Lower Tax Progression, Longer Hours and Higher Wages

The impact of tax reforms that decrease income tax progression is analysed in an equilibrium search model with wage bargaining and endogenous individual working hours. Working hours are either bargained together with the hourly wage (case 1) or determined solely by workers after bargaining over the wage (case 2). In both cases reducing tax progression increases working hours of employed and, more interestingly, unambiguously increases wages and unemployment. Wages and unemployment rise more and working hours and production less in case 1 compared to case 2, probably making case 2 countries best suited for such tax reforms.
JEL Classification : H 24; J 22; J 41     

Wohlstand — keine Alternative zum BIP

In der Dezemberausgabe 2009 ver?ffentlichte der Wirtschaftsdienst ein Zeitgespr?ch mit dem Thema „Wie l?sst sich Wohlstand messen?“. Dazu ?u?ern sich Peter Michael von der Lippe und Claus Christian Breuer kritisch. Roland Zieschank und Hans Diefenbacher sowie Hans Wolfgang Brachinger stellen ihre Sichtweisen jeweils in einer Erwiderung dar.     

Conflict, Effort and Capital Stock in UK Wage Determination

The paper is concerned with the determination of wages, unemployment and labour productivity in the UK. The theoretical model suggests that in addition to economic factors, historical and ideological elements play an important role in the determination of wages, unemployment and productivity. Particular emphasis is put on the capital shortage hypothesis. It is argued that capital scrapping in response to the two oil price shocks, combined with subsequent sluggish growth in capital, may be responsible for the rise of the NAIRU and the persistence of unemployment. The empirical analysis is concerned with testing the theoretical model, using quarterly data for the UK from 1966 until 1994. We use cointegration analysis for the determination of wages, unemployment and labour productivity. This revised version was published online in July 2006 with corrections to the Cover Date.     

Empirical Modelling of Trade Union Growth in Germany, 1956—1986: Traditional versus Cointegration and Error Correction Methods

Ein empirisches Modell des Wachstums der deutschen Gewerkschaften 1956—86: Traditionelle Methoden versus Kointegrations- und Fehlerkorrekturtechniken. — Dieser Aufsatz liefert eine Erkl?rung für den Anstieg und Rückgang der Zahl der Gewerkschaftsmitglieder in der Bundesrepublik Deutschland von 1956 bis 1986. Darin wird für die empirische Modellierung ein alternativer Ansatz gew?hlt, der auf der in jüngster Zeit entwickelten Kombination von Kointegrations- und Fehlerkorrekturtechniken beruht. Das einfache empirische Modell kann die kurzfristige Dynamik und die langfristigen Trends der Mitgliedschaft w?hrend dieser Periode in einer sehr befriedigenden Weise erkl?ren. Es enth?lt ein Konjunkturzyklusmodell, das zur Analyse der Zu- und Abnahme deutscher Gewerkschaften entwickelt wurde, und liefert Sch?tzungen der Elastizit?t von Faktoren, die die Zahl der Mitglieder langfristig beeinflussen. Un modèle empirique de l’expansion des syndicats ouvriers en RFA pendant les années 1956—86: Les méthodes traditionnelles contre les méthodes de cointégration et de correction d’erreurs. — Cette étude doit expliquer l’expansion et le déclin de l’affiliation aux syndicats en RFA pendant les années 1956—86. On propose un cadre alternatif pour un modèle empirique basé sur la combinaison actuellement prouvée entre les techniques de cointégration et des méchanismes de la correction d’erreurs. Le modèle simple empirique est en mesure d’expliquer d’une manière satisfaisante les dynamismes à court terme et les tendances à long terme de l’affiliation pendant cette période. Le modèle contient un modèle développé auparavant pour expliquer les variations dans le nombre des membres en termes du cycle économique en RFA et fournit des estimations pour l’élasticité des facteurs qui influencent l’affiliation à long terme. Modelando empíricamente el crecimiento de sindicatos en Alemania (1956—86): métodos tradicionales versus métodos de cointegración y de corrección de errores. — En este trabajo se provee una explicación para el crecimiento y la reductión del numéro de miembros de sindicatos en la República Federal de Alemania en el periodo 1956—86. Se propone un enfoque alternativo para modelar empíricamente, basado en la relación recientemente establecida entre técnicas de cointegración y mecanismos de corrección de errores. El modelo empírico parsimonioso es capaz de explicar la dinámica del corto plazo y la tendencia de largo plazo observada en el número de miembros durante este periodo de manera muy satisfactoria. Comprende un modelo “nested” representando al ciclo económico, construido para Alemania, y provee estimaciones para las elasticidades de los factores que influencian al número de miembros en el largo plazo.     

