The nonobserved economy in the European Union

To better understand the share of the nonobserved economy (NOE) in the European Union, especially on the PIIGS, we estimate, through the multiple indicators multiple causes model, the path between 1980 and 2013. The model includes (i) the tax burden (disaggregated into direct and indirect taxes), a proxy of regulation burden, the unemployment rate and self-employment as causes of the NOE economy; (ii) the GDP and the labour force participation ratio as indicators of the NOE economy. In particular, the estimated weight of NOE as a percentage of official GDP was always higher in the PIIGS group.     

Assessing ethical behaviours in the Spanish banking and insurance industries: evidence and challenges

This study aims to improve understanding of the ethical nature of the relations in two labour-intensive industries to facilitate the creation of an ethical culture. For this purpose, the authors first review literature related to the main influences on ethical behaviour, then perform an empirical analysis of those factors using a hierarchical stepwise regression of a database of 525 banking and insurance employees. Contrary to expectations, leadership has a less important effect on ethical behaviour than other organizational factors. The results reveal several implications for improving the management of ethical behaviour in these industries.     

Self-reinforcing effects between housing prices and credit

The financial crisis has brought the interaction between housing prices and household borrowing into the limelight of the economic policy debate. This paper examines the nexus of housing prices and credit in Norway within a structural vector equilibrium correction model (SVECM) over the period 1986q2–2008q4. The results establish a two way interaction in the long-run, so that higher housing prices lead to a credit expansion, which in turn puts an upward pressure on prices. Interest rates influence housing prices indirectly through the credit channel. Furthermore, households’ expectations about the future development of their own income as well as in the Norwegian economy have a significant impact on housing price growth. Dynamic simulations show how shocks are propagated and amplified. When we augment the model to include the supply side of the housing market, these effects are dampened.     

Graph efficiency and productivity measures: an application to US agriculture

Hyperbolic measures of efficiency and productivity change with respect to a graph representation of production technology allow researchers to consider output and input dimensions simultaneously in measuring producer performance. Hyperbolic efficiency measures have been proposed, but empirical implementation has not followed, either in efficiency analysis or in productivity analysis. The objectives of this paper are to define hyperbolic performance measures on a graph representation of production technology, to motivate their use by stating some of their advantages over their radial counterparts, and to introduce a direct formulation to calculate them making use of Data Envelopment Analysis techniques. The ideas are illustrated by calculating hyperbolic efficiency and Malmquist productivity indexes for a US agricultural panel data set.     

THE IMPACT OF LABOR MARKET REGULATION ON EMPLOYMENT IN LOW‐INCOME COUNTRIES: A META‐ANALYSIS

Controversy over labor market policy often centers on achieving a balance between preventing worker exploitation, and avoiding loss of productivity or employment through excessive regulation. Although the literature documenting the impact of labor market regulation on employment is extensive, there is a dearth of evidence on the impact of such policies in low‐income countries (LICs). Since it is easier for workers, especially women, to slip into the informal sector in LICs, regulations are likely to have stronger impacts on formal employment in these countries (but lower impacts on unemployment). We systematically reviewed available research from countries that are, or were until recently, LICs. Most studies document that more stringent labor regulations are associated with lower formal sector employment and higher informal sector employment. We also conducted a metaregression analysis of the impact of minimum wages on formal and informal employment. After controlling for publication bias, higher minimum wages are associated with lower formal employment and a higher share of informal workers.     

Category management and consumer choice

This paper shows the results of an exploratory analysis of the structure of a complex product category: Wine. In complex categories, a usual strategy of consumers is the partitioning of alternatives into homogeneous subsets and the sequential eliminations of subsets until a product/brand is chosen from among few homogeneous alternatives in the last subset. To identify if there is such a kind of strategy and the product attributes involved is of great interest for the retailer. After a discussion of the different modelling alternatives of the choice process, the authors provide an application of the additive trees (ADDTREE) model to explore the hierarchical structure. The ADDTREE results provide a first overview of the competitive market structure of the wine category: competition becomes more intense as the wine category is partitioned by, first, the type of wine criteria and, second, the designation of origin (DO) criteria.     

Strategic planning of complex economic systems ∗

A major drawback of conventional models of the behavior of economic systems (and derived tools for policy intervention) is that the desire for tractability leads generally to a high degree of abstraction from reality. This article suggests an alternative, and arguably complementary, approach which engages specifically with economic complexity. The technique used is one of interactive spatial modelling over long time periods where the principle economic agents base decisions on incomplete heuristic information. For illustrative purposes the model has been calibrated on the basis of Senegalese data for 1981–91 and broad generic equations presented. The article argues that such a methodological approach holds out considerable advantages for strategic planning of sustainable economic systems. In particular it permits the direct engagement of noneconomic disciplines and client stakeholders in the planning process.     

Firms’ performance under different bankruptcy systems: a Europe–USA empirical analysis

This study empirically analyses the effect that the bankruptcy law has on firms’ performance based on its financial situation. To do this, we considered the different types of efficiency and their influence on firms’ value. The study was carried out for Germany, Spain, the United States, France and the United Kingdom. We applied System‐GMM estimation to dynamic panel data. The main results show that under creditor‐oriented systems, there is a decrease in the value of both financially distressed firms and those filing for bankruptcy.     

Flexibility at the Margin and Labor Market Volatility in OECD Countries*

We study the business‐cycle behavior of segmented labor markets with flexibility at the margin (e.g., just affecting fixed‐term contracts). We present a matching model with temporary and permanent jobs (i) where there is a gap in the firing costs associated with these types of jobs and (ii) where there are restrictions in the creation and duration of fixed‐term contracts. We show that a labor market with ``flexibility at the margin'' increases the unemployment volatility with respect to one that is fully regulated. This analysis yields new insights into the interpretation of the recent volatility changes witnessed in the OECD area.