EU Widening and Deepening – Are these goals reconcilable?

The paper examines the compatibility between widening the EU and deepening its integration endeavors, with special emphasis on eastward enlargement. After clarifying the broad nature of the accession negotiations under way, it sketches the most critical obstacles encountered in forging ahead with EU deepening, the problems posed by the ongoing restructuring of the accession candidates, and how deepening and widening necessarily interact. Before concluding with an aside on the relationship between the accession process and the EU's designs on assisting southeastern Europe, the paper briefly reviews where the negotiations stand in mid-2001 and elaborates on what may be in store for the enlargement process in the near term.The opinions expressed here are mine and do not necessarily reflect my employer's.     

Reading and understanding employee benefit plan financial statements

If your employee benefit plan has more than 100 participants, chances are you've had to work your way through the audited financial statements you're required to include with your Form 5500 filing. These statements contain a wealth of information about the financial health of your plan, and understanding them is an important fiduciary responsibility. To strengthen your grasp of financial statements, this article gives an overview that will make a plan's financial statements more informative, explains their basic structure and provides information on some of the more arcane aspects (such as actuarial tables). While this article focuses on Taft-Hartley (multiemployer) plans, much of it applies to other types of employee benefit plans.     

National culture and financial literacy: international evidence

ABSTRACT

We examine to what extent (aspects of) national culture can explain cross-country variations in financial literacy. Our results, for a sample of 92 countries, show that Hofstede’s dimensions of power distance and individualism explain, respectively, over 40 and 60 per cent – which is substantially more than national cognitive scores and standard economic variables. In particular, we find that financial literacy is lower in countries where power distance is high, and that the opposite is true for individualism. Uncertainty avoidance would seem be negatively related with financial literacy, but the evidence is not so strong. For masculinity, indulgence, and long-term orientation we find no significant impact. Overall, our results highlight the need for additional (interdisciplinary) theories that can improve our understanding of the determinants of financial literacy and better guide policies in this area.     

Water and vertical territory: the volatile and hidden historical geographies of Derbyshire’s lead mining soughs, 1650s–1830s

ABSTRACT

This paper is concerned with the complex subterranean politics of lead mining in the Derbyshire Peak District. We focus specifically on the implications of lead mining ‘soughs’ – underground channels driven to drain water out of mines to allow for mineral extraction. Built during the 17th, 18th and 19th centuries, soughs were substantial, capital and labour intensive projects which served a key function in the refashioning of subterranean and surface hydrological landscapes. They were ‘driven’ at a time when water was both a major hindrance to mining endeavour and the primary energy source for industrial expansion, such that historical disputes surrounding sough drainage were common. Here, we draw on unpublished historical legal records to explore the ways in which vertical conceptualisations of space were central to the legal discourse over soughs and extend the so called ‘vertical turn’ in geography to include subterranean proto-historical landscapes. Drawing on a high profile conflict between English entrepreneur Richard Arkwright and Conservative politician Francis Hurt, we go some way to addressing recent claims for more ethnographic detail in studies of verticality by considering the people who legally and physically negotiated sough development below as well as above ground. We also illustrate the range of temporalities which framed sough developments and highlight the cross-generational nature of the legal disputes over soughs and the productive landscapes they drained.     

Human capital and economic growth in an overlapping generations model

The paper describes an aggregative optimal growth model, the essential features of which are that individuals are mortal and obtain their labor skill through educational training. The process of human capital formation is described by an education function which relates the pass rate to the educational expenditure per student. Two alternative scenarios, private and public education regimes, are separately investigated. Under the decentralized education regime, risk-neutral individuals borrow to finance their education when young. Under the centralized education regime, the cost of education is financed by taxes imposed on the workers in the economy, and the central government maximizes a long-term social target function. The equilibria of both regimes are analyzed and various comparative static results derived. It is shown that educational investment in a decentralized equilibrium is higher than that in the centralized steady state. We also establish that there exists a time discount rate at which or above which the decentralized per capita consumption exceeds that of the centralized steady state whereas for time rates of discount sufficiently near the population growth rate, the above result will be reversed.     

How Debt Creates Pressure to Perform when Information Asymmetries are Large: Empirical Evidence from Business Start‐ups

In this paper, we empirically examine how leverage affects firm performance when information asymmetries are large. We argue that entrepreneurs are strongly incentivized to maximize earnings when leverage is high in order to reduce the likelihood of adverse credit decisions and firm liquidation. Our empirical tests focus on the effects of leverage on firm profitability and growth in earnings during a 5‐year window after start‐up for a large and unique sample of newly established ventures in Belgium. Accounting for the endogeneity of leverage, the data reveal that more highly indebted business start‐ups are not only more profitable but also realize larger earnings growth. Moreover, the positive effect of leverage on firm profitability intensifies as the venture matures.     

Group Status and Entrepreneurship

Do unfettered markets produce too many or too few entrepreneurs? Two seminal papers [ Stiglitz and Weiss (1981) and de Meza and Webb (1987) ] obtained ambiguous answers to this question based on different assumptions about the character of information asymmetries in credit markets. The present paper approaches the same question but using a labor market model in which income is determined by ability and individuals derive utility from income and occupational group status. Occupational group status for entrepreneurs depends on the average entrepreneurial income (due to ex post screening by banks), whereas status for wage employees depends on their own income and ability (due to ex ante screening by employers). Thus, individuals create externalities through their occupational choice. It is shown that there can be too many or too few entrepreneurs in equilibrium depending on the marginal returns to ability in entrepreneurship relative to paid employment; this enables the researcher to use independent evidence about occupational marginal returns to identify the relevant equilibrium likely to arise in practice, together with the likely appropriate policy responses. Based on this approach, we suggest that there may be too many (low ability) entrepreneurs in the USA.     

Unions and involuntary job separations

In contrast to the extensive literature on the effects of unions on wages, productivity and voluntary job endings, the effect of unions on involuntary job endings has received relatively little attention. This article demonstrates how unions alter involuntary job separation (redundancies, temporary job endings and dismissals) rates at different tenure levels using the British Household Panel Survey data from 1991 to 2008. A novel finding is that being a union member reduces a person's redundancy probability at low‐tenure levels, relative to an employee of a non‐unionised firm, but has no significant effect at high tenure levels. Union membership and union recognition are not related to different rates of temporary job endings.     

Equity–Efficiency Optimizing Resource Allocation: The Role of Time Preferences in a Repeated Irrigation Game

We study repeated water allocation decisions among small scale irrigation users in Tanzania. In a treatment replicating water scarcity conditions, convexities in production make that substantial efficiency gains can be obtained by deviating from equal sharing, leading to an equity–efficiency trade‐off. In a repeated game setting, it becomes possible to reconcile efficiency with equity by rotating the person who receives the largest share, but such a strategy requires a longer run perspective. Correlating experimental data from an irrigation game with individual time preference data, we find that less patient irrigators are less likely to use a rotation strategy.