Population ageing,time allocation and human capital: A general equilibrium analysis for Canada

This study explores the long-term impact of population ageing on labour supply and human capital investment in Canada, as well as the induced effects on productive capacity. The analysis is conducted with a dynamic computable overlapping generations model where in the spirit of Becker [Becker, Gary (1965), A theory of the allocation of time, The Economic Journal, Vol. 75, pp. 493–517.] and Heckman [Heckman, James (1976), A life-cycle model of earnings, learning and consumption, The Quarterly Journal of Economics, Vol. 84, pp. 511–544], leisure has a quality-time feature and labour supply and human capital investment decisions are endogenous. The role of human capital in the growth process is based on the framework used by Mankiw et al. [Mankiw, N. Gregory, Romer, David and Weil, David N. (1992), A contribution to the empirics of economic growth, Quarterly Journal of Economics, Vol. 107, no. 2, pp. 407–437]. The paper indicates that population ageing creates more opportunities for young individuals to invest in human capital and supply more skilled labour at middle age. Consequently, the reduction in labour supply of young adults initially lowers productive capacity and exacerbates the economic costs of population ageing. However, current and future middle-age cohorts are more skilled and work more, which eventually raises productive capacity and significantly lowers the cost of population ageing. Finally, these results suggest that the recent increase in the participation rate of older workers might be the beginning of a new trend that will amplify over the next decades.     

A data driven binning strategy for the construction of insurance tariff classes

We present a fully data driven strategy to incorporate continuous risk factors and geographical information in an insurance tariff. A framework is developed that aligns flexibility with the practical requirements of an insurance company, the policyholder and the regulator. Our strategy is illustrated with an example from property and casualty (P&C) insurance, namely a motor insurance case study. We start by fitting generalized additive models (GAMs) to the number of reported claims and their corresponding severity. These models allow for flexible statistical modeling in the presence of different types of risk factors: categorical, continuous, and spatial risk factors. The goal is to bin the continuous and spatial risk factors such that categorical risk factors result which captures the effect of the covariate on the response in an accurate way, while being easy to use in a generalized linear model (GLM). This is in line with the requirement of an insurance company to construct a practical and interpretable tariff that can be explained easily to stakeholders. We propose to bin the spatial risk factor using Fisher’s natural breaks algorithm and the continuous risk factors using evolutionary trees. GLMs are fitted to the claims data with the resulting categorical risk factors. We find that the resulting GLMs approximate the original GAMs closely, and lead to a very similar premium structure.     

Teaching proactivity in the entrepreneurial classroom

Abstract

This article examines the extent to which a proactive attitude can be considered a component of the entrepreneurial mindset and can be learned in the entrepreneurial classroom. We test the impact on students’ proactive attitude of two different teaching methods: a teacher-directed approach and a self-directed learning approach. We include group potency and emotions as variables that may moderate proactivity learning outcomes. Our sample is composed of 281 Master students in a French business school. Using a mixed methodological approach, the results demonstrate that the proactive attitude can be learned and that collaborative teamwork, a creative team spirit and positive emotions contribute to its development. We offer guidelines for the pedagogical design of EM education, an alternative tool to assess its impact, and a better understanding of emotional factors associated with group potency in student entrepreneurial teams.     

A genealogy of the concept of merit wants

This paper proposes a genealogy of the concept of merit wants coined by Richard A. Musgrave in his Theory of Public Finance (1959). The concept of merit wants can only be understood as a complement to the concept of public goods. I suggest that Musgrave invented the concept to apprehend some considerations that have been left out in the process of consolidation of the concept of public good. The narrow definition of the latter could not account for important state responsibilities that have been asserted by many economists.

I attempt to reconstruct Musgrave's intellectual background. First, I select examples of arguments for state intervention from authors influential in Musgrave's formative period (J.S. Mill, H. Sidgwick, E. Sax, H. Ritschl, G. Cassel, A. Wagner). Second, I argue that the invention of the concept in the 1950s reflected contemporary concerns for redistributive policies. I show that critics of the New Welfare approach (G. Colm, A. Hansen, W. Heller, H. Bowen) have held similar views, which were also in line with the liberal policy spirit of the post-war era in the United States.     

Age-related taxation of bequests in the presence of a dependency risk

This paper studies the properties of the optimal taxes on bequests when individuals differ in wage and in their risks of mortality and old-age dependance. Survival is positively correlated to income but dependency is negatively correlated with it. The government cannot distinguish between bequests motives, that is whether bequests resulted from precautionary reasons or from pure joy of giving reasons. Instead, it observes the timing of bequests and the health status at death. Under the utilitarian social welfare criterion, we show that bequests taxation results from a combination of equity, insurance, and public revenue motives. If redistribution concerns dominate insurance concerns, it is desirable to tax the most bequests of those individuals living long in good health and to tax the least bequests of those dying early. This is a direct consequence of the socio-demographic structure we assumed where richer agents live longer and in better health than poorer agents. To the opposite, if insurance concerns dominate redistributive concerns, early bequests should be the most taxed and, bequests under dependency the least taxed. Under the Rawlsian criterion, we find that early bequests should be the least taxed and bequests left by the healthy long-lived individuals should be the most taxed.     

The political economy of derived pension rights

Derived pension rights (including survivor benefits and spousal compensations for one-earner couples) exist in most Social Security systems but with variable generosity. They are mainly viewed as a means to alleviate poverty among older women living alone. The purpose of this paper is to explain how they can emerge from a political economy process when Social Security is a combination of Bismarckian and Beveridgean pillars. We find that the pension system should be contributive but with a positive level of derived rights. We also show that such a system encourages stay-at-home wives, thus revealing an unpleasant trade-off between female labor participation and poverty alleviation.     

The Normative Problem of Merit Goods in Perspective

Abstract

In his Theory of Public Finance (1959), Musgrave invented the concept of merit wants to describe public wants that are satisfied by goods provided by the government in violation of the principle of consumer sovereignty. Starting from Musgrave’s mature discussion (1987), I construct two categories to classify the explanations of merit goods. The first strand of thought attempts to justify merit goods within the New welfare economics, by modifying its assumptions to accommodate irrationality, uncertainty, lack of information, and psychic externalities. The second category encompasses more radical departures from consumer sovereignty, drawn from philosophical critiques of economics. In the third part of the paper, I argue that the two strands might be represented by a non-individualistic social welfare function. I also show how this solution echoes Musgrave’s early views on public expenditures before he coined the concept of merit wants. From an historical perspective, the survival of the concept highlights the persistence of a social point of view in welfare economics.     

The Profit–Investment Nexus in an Era of Financialisation,Globalisation and Monopolisation: A Profit-Centred Perspective

ABSTRACT

During recent decades, the link between profits and domestic investment has weakened in the largest high-income economies. In this article, we explore this attenuation of the profit–investment nexus through a profit-centred perspective. Focusing on the impact of the origins and uses of profits, we study the investment behaviour of non-financial corporations in relation to their profits at the macro level since 1970, a period marked by financialisation, globalisation and, more recently, monopolisation. We contrast and discuss four competing hypothese—the revenge of the rentiers, the financial turn of accumulation, globalisation and monopolisation—and related stylised facts for France, Germany, Japan, the United Kingdom and the United States.