Employment Decisions in Self-Directed Work Teams: A Regulatory Compliance Perspective

Organizations are increasingly relying on self-directed work teams (SDWTs) to accomplish organizational tasks. The introduction of SDWTs into the workplace poses a number of managerial challenges. This paper will focus on one such challenge, the continuing need to comply with labor and equal employment regulations. We discuss several factors that potentially affect the legal compliance process. These include: (1) the impact of an increasingly diverse workforce on individual behavior and team processes, and (2) the role of procedural justice perceptions in effective HR compliance management. We conclude with some practical solutions to the challenge of managing compliance in SDWT settings.     

Consistency of elementwise-weighted total least squares estimator in a multivariate errors-in-variables model <Emphasis Type="Bold">AX=B</Emphasis>

A multivariate measurement error model AXB is considered. The errors in [A,B] are rowwise independent, but within each row the errors may be correlated. Some of the columns are observed without errors, and in addition the error covariance matrices may differ from row to row. The total covariance structure of the errors is supposed to be known up to a scalar factor. The fully weighted total least squares estimator of X is studied, which in the case of normal errors coincides with the maximum likelihood estimator. We give mild conditions for weak and strong consistency of the estimator, when the number of rows in A increases. The results generalize the conditions of Gallo given for a univariate homoscedastic model (where B is a vector), and extend the conditions of Gleser given for the multivariate homoscedastic model. We derive the objective function for the estimator and propose an iteratively reweighted numerical procedure.Acknowledgements.A. Kukush is supported by a postdoctoral research fellowship of the Belgian office for Scientific, Technical and Cultural Affairs, promoting Scientific and Technical Collaboration with Central and Eastern Europe. S. Van Huffel is a full professor with the Katholieke Universiteit Leuven. This paper presents research results of the Belgian Programme on Interuniversity Poles of Attraction (IUAP Phase V-22), initiated by the Belgian State, Prime Ministers Office-Federal Office for Scientific, Technical and Cultural Affairs, of the Concerted Research Action (GOA) projects of the Flemish Government MEFISTO-666 (Mathematical Engineering for Information and Communication Systems Technology), of the IDO/99/03 project (K.U. Leuven) Predictive computer models for medical classification problems using patient data and expert knowledge, of the FWO projects G.0200.00, G.0078.01 and G.0270.02. The scientific responsibility is assumed by its authors. The authors would like to thank Maria Luisa Rastello and Amedeo Premoli for bringing the EW-TLS problem to their attention. The authors are grateful to two anonymous referees for the valuable comments.     

The link between inflation and inflation uncertainty: Evidence from G7 countries

In this paper we adopt the Markov-switching heteroscedasticity model to analyse the inflation series for G7 countries and examine the interaction between inflation rate and its uncertainty over both the short- and long-run. It is found that the relationship between inflation and inflation uncertainty depends on whether the shock is permanent or transitory. The relationship also differs from country to country. High uncertainty about long-run inflation is associated with a significant positive shift in inflation for Canada, Germany, and Japan. High uncertainty about short-run inflation is associated with a significant positive shift in inflation for Germany and USA, and a significant negative shift in inflation for Canada. The modelling approach employed in this paper is empirically supported by various diagnostics including the Vuong test. We also derive the two components of the variance of inflation forecast for a particular forecast horizon. It is found that the inflation uncertainty increases at all horizons in the middle of 1970s and return to the low level in the middle of 1980s.First version received: June 2001/Final version received: October 2003We would like to thank three anonymous referees for many helpful comments and suggestions.     

Policy matters. The long run effects of aggregate demand and mark-up shocks on the Italian unemployment rate

This paper estimates a VAR including labor productivity, real wage and unemployment rate, to identify the dynamic effects of technology, demand, and mark-up shocks, respectively, on the Italian labor market. Identification is achieved by imposing recursive restrictions on the matrix of long run multipliers. Our results show that both mark up and aggregate demand shocks permanently reduce the unemployment rate. Finally, technology shocks do not significantly affect the unemployment rate in the long run. These findings convey important policy implications: expansionary aggregate demand and deregulation policies reducing the mark up permanently decrease the Italian unemployment rate.Jel classification: C32, E32, J29This paper has been produced as part of a CEPR Research Network on New Approaches to the Study of Economic Fluctuations. We would like to thank Marcello DAmato, Mario Forni, Marco Lippi and Antonio Ribba for useful comments. We are also grateful to Bernd Sussmuth for pointing out to us several significant improvements to the paper.First version received: November 2001/Final version received: October 2002     

