Some deadweight losses from the minimum wage: the cases of full and partial compliance

This paper highlights the social costs from non-price rationing of the labour force due to the minimum wage. By short-circuiting the ability of low reservation-wage workers to underbid high-reservation wage workers, the minimum wage interferes with the market's basic function of grouping the lowest cost workers with the highest productivity firms. The present paper models the deadweight loss that society bears when high reservation-cost workers displace low reservation-cost workers. When firms can evade part or all of the minimum wage, an extra deadweight loss arises. Firms with high evasive ability but low productivity may displace firms with low evasive ability but high productivity.     

Customer Profitability Analysis Reports for Resource Allocation: The Role of Complex Marketing Environments

Most decision making research in management accounting remains focused on cost information in a production context. Little is known on the relevance of customer profifitability analysis (CuPA) reports, which more accurately reflect revenue and marketing support variations acrosscustomers, for marketing decisions. This study uses an experimental design to examine the impact of such reports on resource allocation decisions (that affect the firm's profits) in marketing environments varying in complexity. The main result of the experiment suggests that the value of CuPA reports depends on the complexity of the marketing setting. Only in a highly complex marketing setting do they enhance resource allocation decisions and resultant firm profitability. Conversely, in the simple marketing environment, decision makers can combine their traditional volume-based cost data with other available types of feedback to perform as well as under a more accurate CuPA report. These findings on complexity contrast with those of a prior study in a production context ( Gupta and King, 1997 ). It is argued that improvements in the current research design, in the form of regularly updated profitability reports and concerning accuracy, increase the relevance of CuPA reports in a complex marketing setting.     

The Effect of E-Business on Corporate Performance: Firm Level Evidence for Belgium

E-business offers buyers and sellers a new form of communication and provides an opportunity to create new marketplaces. In general it is suggested that the development of e-business results in higher firm productivity and efficiency as a result of lower search and transaction costs. However, there are a number of recent studies, which demonstrate that firms engaging in e-commerce need not perform better compared to more traditional enterprises. To date, there is little empirical evidence on the impact of information technology on corporate performance. This paper is the first that uses a large representative data set of Belgian firms to study empirically the impact of e-business on productivity and cost efficiency of firms. Our main conclusions can be summarised as follows: (1) The penetration of the Internet in Belgian firms is high; however, the use of e-business is still limited. (2) It is especially the large firms that engage in e-business and mostly in e-procurement. (3) E-business has no effect on total factor productivity in small firms; however, we find positive effects on performance of e-business in large firms.     

A Termination Rule for Pension Guarantee Funds

A termination rule based on a critical funding ratio is proposed for a pension guarantee fund (PGF) that considers closing an underfunded pension plan. This ratio is determined by solving an expected utility maximization problem on behalf of plan beneficiaries subject to two constraints designed to preserve the PGF's viability. The first is an upper bound on the PGF's annual intervention probability; the second, a restriction on the expected shortfall of an underfunded pension plan that is not closed. Both too low and too high critical funding ratios hurt beneficiaries’ interests, depending on their degree of risk aversion.     

The impact of tariffs on profits in the United States and other major trading countries

Zusammenfassung Die Auswirkungen von Z?llen auf die Gewinne der Unternehmen in den Vereinigten Staaten und anderen gr?▾eren Handelsl?ndern. - In diesem Aufsatz wird das Michigan-Modell benutzt, um die Auswirkungen der Protektion auf die gesamten Gewinne und die Stückgewinne in den USA und anderen wichtigen Handelsnationen zu untersuchen. Es ergibt sich, da▾ die Protektion die Gewinne in den Exportsektoren st?rker verringert, als sie die Gewinne derjenigen Sektoren verbessert, die mit Importen konkurrieren. Allerdings bleiben die Gesamtgewinne aus der Kombination von exportorientierten und importsubstituierenden Unternehmen im allgemeinen von den bestehenden Z?llen unbeeinflu▾t. Au▾erdem finden die Gewinntransfers zwischen Exporteuren und importsubstituieren-den Unternehmen meistens innerhalb der gleichen Branche und nicht zwischen verschiedenen Branchen statt. Deshalb erh?hen allgemeine tarif?re Ma▾nahmen kaum die Gewinne von US-Industrien. Nur Tarife, die auf bestimmte Produktgruppen gerichtet sind, k?nnten derartige Wirkungen haben.

