From Generosity to Sustainability: The Austrian Pension System and Options for its Reform

Austria has one of the world's highest pension expenditures relative to GDP, largely because of the generosity of its pension system. This paper examines the institutional setup of the Austrian pension system and projects its medium- and long-term development based on current policies. The projection results show a swift worsening of the finances of the pension system. With the already high level of contribution rates, pension expenditures, and budget transfers, the results underscore the need for reform. Much of the necessary reform can, however, be achieved by maintaining the structure of the system and adjusting some of its key parameters, as begun in the recent pension accord. The paper outlines options for further reform steps.     

Job Design in the Presence of Career Concerns

We reconsider the job design theory of Holmstrom and Milgrom to include career concerns. When agents are motivated by their reputation, the discretion to pursue outside activities plays an integral part in the incentive scheme. Discretion can be a useful instrument to enhance incentives and prevent the adverse selection of low‐ability agents. We argue that these synergies are useful in explaining, among other examples, the employment of US faculty members and of physicians in dual health care systems.     

Dismissals and quits in repeated games

This paper studies repeated games, where player 1 can decide to let the opponent continue or replace her by a new player. We also allow for the possibility of player 2 quitting the game. When only layoffs can occur, a folk theorem for finite horizons obtains due to the threat that termination of the relationship imposes on player 2. However, quits limit this result to those cases in which the outside option for player 2 is small (lower than some Nash equilibrium payoff of the stage game).     

Rents from power for a dissident elite and mass mobilization

Popular uprisings in autocracies seldom lead to democratic regimes. We propose a model that helps explain how rents from power encourage popular revolts. We study why citizens would follow a dissident group seeking regime change, if rents from change accrue only to the group. Our model predicts that higher rents may increase the incidence of public mobilization because rents facilitate coordination. The results suggest that cohesive dissident groups may spur seemingly spontaneous mass mobilizations, even when the mass public know that the dissident group is driven by greed rather than a genuine desire to halt incumbent’s rent‐seeking activities.     

Shedding light on the convergence debate: Using luminosity data to investigate economic convergence in Ecuador

The objective of this research is to analyze convergence in incomes per capita in Ecuador over the period 1992–2013. Using the National Oceanic and Atmospheric Administration’s satellite data capturing nighttime luminosity by region to proxy income, we undertake an analysis of economic convergence between provinces and cantons in Ecuador over the period 1992–2013. Traditional regression analysis alongside dynamic distribution analysis is used to verify the existence and determine the nature of convergence among Ecuadorian territories. What is found is that economic convergence across Ecuador’s provinces can be confirmed with a speed of convergence approximating Barro’s iron‐law of 2% per annum. In contrast to the expectations of finding convergence over recent years, the major progress in economic convergence was made over the 1992–2002 period. This was the period with the highest political and economic uncertainty. Investigating convergence in human development indicators such as infant mortality rates suggests that the boom‐financed period of economic prosperity did however coincide with a significant catchup of provinces lagging in human development achievements to leaders in this dimension.     

Carbon Sequestration with Reforestations and Biodiversity-scenic Values

This paper presents an optimal control model to analyze reforestations with two different species, including commercial values, carbon sequestration and biodiversity or scenic values. We discuss the implications of partial or total internalization of environmental values, showing that internalizing only carbon sequestration may have negative impacts on biodiversity-scenic values. To evaluate the practical relevance, we compare reforestations in the South-west of Spain with cork-oaks (a slow-growing native species) and with eucalyptus (a fast-growing alien species). We do the analysis with two different carbon crediting methods: the Carbon Flow Method and the Ton Year Accounting Method. With the first method, the forest surface increases more, but using mainly eucalyptus. With the second, additional reforestations are done mainly using cork-oaks. We value the impact on visitors of these reforestations using stated preferences methods showing that, when these values are internalized, cork-oaks are favored.     

Differentiability of the value function without interiority assumptions

This paper studies first-order differentiability properties of the value function in concave dynamic programs. Motivated by economic considerations, we dispense with commonly imposed interiority assumptions. We suppose that the correspondence of feasible choices varies with the vector of state variables, and we allow the optimal solution to belong to the boundary of this correspondence. Under minimal assumptions we prove that the value function is continuously differentiable. We then discuss this result in the context of some economic models, and focus on some examples in which our assumptions are not met and the value function is not differentiable.     

Are women expected to be more generous?

This paper analyzes if men and women are expected to behave differently regarding altruism. Since the dictator game provides the most suitable design for studying altruism and generosity in the lab setting, we use a modified version to study the beliefs involved in the game. Our results are substantial: men and women are expected to behave differently. Moreover, while women believe that women are more generous, men consider that women are as generous as men.

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Electronic Supplementary Material  The online version of this article () contains supplementary material, which is available to authorized users. We appreciate comments from Josemari Aizpurua, Shoshana Neuman and participants in seminars at Bar-Ilan University, Max Planck Institute of Economics, Univ. Publica Navarra. Tim Cason and one anonymous referee made substantial comments on the previous draft. Financial support from CICYT (SEJ2007-62081/ECON and SEJ2006-00959/SOCI) and FCEA (SOC2.05/43) is gratefully acknowledge. Martha Gaustad revised the English grammar.     

Firm Experience and Market Entry by Venture Capital Firms (1962–2004)

In this paper, we examine a firm's decision to enter new markets as related to the depth and breadth of its experience and the relative distance of those markets. We situate our discussion and analysis in the context of the venture capital (VC) industry, and examine whether and when US VC firms enter five high‐technology investment markets through first‐ or later‐round investments. This setting allows us to observe both the firms that chose to enter a new market and those that did not, and analyse the antecedents of these decisions. We find that VC firms overall are less likely to enter distant markets; those with broader experience are more likely to make first‐round entries. In addition, VC firms with deeper investment experience are more likely to make first‐round entries in proximate markets and less likely to enter distant markets and make later‐round entries. These results offer interesting implications for the literature on organizational learning and entrepreneurship.