Option Awards for Australian CEOs: The Who, What and Why

The compensation structure for Australian CEOs, and especially the extent to which they receive executive stock options, is explored. Evidence suggests that the award of executive stock options is common in Australia, but not in as systematic a manner as has been documented for US CEOs. Where ESOs are awarded, they form a significant component of total compensation, even allowing for limitations in the way we approximate their value. Modelling the use of ESOs shows relatively few empirical regularities, other than a positive association between firm size and ESO use. This is consistent with a view that ESOs are a form of "rent extraction" by CEOs, but it may also reflect a bias towards their use created by accounting rules.     

Factors influencing ‘missing girls’ in South Korea

Despite the massive attention drawn to ‘missing girls,’ there has been no study that specifically focuses on the association between childlessness and the daughter deficit. Using a bivariate probit selection model, this article analysed the data for 6475 married women aged 15–49 years collected from the 2003 Korea National Fertility and Family Health Survey. The results showed that a couple's decision to have a child exerted a significant influence on its daughter deficit. This study also found that the effect of a woman's education on daughter deficit did not correspond to that of her husband's level of education. Additionally, a prediction was made that if a one child family norm were prevailing in South Korea, the probability of a couple's having a daughter deficit would increase by as much as 63.9%.     

Is the relative risk aversion parameter constant over time? A multi-country study

In this paper, an information matrix (IM)-based test is developed for testing the hypothesis of constant relative risk aversion parameter in the GARCH-M set up. A detailed Monte Carlo study is then carried out to evaluate the performance of this test in terms of size and power. Further, a bootstrap technique is suggested to correct the over-size problem found in small samples. The proposed test is then applied to the time series of returns on stock markets of five important countries to examine whether this important hypothesis holds or not, and it is found that the relative risk aversion parameter is not time invariant for all the five time series.     

Wages,work, and unemployment

This paper provides new evidence on unemployment durations for individuals in Great Britain using a three state Markov framework in a competing risk setting and a nationally representative data set. The analysis is based on the premise that an individual's movements between labour market states can be represented by a Markov process. The modelling procedure combines the dynamic properties of the search approach to unemployment while using the labour supply decision at each moment in time in response to the expected wage to include participation decisions. Using this framework, we are able to determine the effect of individual characteristics, including the expected wage, on labour market behaviour. The model is estimated separately for men and women, and for young and mature workers, to investigate whether labour market behaviour differs for these groups. The validity of the Markov assumptions are tested using different model specifications, and changes in the model over calendar time are also presented.     

India shining and Bharat drowning: Comparing two Indian states to the worldwide distribution in mathematics achievement

Increasing evidence suggests that the level and distribution of cognitive skills is more important to economic development than absolute measures of schooling attainment, and that income and skill inequality are inextricably linked. Yet for most of the developing world no internationally comparable estimates of cognitive skills exist. This paper uses student answers to publicly released questions from an international testing agency together with statistical methods from Item Response Theory to place secondary students from two Indian states—Orissa and Rajasthan—on a worldwide distribution of mathematics achievement. These two states fall below 43 of the 51 countries for which data exist. The bottom 5% of children rank higher than the bottom 5% in only three countries—South Africa, Ghana and Saudi Arabia. But not all students test poorly. Inequality in the test-score distribution for both states is next only to South Africa. The combination of India's size and large variance in achievement give both the perceptions that India is shining even as Bharat, the vernacular for India, is drowning. How India's development unfolds will depend critically on how the skill distribution evolves and how low- and high-skilled workers interact in the labor market.