Portfolio management with stochastic interest rates and inflation ambiguity

We solve, in closed form, a stock-bond-cash portfolio problem of a risk- and ambiguity-averse investor when interest rates and the inflation rate are stochastic. The expected inflation rate is unobservable, but the investor can learn about it from observing realized inflation and stock and bond prices. The investor is ambiguous about the inflation model and prefers a portfolio strategy which is robust to model misspecification. Ambiguity about the inflation dynamics is shown to affect the optimal portfolio fundamentally different than ambiguity about the price dynamics of traded assets, for example the optimal portfolio weights can be increasing in the degree of ambiguity aversion. In a numerical example, the optimal portfolio is significantly affected by the learning about expected inflation and somewhat affected by ambiguity aversion. The welfare loss from ignoring learning or ambiguity can be considerable.     

Information Asymmetries as Antecedents of Opportunism in Buyer-Supplier Relationships: Testing Principal-Agent Theory

ABSTRACT

Purpose: A severe problem in supplier selection refers to moral hazard: suppliers not behaving in the expected way once contracted. Principal-agent theory could provide insights on how to reduce this problem. Because buyer–supplier relationships can be interpreted as principal-agent situations, the application of agency theory should facilitate improved supplier selection. Although theoretically compelling, empirical tests verifying this assumption are not prevalent. Regarding the advancement of theory, this paper tests whether both ex ante and ex post information asymmetries influence moral hazard. In particular, in the context of a globalizing economy with a subsequent increase in information asymmetries as a problem in supplier selection, this conceptual approach may be contributive.

Design/methodology/approach: The authors use a set of 87 buyer–supplier relationships to conduct a test, applying a partial least squares model with latent variables. A particularity of the data set is that it contains information on ongoing as well as on discontinued relationships.

Findings: The analysis indicated that both ex ante information asymmetries (operationalized by a reputation variable) and ex post asymmetries (operationalized by a monitoring variable) have shown to be significant and strong antecedents explaining the occurrence of moral hazard. Interestingly, and opposed to the common assumption, the length of a relationship and the amount of direct meetings have not revealed any explanatory significance. Buyer dependency hardly showed influence on supplier opportunism.

Research limitations/implications: Data were collected from a multitude of buyer–supplier relationships from a single firm in the chemical-pharmaceutical industry. Generalizations to other industries still need to be tested. Socially desirable answering behavior cannot fully be excluded because relationship discontinuation is not a desirable situation. In terms of theory implications, this research adds to the notion that both hidden action and hidden intention can lead to moral hazard.

Practical implications: An agency-based analysis can be operationalized with the help of an agency-based supplier classification portfolio. It might be of particular value to firms to discuss those suppliers that scored high in risk of opportunism but did not (yet) reveal any signs of moral hazard. Finally, the strong explanatory power

of reputation alerts buyers to pay more attention to behavioral information on the (potential) supplier available in the market.

Originality/value: Analyzing the occurrence of moral hazard and including terminated relationships adds to the emerging stream of literature on relationship discontinuation in B2B markets. Further, the strong empirical results may encourage researchers to elaborate on principal-agent theory-based assumptions, adding another layer of explanation to buyer–supplier relationships. Findings show that reputation is unduly neglected as supplier selection criterion in current theory and practice.     

Segmenting Chinese Outbound Tourists by Perceived Constraints

This study examines travel constraints experienced by Chinese outbound tourists. Four constraint factors are identified from visitor data collected in 2006: structural constraint, cultural constraint, information constraint, and knowledge constraint. Information constraint is identified as a factor unique to outbound tourists from China. Among the four constraint factors, structural constraint is the most dominant. Four clusters of visitors are therefore identified: culturally constrained, structurally constrained, absence of sufficient information, and knowledge constrained. The four clusters are distinct in terms of their destination loyalty. The characteristics of each segment are given, and the practical implications of the findings are discussed.     

Drop Rawls?

Business ethicists disagree on whether John Rawls’s political philosophy can be applied to their questions and concerns. They concur, however, that, if warranted, such an application of his theory would be highly instructive for the field. This article scrutinizes that assumption. The paper examines to what extent a normative import of Rawls’s philosophy into business ethics would indeed render adequate results. Highlighting shortcomings of Rawls in regard to several pressing concerns of contemporary business ethics, the paper ponders whether, for purposes of normative guidance and conceptual orientation, Rawls’s theory can meet the expectations that its adherents foster.