A guide map to the terrain of gift value

This article integrates a broad range of gift‐giving literature into a conceptual framework that puts the all too often overlooked construct of personal value at its core. Although there have been substantial contributions from the fields of anthropology, sociology, economics, and consumer behavior, efforts to model gift giving have failed to put the value of the gift‐giving experience at the center of the exchange. Within this article, a model of the gift‐giving experience that overcomes this critical shortcoming is proposed. The model establishes clear categories for breaking the giving process into easily examinable elements, and it is argued that although the concept of value is not a simple one, it should be central to any examination of the gift‐giving phenomenon. © 2001 John Wiley & Sons, Inc.     

Profit Related Pay and the U.K. Small Firm Labour Market

This paper critically examines the relevance of profit related pay (PRP) for the U.K. small firm sector. Since 1986, the U.K. government has actively encouraged PRP, which attracts generous tax breaks, because it believed that PRP would make pay more flexible downwards and would significantly improve employee identification, morale and productivity. An analysis of the theoretical arguments and the assumptions made regarding the nature of the U.K. small firm sector that underlay these claims suggests, however, that the likelihood of achieving either of these alleged benefits is small. An appraisal of the available empirical evidence on the practical implementation and operation of PRP schemes suggests that the tax relief simply encourages firms to introduce cosmetic schemes that have no appreciable impact upon the behaviour of either firms or employees. Moreover, the experience of some firms that adopted PRP schemes indicates that, far from increasing morale and productivity, PRP often creates new tensions and conflict between owners and employees. These and other unintended consequences illustrate the inherent difficulties of government attempts to use the tax system to alter the behaviour of agents engaged in a wide variety of complex and very heterogeneous bargaining situations.     

INEQUALITY AND THE MEASUREMENT OF RESIDENTIAL SEGREGATION BY INCOME IN AMERICAN NEIGHBORHOODS

American metropolitan areas have experienced rising residential segregation by income since 1970. One potential explanation for this change is growing income inequality. However, measures of residential sorting are typically mechanically related to the income distribution, making it difficult to identify the impact of inequality on residential choice. This paper presents a measure of residential segregation by income, the Centile Gap Index (CGI), which is based on income percentiles. Using the CGI, I find that a one standard deviation increase in income inequality raises residential income segregation by 0.4–0.9 standard deviations. Inequality at the top of the distribution is associated with more segregation of the rich, while inequality at the bottom and declines in labor demand for less-skilled men are associated with residential isolation of the poor. Inequality can fully explain the rise in income segregation between 1970 and 2000.     

Are there economies of scale in the demand for money by firms? Some panel data estimates

We estimate elasticities of scale in the demand for money by firms using firm level panel data from Spain, the UK, and the US. This elasticity is one for Spain and the UK but smaller for the US. We find that the errors in the money demand equations contain two terms that are correlated with sales. Firstly, a permanent firm effect that captures differences in technological sophistication. Secondly, a measurement error in sales, which becomes relevant when relying on changes in sales to account for fixed effects. Failure to control for these correlated unobservable terms results in important biases in the estimated sales elasticities.     

Informal Insurance Arrangements with Limited Commitment: Theory and Evidence from Village Economies

Recent work on consumption allocations in village economies finds that idiosyncratic variation in consumption is systematically related to idiosyncratic variation in income, thus rejecting the hypothesis of full risk-pooling. We attempt to explain these observations by adding limited commitment as an impediment to risk-pooling. We provide a general dynamic model and completely characterise efficient informal insurance arrangements constrained by limited commitment, and test the model using data from three Indian villages. We find that the model can fully explain the dynamic response of consumption to income, but that it fails to explain the distribution of consumption across households.