IMMIGRATION AND NATIVE WELFARE*

This article unifies two approaches for identifying the welfare and wage effects of immigration, one emphasizing the immigration surplus, the other stressing a potential welfare loss due to a terms‐of‐trade effect. We decompose the native welfare effect into a standard complementarity effect, augmented by a Stolper–Samuelson effect, and a terms‐of‐trade effect. We illustrate the welfare and wage effects of endogenous goods prices in a stylized‐specific factors model. Finally, we calibrate this model to a generic OECD economy and provide simulation results. The key insight is that endogenous goods prices play a quantitatively important role, sometimes even overturning received results.     

Corporate Headquarters Relocation: Evidence from the Capital Markets

This paper assesses the stock market reaction to announcements of corporate headquarters relocations and examines financial and geographical factors related to wealth effects and factors that influence the decision to relocate corporate headquarters. The results indicate that announcements of relocations are associated with significant positive stock price effects. On average, the stock price of relocating firms increases by 1.29% during the two-day period around the announcement. Abnormal returns are positively related to the availability of labor and negatively related to the cost of living in the new location and the change in employment levels. A logit analysis indicates that the probability of a firm relocating is partially determined by the firm size and the rental expenses/sales ratio. The results also indicate that firm size, the employment/asset ratio levels, and listing in the NYSE/AMEX affect the decision to relocate to a Fortune-ranked city. Finally, firms relocating to Fortune -ranked cities are characterized by a high level of insider ownership relative to firms moving to non-ranked cities.     

Estimating Disequilibrium Cost Elasticities in Agricultural Production

A restricted cost function is estimated using annual data for western Canadian agriculture over the period 1961–84. Using the parameter estimates, disequilibrium cost elasticities are calculated. The elasticities for the sector indicate that the ex ante market prices of quasi-fixed inputs were higher than their shadow values. That is, quasi-fixed factors were underutilized during the sample period. Excess agricultural land contributed most to the cost of disequilibrium.     

Ethics of managing interpersonal conflict in organizations

Although managers spend over twenty percent of their time in conflict management, organization theorists have provided very few guidelines to help them do their job ethically. This paper attempts to provide some guidelines so that organizational members can use the styles of handling interpersonal conflict, such as integrating, obliging, dominating, avoiding, and compromising, with their superiors, subordinates, and peers ethically and effectively. It has been argued in this paper that, in general, each style of handling interpersonal conflict is appropriate if it is used to attain organization's proper end.M. Afzalur Rahim is Professor of Management at Western Kentucky University. He holds B.Com. (Hons.) and M.Com, M.B.A., and Ph.D. degrees. Dr. Rahim teaches courses on organizational behavior, strategic management, and management of organizational conflict. He is the author of over 65 articles and book chapters, five cases, and three research instruments on conflict and power. He is the author of six books, four of which are on conflict management. He is the editor of theInternational Journal of Conflict Management and theInternational Journal of Organizational Analysis. He is the founder of the International Association for Conflict Management and President of the International Conference on Advances in Management.Jan Edward Garrett is Associate Professor in the Philosophy and Religion Department at Western Kentucky University. His recent publications include Persons, Kinds and Corporations: An Aristotelian Perspective, which appeared inPhilosophy and Phenomenological Research, and Unredistributable Corporate Moral Responsibility, which appeared in this journal.Gabriel F. Buntzman is Associate Professor of Management at Western Kentucky University. His current research interests concern relationships between ethics, conflict and the strategic management of organizations. His work in the area of conflict management has appeared in theInternational Journal of Conflict Management, theJournal of Psychology, and three books.     

Are Private Vices Public Finance Virtues? An Empirical Investigation

The article investigates the impact of widely accepted private vices (smoking and alcohol and gasoline consumption) on public finance. Introducing the concept of “vice-related deficit,” which aggregates the positive effects on public finance on the revenue side (cash inflows) and the negative effects on the expenditures side (cash outflows), the article looks upon cigarette, alcohol, and gasoline consumption as determinants of vice-related deficit for a number of 68 countries for year 2012. We found that smoking had a negative effect on vice-related budget balance, while alcohol and gasoline consumption had a positive effect. As control variables, we used life expectancy and size of the economy, both having been found with negative effects. The results prove robust to different sample adjustments. We also found that the negative effect of private vices on public finance is stronger for Christian countries than for non-Christian countries. Policy recommendations were made accordingly.     

Cross‐selling in the US home video industry

We identify significant cross‐selling effects in the home video industry: a 10% increase in the demand for a studio's old titles leads to a 4.7% increase in new title sales. We argue this is due to supply‐side effects: studios with strong titles are better able to “push” other titles through retailers; and the latter “push” these additional supplies to consumers by means of lower prices and/or heavier advertising. Our strategy for identifying causality is based on “star power” effects: increases in old movie demand caused by recent success of movies with a similar cast and/or director.     

A general closed form option pricing formula

A new method to retrieve the risk-neutral probability measure from observed option prices is developed and a closed form pricing formula for European options is obtained by employing a modified Gram–Charlier series expansion, known as the Gauss–Hermite expansion. This expansion converges for fat-tailed distributions commonly encountered in the study of financial returns. The expansion coefficients can be calibrated from observed option prices and can also be computed, for example, in models with the probability density function or the characteristic function known in closed form. We investigate the properties of the new option pricing model by calibrating it to both real-world and simulated option prices and find that the resulting implied volatility curves provide an accurate approximation for a wide range of strike prices. Based on an extensive empirical study, we conclude that the new approximation method outperforms other methods both in-sample and out-of-sample.

     

Immanuel Kant and Endogenous Growth Theory

Despite the modern origins of endogenous growth theory, we argue that the ‘Idea for a Universal History with a Cosmopolitan Aim’ written by Immanuel Kant in 1784 provides an early and coherent example of such a theory. Kant's endogenous growth mechanism is driven by the inherent rivalry that exists between agents which increases effort and strengthens the accumulation of knowledge, which in turn is carried through generations. In an exercise in ‘rational reconstruction’, we present a mathematical model of Kant's mechanism. We use the model to contribute to the contemporary policy debate as to whether ‘keeping up with the Joneses’ leads to excessive effort.     

Globalisation and the Spatial Concentration of Production

(1240) Friederike Niepmann and Gabriel J. Felbermayr In new trade theory (NTT) models, freer trade tends to increase the spatial concentration of industrial production across countries. While nations with large home markets and central geographical location become increasingly attractive business locations, small peripheral countries gradually deindustrialise. Using data for 26 industries, 20 OECD countries and 20 years, we investigate the empirical validity of this claim. Separating out the role of home market size from geographical factors, and using various panel methods, we find robust evidence in line with theory. Freer trade has indeed magnified the importance of domestic demand and geographical location for the pattern of industrial production across the globe and has therefore exacerbated spatial disparities.