DOES IMPROVING SCHOOL QUALITY REDUCE THE PROBABILITY OF UNEMPLOYMENT?

The authors investigate the relationship between high school quality and the probability of extended unemployment among noncollege-bound men during three periods: the first two years, two to four years, and seven to nine years after high school. They find that larger high schools and schools with lower pupil–teacher ratios tend to decrease the probability of being unemployed for noncollege-bound men in the period shortly after high school graduation. However, no effect is found of high school quality on unemployment probabilities approximately a decade after high school completion. (JEL I21 , J64 )     

Motivating Truthful Subordinate Reporting: An Experimental Investigation in a Two-Subordinate Context*

Abstract. This experimental study tests the predicted effects of three performance-contingent pay schemes on subordinate misrepresentations: profit sharing, a single-subordinate truth-inducing scheme, and the Groves scheme. A contribution not found in prior experimental research is the introduction of the distinction between direct and indirect misrepresentations. The results show that, as predicted, the three schemes have different abilities to deter the two types of misrepresentations. The fewest direct and indirect misrepresentations occur under the Groves scheme and the most under the linear profit-sharing scheme. There is no significant difference between the single-subordinate truth-inducing scheme and the Groves scheme in the incidence of direct misrepresentations, but indirect misrepresentations are significantly more frequent under the former. Résumé. La présente étude expérimentale vise à tester certaines hypothèses relatives aux résultats de l'application de trois structures salariales liées au rendement sur les déclarations trompeuses des subordonnés: la participation linéaire aux bénéfices, une structure salariale individuelle favorisant la franchise et la structure Groves. Cette étude se démarque des etudes expérimentales antérieures en ce qu'elle introduit une distinction entre l'information trompeuse directe et indirecte. Les résultats révèlent que, conformément aux hypothèses, les trois structures salariales présentent des capacités différentes de décourager les deux formes de déclarations trompeuses. La structure Groves est celle qui occasionne le plus petit nombre de déclarations trompeuses directes et indirectes, tandis que la participation linéaire aux bénéfices est celle qui en occasionne le plus. Il n'existe pas de différence significative entre la structure salariale individuelle favorisant la franchise et la structure Groves en ce qui a trait à l'occurrence des déclarations trompeuses directes, mais les déclarations trompeuses indirectes sont beaucoup plus fréquentes dans le cas de la structure salariale individuelle.     

CAUSALITY IN POLITICAL BUSINESS CYCLES

One can easily identify four general models of political business cycles: office-motivated models (both forward and backward looking) and partisan models (again, both forward and backward looking). Each model makes different assumptions about the direction and timing of causal links between the economy and polity. This paper uses Granger causality tests to investigate the causal links between presidential popularity and different measures of aggregate economic performance and aggregate economic policy. The paper's aim is to investigate whether any existing theories receive substantive support and, if not, to suggest the properties that any new theories should display. The results indicate no overwhelming support for any existing theories, though partisan models receive more support than do office-motivated models. The data appear to be most consistent with Ellis and Thoma's reputational partisan model.     

Signalling and the Pricing of New Issues

This paper develops a signalling model with two signals, two attributes, and a continuum of signal levels and attribute types to explain new issue underpricing. Both the fraction of the new issue retained by the issuer and its offering price convey to investors the unobservable “intrinsic” value of the firm and the variance of its cash flows. Many of the model's comparative statics results are novel, empirically testable, and consistent with the existing empirical evidence on new issues. In particular, the degree of underpricing, which can be inferred from observable variables, is positively related to the firm's post-issue share price.     

Culture in the Rise of Tiger Economies: Scottish Expatriates in Dublin and the ‘Creative Class’ Thesis

This article evaluates the contributions which Richard Florida's seminal ‘creative class’ thesis might make to ongoing efforts to re‐inscribe ‘culture’ back into political economy explanations of the rise of Tiger economies. It reflects upon the value of reconsidering both the role of skilled migrants in Tiger states and the factors which attract skilled migrants to these economies in the first instance. Based upon analyses of a series of focus groups conducted with Scottish expatriates currently working in Dublin, the article specifically attempts to gauge how far the creative class thesis can be stretched to account for the locational preferences of talented migrants. Whilst Florida's work undoubtedly sheds light on aspects of expatriate existence which might not otherwise have been obvious, its ability to account for the relationships which have existed between technology, talent and tolerance in the Celtic Tiger must be questioned. Moreover, if political economy and Floridian readings are to do more than simply inform one another, there will be a need to establish more clearly the complex ways in which developmental states intersect with skill flows and cosmopolitan cultural agendas.