What Should Be Our Human Capital Investment Policy?

This paper considers the magnitude of the human capital investment required to offset the increase in the inequality in labour earnings in the US economy since 1979. It considers the ineffectiveness of government training policies, the effectiveness of private sector training and the conflict between economic efficiency and the work ethic. It also considers revisions of the tax code. The importance of the distinction between the long view and the short view in analysing human resource policies is emphasised. JEL classification: J24, I28, H40.     

Evaluation of market efficiency for supplementary accounting disclosures: The case of pension assets and liabilities*

Abstract. This paper examines the extent to which stock prices fully reflected the off-balance-sheet item net over- (under-) funded pension liabilities during the four-year period 1979–82. The evidence suggests that the market was informationally inefficient and that it displayed a general underreaction relative to the net pension liability. Significant excess returns could have been earned by using the net pension liability as an instrument for portfolio selection. The empirical analysis fails to identify the existence of confounding variables such as beta risk, size, or industry effects. Résumé. Les auteurs examinent dans quelle mesure le cours des actions a reflété l'évolution du poste net hors bilan de l'excédent (ou du déficit) de provisionnement de la dette au titre des régimes de retraite, pendant la période de quatre ans écoulée entre 1979 et 1982. Les constatations des auteurs laissent supposer que le marché était inefficient sur le plan informationnel et qu'il a enregistré une réaction générale mitigée à la dette nette au titre des régimes de retraite. L'utilisation de la dette nette au titre des régimes de retraite comme critère de sélection de portefeuilles aurait permis d'obtenir des rendements excédentaires importants. L'analyse empirique ne parvient pas à déterminer l'existence de variables contradictoires telles que le risque Beta, la taille ou les effets du secteur.     

Manufacturing Industry and the Balance of Payments Adjustment: The United Kingdom Case

The thesis of this essay is that it is unlikely that economic growth in the UK during the rest of the 1990s will be balance-of-payments constrained in any significant sense. Our conclusion is that manufacturing industry does not and will not play a unique role in Britain's economic future. These propositions are not to be confused with two distinct and related ones. The first is that the fact that the balance of payments need not be seen as a constraint does not rule out the possibility of other problems associated with the balance of payments such as we have seen in the recent past. Secondly, the fact that manufacturing industry is not in any sense a unique part of economic activity in no way lessens its importance as a major and significant sector. This paper is in no sense a critique of manufacturing industry.     

Corporate Financial Policy and the Theory of Financial Intermediation

This paper examines the optimal structure of financial contracts in an economy subject to two forms of moral hazard. Multiple information problems are shown to generate a role for multiple classes of financial claimants. We then show that economic efficiency is enhanced if the financial structure of the economy consists of both direct and intermediated financial contract markets. Consequently, our results demonstrate a motivation for the complementarity between capital markets and depository financial institutions.     

An Individual‐Level Study of Contract Ratification Support

This study uses constructs developed from theoretical models of both unit‐level ratification studies and individual‐level studies of strike support to predict individual employee ratification voting behavior and contract satisfaction. Surveys were given to union members before and after ratification voting. The results suggest that constructs assessing economic factors, employment relations, union relations, and the importance of contract information from the union all influence ratification support. While the bargaining issues are important in explaining ratification support, factors beyond the bargaining issues, such as employer and union loyalty and providing information about the contract, are related to ratification support.     

Legitimating Inequality: Fooling Most of the People All of the Time

Over the three decades leading up to the crisis of 2008, inequality dramatically increased in the United States and Great Britain. What stands out, but is seldom noted, is that this occurred within democracies where the relative losers—the overwhelming majority—could in principle have used the political system to block or reverse rising inequality. Why did they not do so? A glance at history reveals that peoples have only very infrequently contested inequality because they were led to believe that their inferior status in terms of income, wealth, and privilege was just, that it was not really so bad, or that it was necessary for their future well‐being. Ideological systems legitimated a status quo of inequality, or in more modern times even increasing inequality. This article surveys the manner in which inequality has been historically legitimated, first predominantly by religion, then predominately by economic thought. Attention is then focused on the manner in which contemporary economic science and its popular interpretations in the media have served to legitimate inequality in the U.S. since the mid‐1970s. The article concludes with a reflection on the unique conditions that enable the legitimation of inequality to be delegitimated.