Corporate Social Responsibility and Worker Rights: Institutionalizing Social Dialogue Through International Framework Agreements

International framework agreements (IFAs) represent a new generation of transnational agreements between multinational companies and global trade union federations. This paper analyzes the impact of such an agreement on a successful union organizing campaign in Colombia in 2012. We argue that management strategies towards corporate social responsibility and social dialogue influence the impact of IFAs on worker rights. However, this relationship is mediated by the capacity of managers and worker representatives at multiple levels to mobilize their capabilities. The results highlight the importance of institutionalized dialogue between managers and worker representatives, of the dissemination of capabilities across multilevel coordination structures and, most importantly, of their complementarities at various levels.     

Environmental Taxation,Inequality and Engel’s Law: The Double Dividend of Redistribution

Empirical evidence shows that low-income households spend a high share of their income on pollution-intensive goods. This fuels the concern that an environmental tax reform could be regressive. We employ a framework which accounts for the distributional effect of environmental taxes and the recycling of the revenues on both households and firms to quantify changes in the optimal tax structure and the equity impacts of an environmental tax reform. We characterize when an optimal environmental tax reform does not increase inequality, even if the tax system before the reform is optimal from a non-environmental point of view. If the tax system before the reform is calibrated to stylized data—and is thus non-optimal—we find that there is a large scope for inequality reduction, even if the government is restricted in its recycling options.     

Developments in Union Recognition and Derecognition in Britain, 1994–1998

This research note shows a marked change in the relative incidence of cases of derecognition and recognition in the period 1994–1998. It shows that the level of derecognition has fallen significantly in recent years while that of the signing of new recognition agreements has continued at its former level, so that on balance new recognition agreements clearly outnumber cases of derecognition. The context and reasons for this are explained by reference to developments in public policy, employer views and union practice. The results of derecognition and the prospects for union recognition are also examined.     

The Non-Monetary Side of the Global Disinflation

The dramatic decline in inflation across the world over the last 20 years has been largely credited to improved monetary policy. The universal nature of the phenomenon, however, indicates that globalization, which occurred simultaneously, also played a role. We build a model based on Melitz (2003) in which falling transport cost lead to greater openness, higher productivity and lower inflation. Following a decline in transport cost openness increases and firm selection eliminates the least productive domestic firms. The consequent increase in average productivity leads to falling relative prices for goods. A cash-in-advance constraint allows analyzing how falling relative prices can lead to lower inflation. Using a data set of macroeconomic variables for 123 countries from all world regions, we disentangle the influences of monetary policy and globalization by showing that openness-induced productivity growth leads to a significant decline in inflation world-wide. The results can be further confirmed in a calibration exercise.     

Speculative attacks with unpredictable or unknown foreign exchange reserves

During a currency crisis, speculators usually do not know the value of a central bank's foreign exchange reserves. In this paper I show that modelling speculators as having imperfect knowledge of reserves enriches the predictions of the classical model of speculative attacks. With realistic lags in reserve reporting and costs to unsuccessful speculation, successful speculative attacks will involve a jump depreciation, unsuccessful attacks may occur, attacks may occur when fundamentals are improving, attacks may not be preceded by large increases in interest rates, and fixed exchange rates may be abandoned with no attack and no decline in the money supply. JEL Classification: F31     

Early evidence on balloon performance

Balloon loans have become increasingly popular in recent years. For this reason, it is important to understand their features, assess their potential risks, and monitor their early performance. This article focuses on these topics. The first section discusses balloon characteristics and mortgage choice. The second section discusses expected balloon performance. The third section provides an econometric model for monitoring current performance. The fourth and fifth sections describe the data and results, respectively. The final section summarizes the article and offers some concluding remarks. The fundamental conclusions are that (1) early balloon performance is slightly worse than expected (i.e., balloons are not matching fixed-rate performance prior to balloon reset dates); (2) balloon performance is, however, within the range expected over the full term of the loans (i.e., performance worse than fixed-rate performance, but better than ARM performance); and (3) balloons have important characteristics that help mitigate systematic risk.     

The wages of social responsibility — where are they? A critical review of ESG investing

This paper contributes both to investigating the link between the corporate social and financial performance based on environmental, social and corporate governance (ESG) ratings and to reviewing the existing empirical evidence pertaining to this relationship. The sample used includes ESG data of ASSET4, Bloomberg and KLD for the U.S. market from 1991 to 2012. The econometrical framework applies an ESG portfolio approach using the Carhart (1997) four-factor model as well as cross-sectional Fama and MacBeth (1973) regressions. Previous empirical research indicates a relationship between ESG ratings and returns. As against this, the ESG portfolios do not state a significant return difference between companies with high and low ESG ratings. Although the Fama and MacBeth (1973) regressions reveal a significant influence of several ESG variables, investors are hardly able to exploit this relationship. The magnitude and direction of the impact are substantially dependent on the rating provider, the company sample and the particular subperiod. The results suggest that investors should no longer expect abnormal returns by trading a difference portfolio of high and low rated firms with regard to ESG aspects.