ECONOMETRICS FOR GRUMBLERS: A NEW LOOK AT THE LITERATURE ON CROSS‐COUNTRY GROWTH EMPIRICS

Abstract Since the seminal contribution of N. Gregory Mankiw, David Romer and David N. Weil in 1992 the growth empirics literature has used increasingly sophisticated methods to select relevant growth determinants in estimating cross‐section growth regressions. The vast majority of empirical approaches, however, limit cross‐country heterogeneity in production technology to the specification of total factor productivity, the ‘measure of our ignorance’. In this survey, we present two general empirical frameworks for cross‐country growth and productivity analysis and demonstrate that they encompass the various approaches in the growth empirics literature of the past two decades. We then develop our central argument, that cross‐country heterogeneity in the impact of observables and unobservables on output as well as the time‐series properties of the data are important for reliable empirical analysis.     

The Multiple Effects of Business Planning on New Venture Performance

We investigate the multiple effects of writing a business plan prior to start‐up on new venture performance. We argue that the impact of business plans depends on the purpose for and circumstances in which they are being used. We offer an empirical methodology which can account for these multiple effects while disentangling real impact effects from selection effects. We apply this to English data where we find that business plans promote employment growth. This is found to be due to the impact of the plan and not selection effects.     

When does universal peace prevail? Secession and group formation in conflict

This paper analyzes secession and group formation in the general model of contests due to Esteban and Ray (1999). This model encompasses as special cases rent seeking contests and policy conflicts, where agents lobby over the choice of a policy in a one-dimensional policy space. We show that in both models the grand coalition is the efficient coalition structure and agents are always better off in the grand coalition than in a contest among singletons. Individual agents (in the rent seeking contest) and extremists (in the policy conflict) only have an incentive to secede when they anticipate that their secession will not be followed by additional secessions. Incentives to secede are lower when agents cooperate inside groups. The grand coalition emerges as the unique subgame perfect equilibrium outcome of a sequential game of coalition formation in rent seeking contests. Received: March 2004, Accepted: October 2004, JEL Classification: D72, D74 We thank Joan Maria Esteban, Kai Konrad, Debraj Ray, Stergios Skaperdas and two anonymous referees for helpful comments on the paper. We also benefitted from comments by seminar participants in Barcelona, Istanbul, Paris and WZB Berlin.     

A semiparametric model for binary response and continuous outcomes under index heteroscedasticity

This paper formulates a likelihood‐based estimator for a double‐index, semiparametric binary response equation. A novel feature of this estimator is that it is based on density estimation under local smoothing. While the proofs differ from those based on alternative density estimators, the finite sample performance of the estimator is significantly improved. As binary responses often appear as endogenous regressors in continuous outcome equations, we also develop an optimal instrumental variables estimator in this context. For this purpose, we specialize the double‐index model for binary response to one with heteroscedasticity that depends on an index different from that underlying the ‘mean response’. We show that such (multiplicative) heteroscedasticity, whose form is not parametrically specified, effectively induces exclusion restrictions on the outcomes equation. The estimator developed exploits such identifying information. We provide simulation evidence on the favorable performance of the estimators and illustrate their use through an empirical application on the determinants, and affect, of attendance at a government‐financed school. Copyright © 2009 John Wiley & Sons, Ltd.     

The Use and Cost of Child Care in Australia

The use and cost of child care have become important policy issues with rising labour force participation for women responsible for young children. In this article it is shown that for children aged less than 2 informal care is much more important than formal care. For children aged 3 to 5 by far the most important, and cheapest, form of formal care is preschool. The category of formal care which has expanded most rapidly is child care centre places. However the recent expansion of female employment has been effected with no rise in the share of formal care in the total. Publicly supplied child care centre places are over 40 per cent more expensive to produce than private ones. It is argued that for those who do not receive a fee relief subsidy public care is more expensive than private care. The inference is drawn that people are willing to pay more for public than private care because public care is of higher quality. However those buying this higher quality care pay (at most) only 80 per cent of the cost of producing the care. The shortage of care in the public sector is not solved by private sector expansion because users of care are not willing to pay the price of producing high quality care.     

