A NOTE ON THE NONLINEAR EFFECT OF MINIMUM WAGE INCREASES

We use a labor search model with worker experience to assess the effects of minimum wage increases. Minimum wages can have nonlinear effects on unemployment as higher minimum wages become binding for larger portions of the underlying productivity distribution. The model is used to assess the increases proposed by the Obama Administration from $7.25 an hour to $9.00 and then to $10.10 per hour. We find that minimum wage increases have large effects on youth unemployment. These large effects cast doubt on using past empirical estimates of the effects of minimum wages that do not account for potential nonlinearities. (JEL E24, J08, J24, J64)     

Some Thoughts on Moriarty and Moeller

Abstact In a recent paper in Business Ethics Quarterly Professor Jeffrey Moriarty (2005) asserted the relevance of political philosophy to business ethics. Moriarty asked whether “businesses ought to be run (more) like states” and argued why that might be beneficial. This paper on the contrary asserts that there are distinct disadvantages to businesses attempting to be run more like states. Specifically, it asserts that any such an attempt increases the likelihood of the re-emergence of a totalitarian society as businesses currently often act as an intermediary between the individual and the state. The paper contemplates Moeller’s ambitions in the Weimar period for the business to be run like a state and the historical outcome of those ambitions. The paper also distinguishes between two different kinds of rights and argues that different kinds of rights pertain to different sectors which preclude business being run like a state. Dr. Michael Schwartz is an associate professor at the Royal Melbourne Institute of Technology. He also serves as the vice-president of the Australian Association for Professional and Applied Ethics. His research in the field of business ethics has been published in Research in Ethical Issues in Organizations, the Journal of Business Ethics, Business Ethics Quarterly and Business Ethics: A European Review.     

The Distributional Effects of Public Expenditure

It is commonly agreed that economic policies, including budgetary policies, can have potentially strong distributional effects. Traditional economic analysis held that economic policies affected the income distribution primarily through their impact on the rate of growth. More recently, it has come to be recognised that qualitative aspects of economic growth are probably more important than the rate of growth itself. While recent research has confirmed the potential role of expenditure policies as a redistributive tool, it has also shown that redistribution does not necessarily have to come at the expense of economic growth and efficiency. Although there are substantial analytical and technical problems to be faced in the design of equitable and cost-effective public expenditure programmes, unfavourable distributional outcomes of these programmes can usually be traced more to political and institutional pressures than to purely technical factors. JEL Classification number: H5     

Nonseparable Utility and the Double Dividend Debate: Reconsidering the Tax-Interaction Effect

The literature on the use of environmental taxes inthe presence of distortionary (labor) taxes warns thata partial-equilibrium Pigouvian tax analysis is notappropriate because increasing the price of dirtygoods can futher aggravate the prexisting distortions. This argument is most frequently made assuming thatlabor is taxed to meet a fixed revenue requirement.When a dirty good is also taxed, others argue thatthis lowers workers' real wages, causing people toreduce their labor supply below its already suboptimallevel, aggravating labor market distortions. However,most papers ignore the effect that a cleanerenvironment can have on labor supply. That is, mostpast work has assumed that the quality of theenvironment is weakly separable in the utilityfunction. We argue that a cleaner environment canincrease labor supply, at least partially offsettingany incentive for workers to decrease their laborsupply. Further, we show explicitly how relaxing theseparability assumption affects the standardresults.     

Open Science and Open Innovation in a socio‐political context: knowledge production for societal impact in an age of post‐truth populism

This conceptual paper traces the origins and progress of Open Science and proposes its generative coupling to Open Innovation in the contemporary socio‐political context; where universities are re‐imaging their civic missions in the face of anti‐establishment populist politics. This setting is one of changing knowledge production regimes and institutional pressures that create contradictions identifiable through the prism of the series of scientific norms conceptualised by Robert K. Merton. This paper privileges a sociological perspective to proffer scientific knowledge production as a societally embedded process, which is well illustrated by scholarship in the Science and Technology Studies (STS) and Science in Society fields. In doing so, it identifies the co‐evolution, co‐existence and co‐production of Open Science with Open Innovation; and notes how it shares the attributes of other recent diagnoses of changing knowledge production regimes; in particular Mode 2, post‐normal science and the Quadruple Helix. It also argues that Open Science can be coupled with Open Innovation to catalyse positive societal change, but that the rise of a populist post‐truth era opposed to objectivity, expertise and technocratic political solutions gives the demand for openness and participation a different complexion. Merton's norms provide a useful lens to observe recent shifts in the delivery of science, knowledge and innovation in society towards more inclusive, ethical and sustainable outcomes; and expose the limited reflection on how the appropriation and exploitation of open scientific knowledge encounters industrial R&D and Open Innovation.     

SOCIAL CHANGE: THE SEXUAL REVOLUTION*

In 1900 only 6% of unwed teenage females engaged in premarital sex. Now, three quarters do. The sexual revolution is studied here using an equilibrium matching model, where the costs of premarital sex fall over time due to technological improvement in contraceptives. Individuals differ in their desire for sex. Given this, people tend to circulate in social groups where prospective partners share their views on premarital sex. To the extent that society's customs and mores reflect the aggregation of decentralized decision making by its members, shifts in the economic environment may induce changes in what is perceived as culture.     

A Monte Carlo study of the forecasting performance of empirical SETAR models

In this paper we investigate the multi-period forecast performance of a number of empirical self-exciting threshold autoregressive (SETAR) models that have been proposed in the literature for modelling exchange rates and GNP, among other variables. We take each of the empirical SETAR models in turn as the DGP to ensure that the ‘non-linearity’ characterizes the future, and compare the forecast performance of SETAR and linear autoregressive models on a number of quantitative and qualitative criteria. Our results indicate that non-linear models have an edge in certain states of nature but not in others, and that this can be highlighted by evaluating forecasts conditional upon the regime. Copyright © 1999 John Wiley & Sons, Ltd.     

O/S: The relative trading activity in options and stock

Relatively little is known about the trading volume in derivatives relative to the volume in underlying stocks. We study the time-series properties and the determinants of the options/stock trading volume ratio (O/S) using a comprehensive cross-section and time-series of data on equities and their listed options. O/S is related to many intuitive determinants such as delta and trading costs, and it also varies with institutional holdings, analyst following, and analyst forecast dispersion. O/S is higher around earnings announcements, suggesting increased trading in the options market. Further, post-announcement absolute returns are positively related to pre-announcement O/S, which suggests that at least part of the pre-announcement options trading is informed.     

Subjectivist Economics and Ethical Business

A number of business ethics theorist have highlighted the potential for economics to contribute to the advancement of business ethics. In response, this article emphasizes the insights of a particular area of economics that could provide such expansion and development. Subjectivist economics may yet provide an effective analytical framework through which to investigate and evaluate business decision making, and hence the ethics of business. Integrating the concepts of uncertainty, time and imagination, subjectivist economic theory contributes to a greater appreciation of economic choice and behaviour. While such notions are often effectively omitted from modern economic analysis to aid formal representation, business ethicists could utilize such concepts more effectively than their colleagues in economic theory. Significantly, the well-known economists who have championed the insights of subjectivist economics have themselves recommended its extension to an analysis of ethics.