Entrepreneurship persistence with and without personnel: The role of human capital and previous unemployment

By considering entrepreneurs who hire employees (employers) and entrepreneurs without personnel (own-account workers) as related but distinct entrepreneurship groups, this work analyses factors in entrepreneurship survival from a new perspective: we contrast the determinants of employers’ survival with those affecting own-account workers’ survival. Discrete choice models under competing risks frameworks are applied to data drawn from the European Community Household Panel for the EU-15 (EUROSTAT). Our results suggest that survival chances are markedly higher for employers than for own-account workers—especially when non-employment exits are considered. We also observe that high qualifications have positive and statistically significant effects on survival rates of employers, regardless of exit routes, while high qualifications have no significant effect on survival rates of own-account workers. Finally, we find that entering entrepreneurship from unemployment—the target group for entrepreneurship incentives—strongly increases the probability of re-entering unemployment for both entrepreneurship groups. Thus, entrepreneurship and higher education policies should be considered together to develop high quality entrepreneurial businesses.     

The ‘recession-push’ hypothesis reconsidered

The relationship between unemployment and self-employment has been studied extensively. Due to its complex, multifaceted nature, various scholars have found a large array of different results, so that the exact nature of the relation is still not clear. An important element of the relation is captured by the recession-push hypothesis which states that in times of high unemployment individuals are pushed into self-employment for lack of alternative sources of income such as paid employment. We make two contributions to this literature. First, we argue that official unemployment rates may not capture the ??true?? rate of unemployment as it does not include ??hidden?? unemployed who are out of the labour force. Therefore, we propose a new method where the ??recession-push?? effect relates not only to the (official) unemployed but also to the inactive population. Second, we argue that the magnitude of the recession-push effect is non-linear in the business cycle, i.e. the effect is disproportionally stronger when economic circumstances are worse. We provide empirical support for our hypotheses by estimating an econometric model on Spanish data.     

Identity, reputation and social interaction with an application to sequential voting

We analyze binary choices in a random utility model assuming that agent’s preferences are affected by conformism (with respect to the behavior of the society) and coherence (with respect to identity). We show that multiple stationary equilibria may arise and that the outcome looks very different from a society where all the agents take their decisions in isolation. We quantify the fraction of agents that behave coherently. We apply the analysis to sequential voting when voters “like to win”. Compared to the present literature, we enrich the setting assuming that each voter is endowed with an ideology and we consider the interplay between coherence and the desire to vote with the (perceived) majority.     

Countercyclical contingent capital

We analyze the optimal capital structure of a bank issuing countercyclical contingent capital, i.e., notes to be converted into common shares in poor macroeconomic conditions. A comparison of the main effects produced by the countercyclical asset with the simple equity-debt capital structure, the non-countercyclical contingent capital and the countercyclical callable bond is conducted. We demonstrate that this type of asset reduces the spread of straight debt and is effective in reducing the asset substitution incentive. The reduction of bankruptcy costs is strong only when the countercyclicality feature is removed. Contingent capital is useful for macroprudential regulation and we show that the countercyclical feature is important depending on priorities (moderate the asset substitution incentive or reduce bankruptcy costs).     

Technical Change in the Private Consumption Converter

The analysis of technological change is centered on the study of the evolution of technical coefficients in the input–output table. Complementary to this analysis, the household consumption expenditure matrix, relating consumption by commodities to consumption by purpose or by function, also incorporates some other aspects of technological change. Thus, the evolution in time of the coefficients of this consumption expenditure matrix will portray technological processes, implying substitutions between commodities to satisfy the different functions The substitution between consumption expenditure by functions is also to be taken into consideration, because it can influence, together with technological change, the use of commodities in the final demand. For Switzerland, a 1980–89 time series of household consumption expenditure matrices with 37 commodities and 58 functional consumption categories has been estimated using data from consumer expenditure surveys. In this paper, instruments generally applied to the analysis of changes in input–output technical coefficients are extended to these matrices, including methods that deal with biproportional processes of substitution.     

DOES BEHAVIOUR‐BASED PRICE DISCRIMINATION FOSTER FIRMS’ DIFFERENTIATION?

We study the impact of behaviour‐based price discrimination on the incentive of the firms to differentiate their products. We consider both ‘standard’ and ‘extreme’ behaviour‐based price discrimination: the latter always reduces the incentive to differentiate with respect to uniform pricing, while the former fosters differentiation if the consumers are sufficiently forward‐looking and/or the firms are sufficiently myopic.     

Institutional framework,corporate ownership structure,and R&D investment: an international analysis

We combine agency theory with the law and finance approach to analyze how the legal protection of investors and the corporate ownership structure affect corporate investment in research and development (R&D). We use information from 956 firms from the five most R&D-intensive industries in 19 developed countries. Our results show that better protection of investors’ rights by the institutional environment has a positive influence on corporate R&D. We also find that corporate ownership concentration works as a substitute for legal protection. This finding means that R&D investment of the firms in the countries with poor legal protection increases as ownership becomes more concentrated. Our results also show that the identity of shareholders has a relevant effect: Whereas banks and nonfinancial institutions as shareholders result in lower R&D, institutional investors as shareholders increase corporate investment in R&D.     

On the Dynamics of Recycling and Natural Resources

We study the dynamic impact of recycling through its effect on the production set of the economy and its relationship with natural resources. The contribution of renewable and recyclable resources for sustainability is studied. Although in the short run recycling may alleviate resource scarcity, in the long run it is not enough to compensate for the exhaustibility of non-renewable resources and the possibility of obtaining non-decreasing output paths crucially depends on the extent to which production rests on renewable resources. Furthermore, recycling interacts with natural resource growth, surprisingly not always favoring sustainability. The Production and Recycling Function is a generalization of the traditional production function, providing an integrated view of regular production and recycling and representing the production set of the economy when a recycling technology is available.     

A kernel-based method for nonparametric estimation of variograms

Variogram estimation plays an important role in many areas of spatial statistics. Potential areas of application include biology, ecology, economics and meteorology. However, it is common that, for example under highly correlated patterns, traditional estimators can not reflect all the spatial features or dependencies. In this paper, we present an alternative distribution-free estimator based on nearest-neighbour estimation with a non-constant smoothing field that is better able to adapt to spatially varying features of the data pattern. We present a simulation study to compare our new estimator to a nearest-neighbour estimator built with a constant smoothing parameter and to the classical variogram estimator. We apply our method to analyze two ecological data sets.