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Résumé L’effet des droits de douane sur les profits dans les Etats Unis et des autres pays principaux commer?ants. - Dans cet article le modèle Michigan de production mondiale et de commerce est appliqué pour analyser l’effet de la protection sur les profits totaux et par unité dans les Etats Unis et des autres pays principaux commer?ants. Les auteurs trouvent que la protection réduit les profits dans les secteurs exportatrices plus qu’elle stimule les profits dans les secteurs en concurrence avec les importations. Cependant, les profits totaux des entreprises exportatrices et en concurrence avec les importations ensemble ne sont pas affectés par des droits de douane existants. De plus, la majorité des transferts des profits entre les entreprises exportatrices et en concurrence avec les importations se passe dans la même industrie au lieu d’entre des industries. C’est pourquoi, il est conclu que des mesures générales tarifaires probablement n’augmentent pas les profits des industries des E.U. Ce ne sont que les droits de douane sur des groupes des biens spécifiques qui exercent un tel effet.

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Resumen El impacto de los aranceles sobre los beneficios en los Estados Unidos y otros países de importancia en el comercio international. - En este trabajo se utiliza el modelo de productión y comercio mundiales de Michigan para analizar el impacto de la protectión arancelaria sobre los beneficios totales y por unidad en los Estados Unidos y otros países de importancia en el comercio international. Los resultados indican que la protectión disminuye los beneficios en los sectores de exportatión y estimula los beneficios en las industrias que compiten con las importaciones, superando el primer efecto al segundo. Los beneficios totales de las empresas de exportatión y sustitución de importaciones juntas, empero, generalmente no son afectados por los aranceles existentes. Además, la mayor parte de la transferencia de beneficios entre exportadores y empresas de sustitución de importaciones tiene lugar dentro de la misma industria y no entre industrias diferentes. Por ello, medidas arancelarias de tipo general no son susceptibles de mejorar los beneficios de las industrias de los EE UU. Solamente aranceles que afecten a determinados grupos de productos podrían tener ese efecto.

     

New Firm Survival: The Effects of Start-up Characteristics

This paper empirically examines the influence of operating activities and financial and investment decisions in the start-up year on post-entry survival, taking industry effects into account. Compared to traditional financial ratios, we find that funds flow measures are superior in identifying those start-up characteristics that are related to subsequent failure. In the first year, failed firms typically generate less cash flows, incur higher labour expenses, use more trade credit and financial debt, limit inventories and are cash constrained. Surprisingly, industry effects do not have a significant impact. From these results, we draw conclusions for public policy.     

Staying Home or Moving Away? Restructuring Efforts within Multinational Enterprises

This paper analyses the impact of geographic dispersion on employment changes within multinationals. Building on earlier work of Landier et al. (2009, Review of Financial Studies 22, 3: 1119), we investigate whether corporate decision‐making within a multinational is affected by the distance between an affiliate and its headquarter. Our findings suggest a detrimental impact of distance on employees, by either an increased likelihood of observing a downsizing event, or by witnessing a larger decrease in the number of employees at distant locations during downsizing events. In addition, our results seem to relate the higher likelihood of observing a downsizing event to the role of social factors on decision making. The more visible a manager is in his community, the less likely he is to downsize proximate divisions.     

A model for identifying and ranking dangerous accident locations: a case study in Flanders

These days, road safety has become a major concern in most modern societies. In this respect, the determination of road locations that are more dangerous than others (black spots or also called sites with promise) can help in better scheduling road safety policies. The present paper proposes a multivariate model to identify and rank sites according to their total expected cost to the society. Bayesian estimation of the model via a Markov Chain Monte Carlo approach is discussed in this paper. To illustrate the proposed model, accident data from 23,184 accident locations in Flanders (Belgium) are used and a cost function proposed by the European Transport Safety Council is adopted to illustrate the model. It is shown in the paper that the model produces insightful results that can help policy makers in prioritizing road infrastructure investments.     

Does money help predict inflation? An empirical assessment for Central Europe

This paper investigates the predictive ability of money for future inflation in the Czech Republic, Hungary, Poland and Slovakia. We construct monetary indicators similar to those the European Central Bank regularly uses for monetary analysis. We find in-sample evidence that money matters for future inflation at the policy horizons that central banks typically focus on, but our pseudo out-of-sample forecasting exercise shows that money does not in general improve the inflation forecasts vis-à-vis some benchmark models such as the autoregressive process. Since at least some models containing money improve the inflation forecasts in certain periods, we argue that money still serves as a useful cross-check for monetary policy analysis.