Characteristics and Trends in the Israeli Service Economy

Long-term and short-term characteristics of the Israeli service economy are described and analysed. The percentages of service employment in Israel are similar to current ones in developed countries, but a variety of factors make the Israeli case unique. The roots of the Israeli service economy lie in the 1920s when the British established a civil service, while the Jewish population developed the Histadrut, the Jewish Agency, party and municipal services. Meanwhile, the geographical separation between the capital city (Jerusalem), and the largest city (Tel A viv), which became a primate city, encouraged the evolution of services. The constant and very large import of capital, the supply of service-oriented immigrants and the demand for improved health and education services are additional factors. The politicisation of services and bureaucratic activism have a strong impact from a political viewpoint. Altogether, the Israeli service economy has been uniquely structured in an immigration society driven by political rather than economic forces. During the last decade pressures for change have surfaced, due to the development of modern agriculture, manufacturing and domestic consumption. These have increased the finances, insurance and real estate sector, and decreased the dominance of Tel Aviv. The current economic crisis in Israel is interpreted as a crisis of the services.     

ADVANCE PAYMENTS DURING INFLATIONARY PERIODS

During periods of rismg prices, contracts for future delivery of merchandise are usually linked to a price index to protect suppliers from future cost increases, and customers, therefore, advance payments to avoid the price linkage. Suppliers are then faced with two problems: (i) the investment of advance payments and (ii) the presentation of the investment outcome in the fimancial reports. This paper uses a portfolio selection process to analyse the suppliers' investment decisions, and shows that the accounting presentation depends on the particular investment decision, which in turn affects the principalagent relationship. Suggestions are made to eliminate the undesirable effects of this relationap on management's decision making.     

Work values as “reinforcer groupings”

This study was conducted to examine whether the same underlying structure of occupational reinforcers (denoted the structure of work values) turns out when three different data analysis methods are used. A questionnaire requesting a respondent to indicate the importance of each of 21 occupational reinforcers was administered to 546 subjects, drawn so as to constitute a representative sample of the urban adult Jewish Israeli population. Factor analysis, Guttman's smallest space analysis, and cluster analysis were each applied to the subjects' responses from the questionaires, essentially resulting in different work values structure. Comparisons were made and theoretical implications have been discussed.     

Learning from Trading

The incorporation of diverse information into asset prices isempirically examined in an actual securities market with multiplerounds of trade. Using prices of Israeli index and nominal bondsof equal maturity, we calculate implied expectations of inflationthat has already occurred but for which the official statistichas not yet been announced. Learning is defined as the convergenceof these expectations to the actual level of inflation in theperiod after the end of the month but before the announcementof the official statistic. We find that the variance of theinflation expectation errors decreases with trading days inthis period. The decline in the variance suggests that investorslearn, by repeatedly observing prices, about the distributionof other investors' information. We also find a positive relationbetween the dispersion of relative price changes and the sizeof the inflation-expectation errors on the first round of trade.The correlation diminishes as investors learn about the distributionof inflation information in the economy.     

When destructive deviance in the workplace becomes a liability: a decisional behavioral model

In recent years destructive deviant behavior in organizations has drawn increasing attention. However, surprisingly little work has been devoted to assessing when the economic value of deviant behavior is tolerable (i.e., the benefits from employing the deviant worker exceed the financial costs of his/her deviance) and when it becomes unbearable (i.e., the financial cost of the deviance exceeds the benefits accrued from his/her employment). The purpose of the present paper is to introduce a mathematical model which may resolve this lacuna. In addition, a simulation was conducted and its results were reported in order to illustrate the usefulness of the proposed mathematical model. In conclusion it is suggested that the present model be further examined empirically in the real workplace.     

Human capital and financial equilibrium

This article investigates the effect of incorporating human capital—an expansion of the investment opportunity set—into the analysis of portfolio investment decisions. The “production function” of human capital displays decreasing returns to scale. The return on human capital is a product of two factors: a “market” return and return unique to each individual. Financial equilibrium results are derived and tested empirically using U.S. data and an international sample. The main findings are that demand for financial assets relates positively to human capital risk and negatively to financial capital risks.     

A comparative examination of structural models of ability tests

This study was conducted to examine whether the same underlying structure of ability tests emerges when three different data analysis methods are used. The sample consisted of 335 examinees who applied for vocational guidance and were administered a battery of 17 tests. A matrix of intercorrelations between scores, based on the number of correct answers was obtained. The matrix was subjected to factor analysis, Guttman's SSA, and tree analysis, essentially resulting in different structures. Comparisons were made, and the theoretical implications of the results are discussed in relation to various structural models of ability tests existing in the literature.