The Relative Importance of Employer and Employee Effects on Compensation: A Comparison of France and the United States

Using individual data on compensation, matched with establishment and firm data on performance and inputs, we compare the French and American pay systems. The compensation measures are decomposed into components related to measured individual characteristics, establishment–enterprise effects, and a residual. In France, the compensation outcomes are more compressed than in the United States. For France, individual characteristics and establishment effects explain more of the variability in compensation outcomes than in the United States. The observable and unobservable components of compensation are identically correlated in the two countries. The relations among compensation components (individual and establishment) and firm performance outcomes (value-added per worker, sales per worker, and profit per unit of capital) exhibit some important similarities and differences between the countries. Higher paid workers, either because of individual characteristics or establishment effects, are employed in firms that are more productive. Higher pay due to enterprise heterogeneity is associated with higher profitability in France but lower profitability in the United States. J. Japan Int. Econ. December 2001, 15(4), pp. 419–436. Department of Labor Economics, Cornell University, 259 Ives Hall, Ithaca, New York 14853–3901, CREST and NBER; CREST-INSEE, 15, bd Gabriel Péri, 92245 Malakoff Cedex, France, CEPR and IZA; LAMIA-TEAM, Université de Paris 1 Panthéon-Sorbonne, 106–112, bd de l'Hôpital, 75647 Paris Cedex 13, France, and Crest; and Department of Economics, University of Missouri–Columbia, 118 Professional Bldg., Columbia, Missouri 65211. © 2001 Elsevier Science (USA).Journal of Economic Literature Classification Numbers: J31, D21.     

Leeway for the Loyal: A Model of Employee Discretion

This article examines the factors underlying task discretion from an economist's perspective. It argues that the key axis for understanding discretion is the trade‐off between the positive effects of discretion on potential output per employee and the negative effects of greater leeway on work effort. In empirical analysis using matched employer–employee data, it is shown that discretion is strongly affected by the level of employee commitment. In addition, discretion is generally greater in high‐skilled jobs, although not without exceptions, and lower where employees are under‐skilled. Homeworking and flexitime policies raise employee discretion. The impact of teamworking is mixed. In about half of cases team members do not jointly decide about work matters, and the net effect of teams on task discretion in these cases is negative. In other cases, where team members do decide matters jointly, the impact is found to be neutral according to employees' perceptions, or positive according to managers' perceptions. There are also significant and substantial unobserved establishment‐level factors which affect task discretion.     

Ethics as a Risk Management Strategy: The Australian Experience

This article addresses the connection of ethics to risk management, and argues that there are compelling reasons to consider good ethical practice to be an essential part of such risk management. That connection has significant commercial outcomes, which include identifying potential problems, preventing fraud, the preservation of corporate reputation, and the mitigation of court penalties should any transgression arise. Information about the legal position, examples of cases, and arguments about the potential benefits of ethics are canvassed. The orientation of this article is essentially Australian. It is hoped that it may provide some insights of value to other countries.     

Leisure co‐participant preferences of the elderly: Age‐homogeneity versus age‐heterogeneity

Abstract

Leisure participation often occurs in the company of others. Therefore, identifying the nature of preferred others is important in understanding antecedent conditions which facilitate the leisure experience. A major characteristic in determining co‐participant preferences of the elderly is the preferred age of others involved in the activity. This study was conducted to determine whether older individuals prefer to interact with age‐peers or with younger individuals when participating in 19 selected leisure activities. Results indicated a preference for age‐heterogeneity in interaction. However, old respondents were more likely to select old co‐participants than were young respondents.     

Measurement specification and leisure satisfaction

Abstract

A comparison of specific expressive and instrumental indicators of satisfaction were compared against general measures of satisfaction. Research was conducted to explore specific indicators of satisfaction which included expressive measures representing major intrinsic goals of a leisure activity and instrumental measures which serve to facilitate those goals. Expressive indicators of satisfaction involving core experiences were most salient in explaining variance in general measures of satisfaction. Specific instrumental indicators of satisfaction did not contribute significantly to explaining variance in general measures of satisfaction.