and foreign exchange rates. It is argued that it may be meaningful to abandon the econometrically optimal weighting matrix in the objective function and instead invoke the moments' t-statistics in an intuitively appealing way. This modification gives rise to estimations whose moment matching, given the model's parsimony, can be largely considered to be satisfactory. Also the parameter estimates across different markets make good economic sense.     

The Evolution of Private Equity Fund Terms Beyond 2 and 20

With the remarkable increases in the assets under management of private equity firms, the standard compensation arrangement of a 2% management fee plus 20% carried interest has raised concerns of a misalignment of interests between limited partners (LPs) and general partners (GPs). Using a proprietary data set that includes detailed fund terms of 210 PE buyout funds with vintage years between 1989 and 2012, the authors summarize the findings of their recent study of the evolution of fund terms. The authors report that PE fund terms have been remarkable mainly for their resistance to change, and that the only important force for bringing about reductions in percentage management fees has been the recent increase in fund sizes. But the modest cuts in management fees that have accompanied the increase in fund sizes have done little to address what appears to be a conflict of interest between LPs and GPs over the optimal PE fund size. As one possible solution to this conflict, the authors analyze a recent innovation by Bain Capital that involves considerably smaller management fees (say, 1%) and larger carried interest (as high as 30%). According to the authors, such terms have a good chance of becoming the new industry standard for two reasons: First, LPs have become increasingly “professionalized,” which has led to greater focus on GP compensation and ways of realigning their interests with LPs'. Second, the “signaling” benefits for those GPs willing to distinguish themselves by offering terms like “1 and 30” could encourage more GPs to move in this direction. In the authors' words, “For all but the most reputable and established PE firms, those GPs that do not offer the new terms may well be seen as signaling little confidence in their ability to do what they're being paid to do: namely, produce above‐market returns.”     

Asset market games of survival: a synthesis of evolutionary and dynamic games

The paper examines a game-theoretic model of a financial market in which asset prices are determined endogenously in terms of a short-run equilibrium. Investors use general, adaptive strategies (portfolio rules) depending on the exogenous states of the world and the observed history of the game. The main goal is to identify portfolio rules, allowing an investor to “survive,” i.e., to possess a positive, bounded away from zero, share of market wealth over an infinite time horizon. The model under consideration combines a strategic framework characteristic for stochastic dynamic games with an evolutionary solution concept (survival strategies), thereby linking two fundamental paradigms of game theory.