Survey Evidence on Wage Rigidity and Unemployment: Sweden in the 1990s*

We document the results of a repeat survey, which updates Agell and Lundborg (1995) , on wage rigidity in a sample of 159 Swedish manufacturing firms, conducted during the severe Swedish recession of the 1990s. It is found that not even a prolonged period of very high unemployment and quite low inflation softened workers’ resistance to wage cuts. We discuss possible reasons for this. In addition, we report new evidence on underbidding, efficiency‐wage mechanisms, and unemployment persistence.     

Black Education: Myths and Tragedies

This article explores elements of apologetics in conventional economics. It argues that much of the latter is apologetics in the form of the ideology or utopia of laissez-faire, and many of its representatives are apologists of the latter. The article first examines instances of unconditional laissez-faire apologetics and extreme apologists. Then it presents cases of qualified laissez-faire apologetics and moderate apologists. Lastly, it identifies some examples of laissez-faire non- and anti-apologetics and critics expressing discontent with apologetic economics. The article aims to contribute to a fuller understanding of the relationship between economics and social science overall and ideology, politics, and related non-scientific elements.     

Forecasting clients’ reactions: How does the perception of strategic behavior influence the acceptance of advice?

Because they want high quality information, people often follow advice from advisors with high levels of expertise and confidence, and a reputation for accuracy. However, clients cannot always be sure that an advisor is actually using a knowledge advantage to act in the client’s best interests. In two studies we investigated the influence of an advisor’s perceived degree of self-interested intention on the client’s intention to accept and use their advice. We report two experiments in which clients received the same advice from a supposed representative of either a profit or a non-profit organization. The results of our first study suggest that clients who were confronted with an advisor from an organization with a profit-oriented background ascribed higher levels of self-interested intentions to the advisor and perceived the advisor to be less trustworthy. Furthermore, clients were less willing to rely on the advisor’s recommendation, and this effect was mediated by the perceived trustworthiness of the advisor. In our second study we conceptually replicated the findings of Study 1 using behavioral measures, and also differentiated three different facets of trustworthiness (competence, benevolence and integrity) in the interaction between advisor and client.     

A Global Value Chain Analysis of the ‘Regional Strategy’ Perspective

In this counterpoint paper we argue that the findings presented by the ‘regional strategy’ literature do not capture the full array of global activities of the multinational enterprise (MNE). While this literature makes an important contribution to the field by showing that sales and production activities in the MNE are regionally structured, we argue that this assessment is biased for two reasons. First, this approach overly focuses on geographical location of downstream activities, while disregarding that of knowledge creation and other relevant upstream activities in the MNE. Second, the approach associates the firm's value creation only with its internalized activities and does not capture the value created through any activities that are externalized. Many MNEs rely to a significant extent on value creation outside the firm's legal boundaries. We argue that such omissions are likely to lead to biased interpretations using different theoretical lenses, such as the knowledge‐/resource‐based view, internalization theory and more general transaction cost economics. Based on our reasoning, we provide recommendations for future research both within and beyond the ‘regional strategy’ literature.     

25 Years of Giddens in accounting research: Achievements, limitations and the future

Twenty five years ago, Giddens’ structuration theory (ST) was introduced into accounting research as a reaction to the history-less, apolitical and technical-efficiency focus of traditional functionalist research. A quarter of a century later, this growing stream of research consists of some 65 published papers and has become one of the dominant alternative approaches used to explore accounting as an organizational and social practice. We review this literature based on the following two research questions; (i) what are the major achievements of this literature, and in what respects has it contributed to our understanding of accounting in relation to other alternative streams of accounting research, such as those grounded in critical theory, actor-network theory (ANT), new-institutional sociology (NIS) and practice theory? and; (ii) what are the limitations of the ST strand and, considering these (and its relative strengths), how should it be advanced in the future? Overall, we find that the mobilization of ST as a general ontological framework has generated three major and largely unique contributions, namely; (i) the introduction of a duality perspective; (ii) the conceptualization of accounting as an interwoven totality comprised of structures of signification, domination and legitimation, and; (iii) an ontological basis for theorizing how, when and why socially embedded agents may produce both continuity and change in accounting practices. However, we also conclude that it is difficult to identify a particular and distinctive empirical imprint of the ST literature, and that some of the theory’s ‘competitive advantages’ are far from fully exploited. Based on these identified strengths and weaknesses of the ST perspective, we consider an array of directions for future scholarly effort.     

(S, s) Inventory Policies in General Equilibrium

We study the aggregate implications of (S, s) inventory policies ina dynamic general equilibrium model with aggregate uncertainty. Firms in themodel's retail sector face idiosyncratic demand risk, and (S, s) inventory policies are optimal because of fixed order costs. The distribution ofinventory holdings affects the aggregate outcome in two ways: variation inthe decision to order and variation in the rate of sale through the pricingdecisions of retailers. We find that both mechanisms must operate toreconcile observations that orders are more volatile than, and inventoryinvestment is positively correlated with, sales, while remaining consistentwith other salient business cycle characteristics. The model exhibits strongamplification for some shocks and persistence to a limited extent.     

Stationary equilibria in bargaining with externalities

This paper studies infinite-horizon bargaining between a seller and multiple buyers when externalities are present. We extend the analysis in Jehiel and Moldovanu by allowing for both pure and mixed equilibria [Jehiel, P., Moldovanu, B., 1995a. Cyclical delay in bargaining with externalities. Rev. Econ. Stud. 62, 619–637]. A characterization of the stationary subgame perfect equilibria in generic games is presented. Equilibria with delay exist only for strong positive externalities. Since each buyer receives a positive payoff when the seller makes an agreement with some other buyer, positive externalities induce a war of attrition between buyers.     

The inefficiency of price quantity bargaining

In bargaining between a buyer and several sellers on prices and quantities, strategic inefficiencies arise. By reallocating quantities between agreements, the buyer can increase its share of the surplus. With two symmetric sellers producing substitutes, the quantity in the first agreement will be higher than the efficient quantity, and the quantity in the last lower, thus implying that sellers are strategically discriminated. When asymmetries are not too large and sellers produce substitutes, the buyer first agrees with the seller with the lowest marginal cost and only the most efficient order of agreement is an equilibrium outcome. When goods are complements, both equilibrium quantities are lower than the efficient levels.     

Behavioral Effects of Withholding Taxes on Labor Supply*

In most advanced economies, income tax collection uses third‐party withholding for wage income. Because withholding taxes do not necessarily reflect true effective taxes, these may give false signals of net‐of‐tax pay. We test labor supply responses to such misconceptions using laboratory experiments. Withholding taxes (and the resulting tax refunds) should be behaviorally neutral, but our results show that tax adjustments lead to effort adjustments, which suggests that withholding blurs tax incentives. While there is no statistically significant response in the overall sample, the participants in the subgroup who self‐assess to be motivated by monetary incentives (about half of the total sample) reduce their effort in response to withholding taxes and increase their effort after receiving tax refunds.     

Experimental Evidence on the Effects of Early Meetings and Activation

We analyse three Danish experiments with combinations of early and intensive active labour market policy. We find that frequent individual meetings between newly unemployed workers and their caseworkers have substantial (and significant) effects on employment rates in both the medium and long run. Group meetings or an “activation wall” show positive but insignificant effects. Based on information on the costs of running the experiments, active labour programmes, and public transfer payments, we analyse the impact on government budgets and we show that individual meetings improved budgets with up to 4,500 euros per unemployed worker. We also look at the impact for subgroups.