A MACROECONOMIC PERSPECTIVE OF AFTA'S PROBLEMS AND PROSPECTS

The Association of Southeast Asian Nations (ASEAN) and the impressive economic performance of most of its members have increased the weight of the region's views in world fora. However, ASEAN has been unsuccessful in fostering a regional integration arrangement (RIA) leading to an increase in intraregional trade and foreign direct investment. In January 1992, ASEAN launched the Asean Free Trade Area (AFTA) seeking to establish a free trade area (FTA) by 2008.
Market integration increases economic interdependence and thereby raises the need for policy integration and discipline. This paper argues that a number of difficulties that ASEAN faced in promoting intraregional trade are likely to continue to affect AFTA (e.g., low economic complementarity and macroeconomic imbalances requiring large changes in equilibrium real exchange rates). The experience of other RIAs suggests other potential problems.
AFTA's prospects of evolving into deeper forms of sustainable integration are remote. Some cooperation in areas of common interest seems likely.     

An Evaluation of Inertia Models of Unemployment

Two approaches have been used to model unemployment. The first, conventional, approach involves linking the unemployment outcome to observed indices of productivity, structural factors and discrimination such as educational attainment, location and birthplace. The second approach, the inertia model, involves using a person's labour market history as a way of including in unemployment models information on the 'unobservables' that influence employability. This paper evaluates the performance of both models of unemployment. The results provide unambiguous support for the inertia model when modelling unemployment. The inertia model has higher explanatory power, higher within-sample prediction rate success and fewer out-of-sample forecasting errors than the conventional model. The estimates from the inertia model can be used to provide quite accurate predictions of the risk of becoming unemployed. This is important if individuals at high risk of becoming unemployed are to be targeted for labour market assistance.     

The hidden value of air transportation infrastructure

Air transportation is a key strategic asset in that it provides access to markets and thereby enables the economic development of nations. Thus, in order to maintain their competitiveness in a global economy, countries must invest in air transportation infrastructure to ensure their ability to meet current and future demand for aviation services. The objective of this paper is to develop and illustrate a methodology for evaluating the strategic value of air transportation infrastructure, in particular the benefits associated with the ability to react quickly to changes in the market. The hypothesis is that by recognizing and taking advantage of this strategic value, it may be possible to design better policies for aviation infrastructure delivery.The methodology developed here uses system dynamics to model different strategies for infrastructure delivery. These strategies are defined by three variables: the amount of capacity increase, the time to deliver the capacity and the congestion threshold that triggers the need for capacity delivery. Monte Carlo simulation is used to take into account multiple sources of uncertainty. The model shows that a strategy of capacity delivery based on small increments and short response times can yield more benefits than strategies that consider large capacity increases and long response times. Furthermore, in the specific airport example considered here, it was found that a congestion threshold of 75% should be the trigger for capacity enlargements if strategies based on small capacity increments and 1 or 5 years to increase capacity are considered. The lesson for decision-makers is that congestion delays must be addressed with foresight.     

Wage expectations in northern and southern Italian regions: An interpretation based on psychological and social factors

Individual wage expectations of Italian unemployed are studied. The analysis is carried out separately for the North‐Central and southern Italian regions using semiparametric additive models. Results show a marked difference in expectations formation across regions. We argue that as far as the labour market information in the South is less diffuse and more ambiguous than in the North, the divergence between the econometric model based on a utility‐maximisation mainstream theory and the actual wage expectation mechanism may be large. A tentative explanation based on psychological and social factors is offered.     

"Quicker and sicker" under Medicare's prospective payment system for hospitals: new evidence on an old issue from a national longitudinal survey

Medicare's prospective payment system for hospitals (PPS), introduced in the USA in 1983, replaced cost reimbursement with a system of fixed rates which created incentives for hospitals to control costs. Previous studies found that elderly patients were discharged from hospital "quicker and sicker" under PPS and concluded that families were coping at home. We analyse a national longitudinal survey, the first National Health and Nutrition Examination Survey and its Epidemiologic Followup Study, which includes data on more outcomes over a longer period than earlier studies. We find that the rate of admission to nursing homes from the community in the first weeks after a hospital discharge more than tripled under PPS, suggesting that families were not always able to cope. As another response to sicker patients, discharges directly to nursing homes from hospitals, which jumped initially under PPS, may have risen further when payment rates were tightened in the early 1990s. Hospital readmissions fell after the first few years. Our findings are strengthened by the fact that we control for patients' health using health information collected independently of hospital admission.     

CHILD SUPPORT IN THE U.S.: CAN FATHERS AFFORD TO PAY MORE?

This paper presents up-to-date estimates of the ability of non-resident fathers to pay child support. While no nationally representative data exist on the incomes of fathers, this issue has become more pertinent in recent years, as child support has become an important national issue. We find that fathers on average are able to pay nearly five times more in child support than they currently pay, and also that low income fathers can afford to pay substantially more than they actually pay. We also find that changes in nonmarital childbearing and the returns to education have had only minimal effects on trends in fathers' incomes.     

Dependent care and the workplace: An analysis of management and employee perceptions

This study attempts to identify differences in the perceptions of top management (defined as CEOs, directors, and presidents) and employees (defined as middle and supervisory management) regarding (a) the effects of dependent care responsibilities on job performance, and (b) the extent of a firm's responsibility in providing support for those faced with caring needs concerning eldercare, childcare, substance abuse, and mental/physical handicaps. The results indicate that these two groups have significantly different perceptions of the effect of dependent care responsibilities on job performance, and on the firm's responsibility in providing support for three types of dependent care.