Strategic Trade Policy with Heterogeneous Costs

The paper examines optimal strategic trade policy under a heterogeneous cost oligopoly. The first‐best policy involves a structure of firm‐specific export subsidies/taxes in which the government favours the most efficient firms only with a sufficiently low social cost of public funds.     

SUBSIDIES AS OPTIMAL FISCAL STIMULI

Theoretical macroeconomic models typically take fiscal policy to mean tax‐and‐spend by a ‘benevolent government’ that exploits potential aggregate demand externalities inherent in the imperfectly competitive nature of goods markets. Whilst shown to raise aggregate output and employment, these policies crowd‐out private consumption and typically reduce welfare. On account of their widespread use to stimulate economic activity, we consider the use of ‘tax‐and‐subsidize’ instead of ‘tax‐and‐spend’ policies. Within a static general equilibrium macro‐model with imperfectly competitive goods markets, we examine the effects of wage and output subsidies and show that, for a small open economy, positive tax and subsidy rates exist which maximize welfare, rendering no intervention suboptimal. We also show that, within a two‐country setting, a Nash non‐cooperative symmetric equilibrium with positive tax and subsidy rates exists, and that cooperation between governments in setting these rates is more expansionary and leads to an improvement upon the non‐cooperative solution.     

Testing the ‘brain gain’ hypothesis: Micro evidence from Cape Verde

Does emigration really drain human capital accumulation in origin countries? This paper explores a unique household survey designed and conducted to answer this research question. We analyze the case of Cape Verde, a country with allegedly the highest ‘brain drain’ in Africa, despite a marked record of income and human capital growth in recent decades. We propose the first explicit test of ‘brain drain’ arguments, according to which the prospects of own future migration can positively impact educational attainment. Our most conservative estimates using individual specific variation in economic conditions at the destination indicate that a 10 pp increase in the probability of own future migration improves the probability of completing intermediate secondary schooling by nearly 4 pp for individuals who do not migrate before age 16. These findings are robust to the choice of instruments and econometric specification. Counterfactual simulations point to significant human capital gains from lowering migration barriers.     

Return Migration,Self‐selection and Entrepreneurship

Are return migrants more entrepreneurial? Existing literature has not addressed how estimating the impact of return migration on entrepreneurship is affected by double unobservable migrant self‐selection, both at the initial outward migration and at the final inward return migration stages. This paper exploits exogenous variation provided by the civil war and the incidence of agricultural plagues in Mozambique, as well as social unrest and other shocks in migrant destination countries. The results lend support to overall negative unobservable return migrant self‐selection, which results in an under‐estimation of the effects of return migration on entrepreneurial outcomes when using a ‘naïve’ estimator that does not control for self‐selection at both the initial migration and at the final return migration stages.     

Stages of diversification in a neoclassical world

Recent research has documented a U-shaped industrial concentration curve over an economy’s development path. How far can neoclassical trade theory take us in explaining this pattern? We estimate the production side of the Heckscher–Ohlin model using industry data on 44 developed and developing countries for the period 1976–2000. Decomposing the implied changes in industrial concentration over time shows that at least one third of these changes seems to be explained by a Rybczynski effect. This result suggests that capital accumulation led poor countries to diversify their industrial production, while rich countries made their production more concentrated in highly capital-intensive industries.     

Unionisation and Foreign Direct Investment: Challenging Conventional Wisdom?

This paper investigates the effects of different degrees of wage setting centralisation on the incentive of a MNE to locate in a host country, and on the host country's welfare. Decentralised and centralised wage bargaining are considered. The nature of product market competition between the MNE and domestic firms proves crucial to results which cast doubt on some of the conventional wisdom on FDI. In particular, we show that: (i) it is not always welfare improving to attract inward FDI, and (ii) the MNE may prefer centralised to decentralised wage setting regimes.     

Unionization,international integration,and selection

Abstract We study how unionization affects competitive selection between heterogeneous firms when wage negotiations can occur at the firm or at the profit‐centre level. With productivity specific wages, an increase in union power has: (i) a selection‐softening; (ii) a counter‐competitive; (iii) a wage‐inequality; and (iv) a variety effect. In a two‐country asymmetric setting, stronger unions soften competition for domestic firms and toughen it for exporters. With profit‐centre bargaining, we show how trade liberalization can affect wage inequality among identical workers both across firms (via its effects on competitive selection) and within firms (via wage discrimination across destination markets).     

永恒的平衡之感

法拉帝集团安科纳造船厂50周年庆 对于这一重要的庆典,法拉帝选用的方式,足够具有纪念意义.由旗下超级游艇品牌CRN,这一意大利最大的游艇建造商之一,来打造该品牌有史以来最大的一艘游艇,并在庆祝礼上将其成功下水,确实没有比这一方式更加令人激动人心的事了.当然,这更成为了一次盛大的聚会,包括各级别重要机构、客户贵宾、高层员工,及法拉帝的整个管理层人员,足足3000余人,他们带着饱满的热情来共同迎接这个拥有6层甲板、80米长钢铝制成的最新旗舰.这一海洋庞然大物的创造,当然离不开与法拉帝长期合作的知名设计团队——Zuccon国际项目工作室的前卫理念,以及CRN工程团队为本奔向海而长期付诸的努力.     

Employment to output elasticities and reforms towards flexicurity: Evidence from OECD countries

Labor market reforms in the direction of “flexicurity” have been widely endorsed as a means to increase an economy's ability to adjust to negative shocks while offering adequate social safety nets. This paper empirically examines how such reforms influence employment's responsiveness to output fluctuations (employment–output elasticity). To address this question, we employ a single equation error correction model with policy interactions on a panel of OECD countries, which also incorporates the period of the Great Recession, and distinguish between passive and active labor market policy types. Flexicurity is represented by three policy measures: unemployment benefit generosity, the flexibility of hiring and firing rules, and spending on active labor market policies. We find that the effects of any single policy change are shaped by the broader existing policy mix within which it takes place. A hypothetical flexicurity reform towards the policy mix of Denmark, a well-known example of the flexicurity regime, is found to increase or leave unchanged countries' short-run employment–output elasticities, depending on the initial policy mix. These results are robust to accounting for a large set of additional labor market institutions.