Can progressive taxation account for cross-country variation in labor supply?

The difference between average hours worked in the US and average hours worked in Continental European countries has been increasing since the early 1970s. To explain this phenomenon, this paper develops an endogenous growth model with two key properties: agents are heterogeneous in their rates of time preference and labor skills, and the model incorporates progressive income taxes. The model is calibrated to US and German data for the periods 1971-1974 and 1986-1989. Our findings suggest that the degree of progressivity is a major factor in explaining the patterns of the US and German labor supply over time. Predictions of the model also match the distributional trends in both countries during this time period.     

More on phantom bidding

Summary. A phantom bidding model is analyzed for a sale auction. The following issues are addressed: the effects of phantom bidding on overall social welfare and buyers' profits. It is shown that social welfare may increase or decrease as the auctioneer switches from the fixed reserve price policy to phantom bidding. The buyers' profits will increase whenever social welfare increases. Received: November 4, 1998; revised version: February 8, 1999     

A yield management model for five-star hotels: Computerized and non-computerized implementation

The purpose of this study was to propose an enhanced yield management (YM) model that was developed based on the previous models and to test the applicability on five-star lodging properties in Turkey to identify the related problems. The proposed model overcomes some of the limitations of previous ones. It was specifically developed for full service, upscale hotels, namely for five-star lodging properties with or without a computerized yield management system (CYMS). Examination of the actual implementation stages provided useful insight in determining the applicability and the problems related to the application of the model. Findings indicted that the proposed YM model can be used by all upscale properties (with or without a CYMS) to manage their revenue and yield. Findings suggested that the application of the model is likely to improve the operational and financial performance for both type of properties.     

Financial market participation and the developing country business cycle

I explore the implications of limited participation in financial markets on a standard small open economy business cycle model. Despite its parsimony, the limited participation model developed in this paper improves over the standard model in terms of explaining two important features of business cycle facts of developing countries: high volatility of consumption, and high negative correlation between the trade balance and output. Limited participation model is then used to inspect the effects of financial development and integration on macroeconomic volatility. Under a standard calibration, limited participation model leads to the conclusion that financial development and integration are associated with higher investment and output volatility. Effect of more participation on consumption volatility is dependent on the specification of the risk premium function.     

Competition in the general insurance industry

Using a large sample of cross-sectional data for 1998 of companies operating in the general insurance industry we attempt to shed some light on the issue of competition in this industry. Companies offering products and services in the general insurance market are believed to trade under very competitive conditions. In order to test this widely-held claim we investigate whether firms’ pricing policies reflect competitive or monopolistic market features. Under competitive conditions companies are forced to pass on any increase in costs in prices and thus their revenues will rise pari passu should wages, underwriting costs or other expenses are increasing. By contrast, a firm operating under monopolistic competition responds to an increase in marginal and average costs by increasing price and reducing output, resulting in a less then complete pass-through in revenue; profit falls. Our study is the first, to our knowledge, to apply this research methodology to the general (casuality/liability) insurance industry. Firms in this industry generate revenue through underwriting of insurance risks and from investing their assets. As underwriting and capital markets are in general segmented (catastrophe bonds apart), our empirical approach is based on the insurance and portfolio behaviour of firms and not on an integrated view of both. Previous investigations of this kind have focussed on the banking industry. Contrary to widely held views we find that competition is less than perfect.     

Labor market outcomes,savings accumulation,and return migration

In this paper, I examine the determinants of return migration from Germany for immigrants from four different source countries, and test the savings accumulation conjecture that is used to rationalize return migration decisions using both cross-country and time variation in purchasing power parity. The empirical results confirm the savings accumulation conjecture. Therefore, return migration can be seen as part of optimal life-cycle location choices in this context. I also examine how labor market outcomes influence return decisions. A key finding here is that unlike previous studies, which find a positive impact of unemployment on return migration, I find that the direction of the impact of unemployment changes by the spell length.