The Role of Multinational Firms in the Wage-Gap Debate

The observation of an increase in the ratio of skilled to unskilled wages in the high-income countries and in some cases in low/middle-income countries has led to considerable discussion and controversy as to its cause. Virtually none of the analyses have considered a role for multinational investment in explaining the wage-gap phenomenon. This paper adapts the authors' earlier work to consider what role multinationals might play in factor markets. It identifies circumstances under which investment liberalization is likely to raise the wage gap in both the skilled-labor abundant and the unskilled-labor abundant country.     

Growth,Convergence, and Social Cohesion in the European Union

The aim of this paper is to analyze the economic and social cohesion in the European Union. There are different factors to explain the convergence process and besides, empirical findings are not conclusive. To the European Union, GDP per head interregional differences have decreased for certain periods but it has remained unchanged or even increased for others periods. The second report on the economic and social cohesion indicates that some decades are necessary to eliminate regional differences. These differences in regional GDP are mainly explained by differences in their productive structures, degree of innovate activity, communications structures, which depend on the relative level of transport infrastructures, and manpower qualifications. This analysis allows us to obtain some conclusions to the economic policies and the social cohesion. A preliminary version of this paper was presented in the 57th International Atlantic Conference, held in Lisbon, Portugal, March 10–14, 2004.     

Ex-post full surplus extraction,straightforwardly

Consider an estimate of the common value of an auctioned asset that is symmetric in the bidders’ types. Such an estimate can be represented solely in terms of the order statistics of those types. This representation forms the basis for a pricing rule yielding truthful bidding as an equilibrium, whether bidders’ types are affiliated or independent. We highlight the link between the estimator and full surplus extraction, providing a necessary and sufficient condition for ex-post full surplus extraction, including the possibility of independent types. The results offer sharp insights into the strengths and limits of simple auctions by identifying the source of informational rents in such environments. Harstad acknowledges hospitable accommodation by the Fuqua School of Business, Duke University, and the Olin School of Business, Washington University in St. Louis, during parts of this research. We are grateful for comments and suggestions from Richard McLean and Jeroen Swinkels.     

Factors Affecting the Content of High School Economics

Several years ago there was great interest in the high school economics course. Studies were being made of the effectiveness of high school economics, of the relationship between the student's high school economics background and his or her performance in the college principles course, and of the economic knowledge of precollege teachers. Strom's article may bring about a revival of interest in secondary school economic instruction. He has considered variables not previously taken into account, he has addressed the problem of defining the high school course, and—perhaps most important—he has suggested that the two-step factor analysis/regression procedure may be superior to the standard regression analysis in economic education research.     

Robust political economy

This paper introduces the idea of “robust political economy.” In the context of political economic systems, “robustness” refers to a political economic arrangement's ability to produce social welfare-enhancing outcomes in the face of deviations from ideal assumptions about individuals' motivations and information. Since standard assumptions about complete and perfect information, instantaneous market adjustment, perfect agent rationality, political actor benevolence, etc., rarely, if ever actually hold, a realistic picture and accurate assessment of the desirability of alternative political economic systems requires an analysis of alternative systems' robustness. The Mises-Hayek critique of socialism forms the foundation for investigations of robustness that relax ideal informational assumptions. The Buchanan-Tullock public choice approach complements this foundation in forming the basis for investigations of robustness that relax ideal motivational assumptions. JEL Code B53, P16, P26