Intersectoral wage linkages: the case of Sweden

The purpose of this study is to investigate whether wage-setting in certain sectors of the Swedish economy affects wage-setting in other sectors. The theoretical background is the Scandinavian model of inflation, which states that wage-setting in the sectors exposed to international competition lead wage-setting in the sheltered sectors of the economy. The Johansen maximum likelihood cointegration approach is applied to quarterly data on Swedish sector wages for the period 1980:1–2002:2. Different vector error correction (VEC) models are created, based on assumptions as to which sectors are exposed to international competition and which are not. Granger causality tests are then carried out in the different restricted/unrestricted VEC models to test for sector wage leadership. The Granger causality tests provide strong evidence for the presence of intersectoral wage causality, but no evidence of a wage-leading role for the internationally exposed manufacturing sector.      

Unemployment disparities and regional wage flexibility: comparing EU members and EU-accession countries

This paper provides empirical evidence on regional labor market flexibility in Europe and, in particular, in the EU-accession countries in Central and Eastern Europe. Whereas substantial regional disparities in unemployment are found for pre-accession EU member countries as well as for accession countries, an empirical analysis taking account of spatial effects shows that regional wage flexibility is significantly higher for accession countries. Moreover, unemployment disparities are found to be less persistent in the accession countries.

Austrian economics and the analysis of labor markets

Theory and policy relating to labor markets is dominated by the mainstream labor market model, although a less well-known, socioeconomic version can also be identified. The mainstream model is methodologically flawed and forced, thereby, to relegate any (serious) investigation of labor market institutions and/or social structures to the margins of its analysis. The socioeconomic account is not so much methodologically flawed, as methodologically ambivalent. While this ambivalence does not actually prevent the investigation of institutions and/or social structures, it does promote ambiguity whenever we inquire into the precise nature of the interaction between them and labor markets. Insights from Austrian economics, when used in collaboration with critical realist methodology, can play a part in augmenting the socioeconomic account, generating a totally new approach to the analysis of labor markets.

Technological knowledge as an essential facility

The economics of regulation has articulated the notions of essential facility and mandated interconnection. Their application to the governance of technological knowledge can be fruitful especially when implemented by the adoption of a compensatory liability rule and the parallel reduction in the exclusivity of patents. Because knowledge is at the same time an output and an input in the production of new knowledge, exclusivity, traditionally associated to patents, is the cause of actual knowledge rationing with major drawbacks in terms of both static and dynamic efficiency. This institutional innovation can improve the governance of technological knowledge and increase both its rates of dissemination and generation.

Italian households’ debt: the participation to the debt market and the size of the loan

This paper analyses Italian households’ participation to the debt market, separating the probability of demanding a loan from the probability of being rationed by lenders; on the supply side of the market specific attention is paid to enforcement costs of the loan contract when customers default. A new result is that the age of the household head acts essentially as a demand factor, rather than a variable influencing the lender’s choice. Both current and future households’ income increase the demand for loans and reduce credit rationing. Self-employed workers are more rationed by lenders. Credit constraints are also linked to the area where the household lives, partly because of different enforcement costs. The final part of the paper analyses the equilibrium quantity of the loan, for households who have a loan and are not constrained. The loan size is positively linked to household net wealth and income profile. An important contribution of this paper is the finding that, not only the participation to the debt market, but also the loan size is negatively affected by enforcement costs.      

Property rights and information flows: a simulation approach

With the growth of the information economy, the proportion of knowledge-intensive goods to total goods is constantly increasing. Lessig (The future of ideas: the fate of the commons in a connected world. Vintage, New York 2001) has argued that IPRs have now become too favourable to existing producers and that their ‘winner-take-all’ characteristics are constraining the creators of tomorrow. In this paper we look at how variations in IPRs regimes might affect the creation and social cost of new knowledge in economic systems. Drawing on a conceptual framework, the Information Space or I-Space to explore how the uncontrollable diffusibility of knowledge relates to its degree of structure, we deploy an agent-based modelling approach to explore the issue of IPRs. We take the ability to control the diffusibility of knowledge as a proxy measure for an ability to establish property rights in such knowledge. Second, we take the rate of obsolescence of knowledge as a proxy measure for the degree of turbulence induced by different regimes of technical change. Then we simulate the quantity and cost to society of new knowledge under different property right regimes.

Commodity price cycles and heterogeneous speculators: a STAR–GARCH model

We propose an empirical commodity market model with heterogeneous speculators. While the power of trend-extrapolating chartists is constant over time, the symmetric impact of stabilizing fundamentalists adjusts endogenously according to market circumstances: Using monthly data for various commodities such as cotton, sugar or zinc, our STAR–GARCH model indicates that their influence positively depends on the distance between the commodity price and its long-run equilibrium value. Fundamentalists seem to become more and more convinced that mean reversion will set in as the mispricing enlarges. Commodity price cycles may thus emerge due to the nonlinear interplay between different trader types. The paper represents the authors’ personal opinion and does not necessarily reflect the views of the Deutsche Bundesbank.     

Component efficient solutions in line-graph games with applications

Recently, applications of cooperative game theory to economic allocation problems have gained popularity. We investigate a class of cooperative games that generalizes some economic applications with a similar structure. These are the so-called line-graph games being cooperative TU-games in which the players are linearly ordered. Examples of situations that can be modeled like this are sequencing situations and water distribution problems. We define four properties with respect to deleting edges that each selects a unique component efficient solution on the class of line-graph games. We interpret these solutions and properties in terms of dividend distributions, and apply them to economic situations. This research has been done while the third author was visiting Tinbergen Institute at the Free University, Amsterdam. The research is part of the Research Programme “Strategic and Cooperative Decision Making” at the Department of Econometrics. Financial support from the Netherlands Organization for Scientific Research (NWO) in the framework of the Russian-Dutch programme for scientific cooperation, is gratefully acknowledged. The third author also appreciates partial financial support from the Russian Leading Scientific Schools Fund (grant 80.2003.6) and Russian Humanitarian Scientific Fund (grant 02-02-00189a). We thank three anonymous referees for their valuable comments.     

Charitable Donations: Evidence of Demand for Environmental Protection?

Using data from the 2001 Giving and Volunteering in the United States survey, I examine household charitable donations to environmental organizations. Household income has a positive impact on environmental giving. While the tax price affects overall charitable contributions, it does not affect environmental giving. More education, being female, homeownership, and voting are also associated with a greater likelihood of contributing to the environment. African-Americans and Latinos are less likely to contribute to the environment, although conditional on giving, Latinos give more. Retired persons and households with children are less likely to contribute to the environment. Larger households give less to the environment. Households from the Northeast are the most likely to make environmental contributions while households from the South are the least likely.