Inequality and Participative Democracy: A Self-Reinforcing Mechanism

During the last three decades, a notable increase in economic inequality is observed, accompanied by a decline in people's engagement in politics and electoral participation. This is an unsatisfactory phenomenon as it undermines the legitimacy of democratic representation. This negative association is produced by a complex salient mechanism. This study aims at investigating this issue. Using data from a panel of 28 OECD and European countries, this paper identifies a two-way causal relationship between inequality and political participation. The results show that greater income inequality alienates and discourages people from engaging with common affairs, thus leading to lower political participation. Yet, lower electoral participation leads towards a less equitable distribution of income. Hence, this study reveals a self-reinforcing mechanism where the unequal distribution of income leads to political exclusion, which in turn leads to more inequality.     

An Investigation of the Pay-As-You-Go Financing Method Using a Contingency Fund and Optimal Control Techniques

Abstract

In many countries, aging populations are expected to lead to substantial rises in the cost of public pension systems financed by the pay-as-you-go (PAYGO) method. These systems will need to be adapted to cope with these changes. This paper considers one approach to reform, described in the literature as “parametric” (see, e.g., Disney 2000), and develops a model for adapting the PAYGO method using a contingency fund and optimal control techniques. The solution of the original model is investigated within two different frameworks: a deterministic-continuous one and a stochastic-discrete one. Finally, a case study applied to Greece is discussed, leading to a potentially acceptable proposal of a smooth path for contribution rates and the age of eligibility for the normal retirement pension.     

Curiosity's pleasure? Exploring motives for cultural consumption

Although there is a robust research framework describing several motivational factors explaining cultural consumption behavior, most of these research endeavors do not rely on specific theories. Therefore, based on three psychological approaches and previous research, this study aims to identify the main motives of people consuming various cultural goods (i.e., books, recorded music, historical monuments, and festivals). To further extend current studies, this research suggests a hierarchical structure of consumer needs and investigates the motivational differences between cultural consumption behavior and demographic variables (gender and age). A structural equation modeling was employed to confirm the structure of the consumers' drives indicating that six motives (entertainment, escapism, cultural exploration, learning/curiosity, family togetherness, and socialization) can sufficiently describe individuals' needs. The above dimensions can be sorted into three higher‐order types of motivation, which are the emotional, cognitive, and social ones. The results also revealed that there are significant differences in motivation depending on cultural participation as well as demographic variables. The current findings are important not only for academics, but also for art practitioners, who need to develop effective marketing strategies, increase consumer satisfaction, and meet their economic objectives.     

Interactions of the firm's real and financial decisions

This paper provides an integrated approach to the theory of the firm. Under technological uncertainty, corporate taxes, risky debt and risk neutrality it is shown that the firm's investment production and financing decisions are made simultaneously. It is demonstrated that the relationship between optimal capital (or labour) and debt is not strictly negative as in Dotan and Ravid (1982) nor strictly positive as in Hite (1977). The direction of this relationship depends on the characteristics of debt and the characteristics of the firm's production function. Given the simultaneity of the real and financial decisions, it is shown that an interior optimum exists for the firm's value as a function of debt.     

Seniority Profiles in Unionized Workplaces: Do Unions Still have the Edge?*

The focus of this study is to distinguish the different paths seniority earning profiles follow depending on whether the individual is employed in a workplace where trade unions and collective bargaining are present, or not. Within this framework, two propositions are set. In the union sector seniority should be an important determinant of wages, while in the non‐union sector productivity, proxied by occupational experience, should have a key role on earning profiles. The empirical analysis verifies both propositions. Seniority earning profiles appear to be steeper in the union sector, while occupational expertise is estimated to have a more significant role in non‐union jobs.     

The Components of the Bid‐Ask Spread: the Case of the Athens Stock Exchange

We analyse the components of the bid‐ask spread in the Athens Stock Exchange (ASE), which was recently characterised as a developed market. For large and medium capitalisation stocks, we estimate the adverse selection and the order handling component of the spreads as well as the probability of a trade continuation on the same side of either the bid or the ask price, using the Madhavan et al. (1997) model. We extend it by incorporating the traded volume and we find that the adverse selection component exhibits U‐shape patterns, while the cost component pattern depends on the stock price. For high priced stocks, the usual U‐shape applies, while for low‐priced ones, it is an increasing function of time, mainly due to the order handling spread component. Furthermore, the expected price change and the liquidity adjustment to Value‐at‐Risk that is needed are higher in the low capitalisation stocks, while the most liquid stocks are the high priced ones. Moreover, by estimating the Madhavan et al. (1997) model for two distinct periods we explain why there are differences in the components of the bid‐ask spread.     

The Euro and inflation uncertainty in the European Monetary Union

This paper adopts a time-varying GARCH framework to estimate short-run and steady-state inflation uncertainty in 12 EMU countries, and then investigates their relationship with inflation. The effects of the Euro introduction in 1999 are examined by utilising a dummy variable. Tests for endogenously determined breaks are also employed. We find a considerable degree of heterogeneity across EMU countries in terms of average inflation, its degree of persistence, and both types of uncertainty, whilst the trend component of inflation is generally decreasing. Various breaks in the relationship between inflation and inflation uncertainty are found, frequently well before the Euro introduction.     

Absorptive capacity, innovation, and financial performance

This study here examines the role of absorptive capacity as both a mechanism to identify and translate external knowledge inflows into tangible benefits, as well as a means of achieving superior innovation and time-lagged financial performance. Using path analysis in a sample of 461 Greek enterprises participating in the third Community Innovation Survey, this study demonstrates that external knowledge inflows are directly related to absorptive capacity and indirectly related to innovation. Absorptive capacity contributes, directly and indirectly, to innovation and financial performance but in different time spans. This study, therefore, contributes to the understanding of absorptive capacity's antecedents and outcomes by providing empirical evidence of longitudinal form that offers important research and practical implications.