Computerization and Structural Change

I develop three measures of structural change on the basis of U.S. data: changes in occupational composition, changes in input–output technical coefficients, and changes in capital coefficients. Using pooled cross-section, time-series data for 44 industries over the period from 1970 to 1990, I find that computer investment per worker has had a positive and significant effect on the degree of occupational change and changes in input and capital coefficients.     

The British youth labour market in crisis

The paper argues that the British youth labour market is in a crisis with employment falling, unemployment and long-term unemployment rising rapidly. In section one the paper reviews the evidence and, in particular, looks at alternative measures of unemployment duration. Section two discusses various explanations for the growth of youth unemployment and dismisses the view that it is due to the increase in relative wages of young people. It is argued that the youth labour market has several distinctive features that make it more sensitive to cyclical fluctuations. Section three takes a brief look at various policies to alleviate the problem. Section four concludes the paper stressing that a reflation of the economy is necessary to make a significant impact on youth unemployment.     

On a class of law invariant convex risk measures

We consider the class of law invariant convex risk measures with robust representation r_h,p(X)=sup_fò₀¹ [AV@R_s(X)f(s)-f^p(s)h(s)] ds\rho_{h,p}(X)=\sup_{f}\int_{0}^{1} [AV@R_{s}(X)f(s)-f^{p}(s)h(s)]\,ds, where 1≤p<∞ and h is a positive and strictly decreasing function. The supremum is taken over the set of all Radon–Nikodym derivatives corresponding to the set of all probability measures on (0,1] which are absolutely continuous with respect to Lebesgue measure. We provide necessary and sufficient conditions for the position X such that ρ _h,p (X) is real-valued and the supremum is attained. Using variational methods, an explicit formula for the maximizer is given. We exhibit two examples of such risk measures and compare them to the average value at risk.     

Stay in school or start working? — The human capital investment decision under uncertainty and irreversibility

At any moment a student may decide to leave school and enter the labor market, or to stay in the education system. The timing of their departure determines their level of academic achievement and formal qualification. Education is a multi-stage process of investing in an accumulative human capital stock. How long can I expect to go to school? How much will I invest in my education? To answer these questions we apply the real option approach. We depart from recent literature by (1) adding accumulated education costs and determining the expected time of market entry, (2) considering complete earnings profiles including entry-level wages, sheepskin effects and earning dynamics, and (3) discussing the option value of schooling while introducing potential career opportunities or threats of unemployment modeled as major uncertain events connected with particular formal education achievements.     

To Screen or Not to Screen? Using the Internet for Selection Decisions

Organizations are increasingly relying on Internet searches and social networking websites to uncover detailed and private information about job applicants. Such Internet screening techniques have the potential to provide additional information beyond that found using traditional screening approaches. However, questions regarding the legality and appropriateness of this practice, as well as issues regarding the standardization, reliability, and validity of the information obtained, need to be addressed. The current work describes these issues associated with Internet screening and provides recommendations to help ensure this practice is used appropriately in organizations. Suggestions for future research on Internet screening are also discussed.     

Enhancing Stock Market Return with New Product Preannouncements: The Role of Information Quality and Innovativeness

To advance development and application of signaling theory in the new product preannouncement literature while seeking to resolve ambiguity regarding the influence of innovativeness on stock market return, the role of information quality is examined. Specifically, this study investigates the effect of innovativeness across low and high levels of information quality. The results, ascertained using event study methodology on a sample of 243 new product preannouncements collected over a nine‐year period, indicate that higher information quality increases the strength of the positive relationship between innovativeness and stock market return. The findings offer managers insight into what role information quality plays in new product preannouncements that can help their firms generate higher stock market return.     

Optimal portfolio allocation under the probabilistic VaR constraint and incentives for financial innovation

We characterize the investor’s optimal portfolio allocation subject to a budget constraint and a probabilistic VaR constraint in complete markets environments with a finite number of states. The set of feasible portfolios might no longer be connected or convex, while the number of local optima increases exponentially with the number of states, implying computational complexity. The optimal constrained portfolio allocation may therefore not be monotonic in the state–price density. We propose a type of financial innovation, which splits states of nature, that is shown to weakly enhance welfare, restore monotonicity of the optimal portfolio allocation in the state-price density, and reduce computational complexity. We are grateful to Ken Kavajecz and seminar participants at Harvard Business School, London School of Economics, Maastrict University, ZEI Bonn, and Danske Bank Symposium on Asset allocation and Value-at-Risk: Where Theory Meets Practice for comments on an earlier version of this paper. We also benefitted from the suggestions of two anonymous referees. Our papers can be downloaded from www.RiskResearch.org.     

The walrus, carpenter and oysters: Liberal reform, hypocrisy and expertocracy in Maori land loss in New Zealand 1885–1911

This paper considers the Liberal Governments’ reformist agenda and resultant hypocrisy surrounding wealth confiscation from Maori in New Zealand from 1885 to 1911. Through an analysis of official records, ledger accounts and other historical documents, it shows how the government compulsorily acquired land from Maori and resold it at considerable profit, thus supplying a means of increasing state revenues. Supplementing these revenues were exorbitant survey fees, government commissions from Native Reserves and local government rates in which accounting expertise made it possible to enclose, price and levy charges. The calculative process enabled parliamentarians to argue that given the poor returns to Maori, their assets should be put into the hands of land-selling councils. Maintaining a figurative distance from the mechanism of exploitation, all the while responsible for its enactment, successive Liberal administrations throughout the period made much of past injustices and expressed considerable sympathy for Maori. Maori were largely dispossessed of their land by the end of this period—a period of relative calm where public appeasement and niceties presented a more benign façade to the disproportionately heavy taxation burden on, and ultimate pillage of Maori.     

Competition and Appraisal Inflation

The Journal of Real Estate Finance and Economics - In mortgage debt contracts, real property serves as collateral and the terms of mortgage financing are largely conditional on the certification of...