Topics in nonparametric comparative statics and stability

This paper presents the analysis of the Jacobian matrix of a small, macroeconomic model to determine the robustness of the model's comparative statics. The values of the model's coefficients are assessed with respect to seven alternative estimation strategies such as ordinary least squares or two-stage least squares. For each alternative version, the invertibility and stability of the Jacobian matrix is studied. The model is robust to the degree that these characteristics are shared by any matrix with the same sign pattern or other similar nonparametric conditions on its entries. One way to address the relative success of the different estimation strategies is through the robustness of the comparative statics of the resulting model.     

A Schumpeterian model of equilibrium unemployment and labor turnover

This paper constructs a general equilibrium model of equilibrium unemployment by combining an endogenous growth model with a variant of equilibrium search theory. The analysis offers two explanations for the causes of widening wage gap between skilled and less-skilled labor, and rising unemployment rate among the less skilled: technological change in the form of an increase in the size of innovations or skilled labor saving technological change in R&D activity. In addition, the model identifies two distinct effects of faster technological progress on the aggregate unemployment rate. First, it increases the rate of labor turnover and therefore increases the aggregate unemployment rate – the creative destruction effect. Second, it creates R&D jobs, which offer workers complete job security, and consequently reduces the aggregate unemployment rate – the resource reallocation effect.     

Health benefits: employer liability and the need for change

The cost of health care benefits has been rising much faster than overall inflation recently, and employees are increasingly dissatisfied with the programs being offered. This has left many human resources professionals searching for a better way. Against this background, attempts to increase employer liability pose serious threats. While some employers might consider abandoning health benefits to avoid this expanded liability, other alternatives may be more appealing and may be equally effective at limiting liability.     

How and when environmental orientation drives corporate sustainable development in a cross-national buyer–supplier dyad

This study aims at relating the role of environmental orientation to corporate sustainable development within a cross-national buyer–supplier dyad. To this end, it specifically proposes and empirically tests a model delineating how the international buyer's environmental orientation would influence its green supplier development (GSD) activities, then its outsourcing supplier's green product strategies (GPS), and finally total relationship value (TRV) of the entire buyer–supplier dyad. It also examines how supplier overall information technology advancement (SOITA) would further moderate the aforementioned influences. Survey results derived from 202 buyer–supplier dyads have provided empirical support for all the hypothesized relationships of the proposed model. To summarize, the findings show that international buyers' internal and external environmental orientations both serve as a major driver for their GSD, which, in turn, significantly advances outsourcing suppliers' practice of GPS and consequently enhances TRV. Moreover, this study has demonstrated that SOITA exerts a significant and positive moderating effect on the GSD–GPS link. Overall, this study provides important insights into understanding the complex and contingent processes underlying the influence of the international buyer's environmental orientation on the joint performance of the dyad.     

Environmental performance,sustainability, governance and financial performance: Evidence from heavily polluting industries in China

This study seeks to contribute to the existing business strategy and the environment literature by examining the effect of governance structures on Chinese firms' environmental performance, and consequently ascertain the extent to which the financial performance–environmental performance nexus is moderated by governance mechanisms. Using a sample of Chinese companies from heavily polluting industries over a 5-year period, our baseline findings suggest that, on average, board size and governing board meetings are positively associated with Chinese firms' environmental performance, whilst board independence and gender diversity have positive, but insignificant association with firms' environmental performance. Our evidence suggests further that the examined internal governance mechanisms have a mixed moderating effect on the link between financial performance and environmental performance. Our findings have important implications for company executives, environmental activists, policy-makers, and regulators. Our results support insights drawn from agency, resource dependence, stakeholder, and legitimacy theories.     

There is no ‘I’ in team: Career concerns,risk‐taking incentives,and team outcomes

The National Basketball Association contracting rules provide plausibly exogenous variation in career concerns near contract end. We use this setting to study how individual career concerns affect risk‐taking behavior and can sabotage team performance. Using the frequency and duration of player injuries from 1991 to 2013 we measure individual risk‐taking behavior. We find that the average player's likelihood of missing a game due to injury falls by 0.06 percentage points (or over 100% relative to the mean injury rate) in the final 3 months of his contract, and when missing games due to injury is unavoidable, his recovery time drops by 22 days. However, “elite” players with virtually no career concerns actually miss more games due to injury. Finally, we find that elite players missing too many games and “average” players playing before healthy, combine to hurt team performance. For each additional player in the last 3 months on contract, the win probability for that team falls by over 2.6%.     

Deferred taxation under default risk

In this article, we have used a continuous EBIT-based model to study deferred tax liabilities under default risk. Quite surprisingly, default risk has been disregarded in research on deferred taxation. In order to underline its importance, we first calculated the probability of default, over a given time period, together with the contingent value of tax deferral. We then applied our theoretical model to a sample of 27,749 OECD companies. We showed that, when accounting for both firms with a negative EBIT and firms with a probability of default higher than 50% (over a 10-year period), a relevant percentage of firms were close enough to default. Hence, the expected present value of deferred taxes is much lower than that obtained in a deterministic context. From the Government’s point of view, deferred tax liabilities are a risk-free loan. Since only a portion are subsequently repaid, the Government should account for future losses due to companies’ default. So far, these estimates have been missing, although techniques do exist and are quite practical.     

STILL “SAVING BABIES”? THE IMPACT OF CHILD MEDICAID EXPANSIONS ON HIGH SCHOOL COMPLETION RATES

The decoupling of child Medicaid from the cash welfare system greatly increased access to public health insurance for low‐income children in the United States. In this paper, I show that the federally mandated public health insurance expansions of the late‐1980s and early‐1990s significantly increased the number of public high school completers in the 2000s. Using the legislated generosity of a state's child Medicaid program as a time‐varying, exogenous source of variation in a quasi‐experimental design, I find substantively large declines in the dropout rate and, importantly, large increases in traditional 4‐year graduation rates. Results for both measures are driven by Hispanic and White students, the two groups experiencing the greatest within‐group increases in eligibility due to the decoupling of child Medicaid from the Aid to Families with Dependent Children program. In addition, I find evidence that increases in the length of childhood years covered (e.g., through age 5 vs. through age 17) leads to greater gains in completion rates. This suggests that public health insurance coverage throughout childhood produces the largest effect. (JEL C23, H51, H52, H75, I21)     

Competition under revenue-cap regulation with efficiency benchmarking: tariff related incentives for gas transmission system operators in merged markets

Journal of Regulatory Economics - In Europe, gas market mergers aim at reducing restrictions on gas wholesale markets. Market mergers also allow network users to book transport capacity at...     

Market-focused sustainability: market orientation plus!

The concept of sustainability is increasingly being addressed theoretically by scholars and practically by managers and policymakers. With this growing focus on sustainability efforts, marketing is in a unique position to elevate its focus from managing relationships with customers to strategically managing a broader set of marketplace issues. Overall, an organization achieves market-based sustainability to the extent that it strategically aligns itself with the market-oriented product needs and wants of customers and the interests of multiple stakeholders concerned about social responsibility issues involving economic, environmental, and social dimensions. To set the stage for marketing’s inquiry into sustainability efforts, I briefly review the concept of sustainability, compare it with corporate social responsibility, bring in stakeholders, argue for the notion of “market orientation plus,” and consider the possibility that the notion of what sustainability encompasses is converging in the marketing literature.