Left-side Relatively Weak Increases in Risk and Their Comparative Statics

This paper proposes a new concept, a left-side relatively weak increase in risk (L-RWIR) order, that extends the definition of a relatively weak increase in risk (RWIR) order. We show that, for the class of linear payoffs, one can obtain an appealing comparative statics result for L-RWIR shifts imposing additional restrictions on risk preferences of a risk-averse decision maker.JEL classification: D81.revised version received October 10, 2003Acknowledgements The authors would like to thank an anonymous referee for insightful comments and useful suggestions.     

Learning-by-doing versus Schooling in a Model of Endogenous Growth

A two sector model of learning-by-doing measured by means of production aggregated over time and of human capital accumulation in a schooling sector is presented. Time utilization is rival between schooling and learning-by-doing. Depending on the sum of elasticities of the accumulated factors (i.e., of production experience and educational human capital) in both sectors, a situation with or without endogenous growth results. Dynamic optimization of the choice between leisure and working and of the division of human capital between education and production is executed. Transitional dynamics are analyzed for a Cobb-Douglas example and a numerical simulation is performed.JEL classification: C61, D90, O41.Acknowledgements The author would like to thank Eric C. Meyer and two anonymous referees for helpful comments. The usual caveats apply.revised version received November 23, 2003     

Asset price volatility and trading volume with rational beliefs

Summary. This paper develops a model of speculative trading in a large economy with a continuum of investors. In our model the investors are assumed to have diverse beliefs which are rational in the sense of being compatible with observed data. We demonstrate the existence of price amplification effects and show that the equilibrium prices can be higher or lower than the rational expectation equilibrium price. It is also shown that trading volume is positively related to the directions of price changes. Moreover, we study how asset price volatility and trading volume are influenced by belief structures, short selling constraints and the amount of fund available for investment.Received: 23 January 2003, Revised: 30 April 2003, JEL Classification Numbers: D84, G12.We are grateful to Professors Mordecai Kurz, Kenneth Arrow, Kenneth Judd, Carsten Nielsen, Maurizio Motolese, Mark Garmaise, Jean-Michel Grandmont, Peter Hammond, Karl Shell, Jan Werner and participants of the Society for the Advancement of Economic Theory (SAET) Conference and Stanford Institute of Theoretical Economics (SITE) Conference for many helpful suggestions. Correspondence to: H.-M. Wu     

Non-convex Technologies and Cost Functions: Definitions,Duality and Nonparametric Tests of Convexity

This contribution is the first systematic attempt to develop a series of nonparametric, deterministic technologies and cost functions without maintaining convexity. Specifically, we introduce returns to scale assumptions into an existing non-convex technology and, dual to these technologies, define non-convex cost functions that are never lower than their convex counterparts. Both non-convex technologies and cost functions (total, ray-average and marginal) are characterized by closed form expressions. Furthermore, a local duality result is established between a local cost function and the input distance function. Finally, nonparametric goodness-of-fit tests for convexity are developed as a first step towards making it a statistically testable hypothesis. An erratum to this article is available at .     

Arrow's equivalency theorem in a model with neoclassical firms

Summary. In this paper we consider a two-period general equilibrium model with uncertainty and real assets as financial instruments. The novelty of the analysis is that real assets are the stocks of neoclassical firms, so that both returns and yields depend on anticipated spot goods prices (and, of course, the yield matrix may change rank with prices). Assuming that financial markets are potentially complete, we establish generic existence of financial equilibrium and prove that there exists a dense set of economies such that financial equilibria are efficient.Received: 19 April 2001, Revised: 23 April 2003, JEL Classification Numbers: C60, D51, G10, D60.I am extremely grateful to Dave Cass for drawing my attention to this problem and inspiring me to work on it as well as for many stimulating discussions. I also benefited from discussions with H. Polemarchakis, M. Stinchcombe, and A. Villanacci. I am thankful to the anonymous referee of the first versions of the paper for thoughtful comments and suggestions, and to participants of a recruiting seminar at the University of Texas at Austin (January 2001), the Conference on Economic Design SED 2000, Istanbul, Turkey (June 2000), and Inter-University Student Conference, New York University, New York (May 2000).