Dynamics in transitory and permanent variation of wages in Germany

We employ covariance structure models to decompose the cross-sectional variance of male wages in Germany into its permanent and transitory parts. We find that the steep growth of cross-sectional inequality during the early 2000s is predominantly driven by transitory factors.     

The Issue of Governance and the Role of the Regulator: Lessons from the California Deregulation Experiment

The deregulation of the California electricity industry began as a collaborative effort between the regulatory institutions, legislature, the regulated utilities and consumer stakeholders. However, the authorizing legislation failed to define the ongoing role and authority of the principal regulatory institution in the State—the Public Utilities Commission. As a consequence, roles and responsibilities were assumed largely by institutional initiative as opposed to a master plan with the result that competition for authority extended through State and Federal jurisdictions without formal resolution. Under the weight of an inverse relationship of wholesale to retail costs, the wholesale electricity market began to disintegrate. In response, the Federal Energy Regulatory Commission, the California Governor’s Office and the California Legislature began to exert or assert authority over operations and regulation of the market. The result was confusion, increased cost, limited response to extraordinary conditions and ultimately loss of regulatory control by the Public Utilities Commission. Options were available to forestall or avoid the eventual outcome but were not adopted or advocated in time. The lessons learned should help craft future deregulation efforts.     

SIZE-DISTRIBUTION OF EARNINGS AND HOUSEHOLD INCOMES IN SMALL SOCIALIST COUNTRIES

Part I: Availability and meaning of East European distributional statistics are discussed. Part II: Measures of inequality to be used in this study are examined: the Gini coefficient of concentration, though superior to some other single indicators, is found to be an unreliable comparative measure of inequality, and is therefore supplemented by a set of ratios of selected percentiles to the median. Part III: Inequality of full-time gross monthly earnings is measured for (almost) the whole civilian working population and for some subpopulations (selected industries, men, women) in Czechoslovakia and Yugoslavia through 1970, in Hungary through 1968: the observed inequality appears to be less than in small capitalist countries, in spite of the reversal of the socialist egalitarian trend in the 'sixties. The main factor of equalization of socialist earnings are small interoccupational and interregional differentials and a very flat age profile. Part IV: The socio-economic structure of households, the size of samples underlying the distributional statistics, and the composition of household “revenues” (wage and salary earnings, agricultural incomes, social security payments, relatively unimportant property incomes, as well as non-income cash flows) are examined. Inequality coefficients are estimated for per capita revenues of all households as well as subpopulations of households in Czechoslovakia and Hungary, and some information is given on the distribution of household incomes in Yugoslavia. Part V: Limits of desirable equalization of earnings are discussed. With very narrowly dispersed short-term earnings, lifetime earnings tend to be rather unequally distributed because of the variation of earning years among occupations. With largely equalized primary incomes, per capita household incomes tend to be more unequally distributed, in spite of massive transfers, because of the varying ratio of earners to dependents within households. The need of income differentials as incentives to work, the probable trade-off between income equality and economic growth, and socialist distributive principles are outlined.     

Balancing difficulty of performance targets: theory and evidence

We examine how firms balance difficulty of performance targets in their annual bonus plans. We present an analytical model showing that managerial allocation of effort is a function of not only relative incentive weights but also the difficulty of performance targets. We find that relative incentive weights and target difficulty can either be complements or substitutes in motivating effort depending on the extent to which managers have alternative employment opportunities. To test the predictions of our model, we use survey data on performance targets in annual bonus plans. Our sample of 877 survey respondents consists primarily of financial executives in small- and medium-size private companies where annual bonuses are important both for motivation and retention. Consistent with our model, we find that relative incentive weights are negatively (positively) associated with perceived target difficulty when concerns about managerial retention are high (low). It follows that performance measures included in annual bonus plans have sometimes easy and other times challenging targets depending on their relative incentive weights and retention concerns.     

Modeling Distribution Channel Dynamics of North American Cars in the Spanish Automobile Industry

Relations between manufacturers and distributors have been the center point of the distribution channel’s management. This study covers the effects of coercive, as well as non-coercive power on intermediary variables such as cooperation and conflict. It will also analyze the effects of cooperation and conflict on American car dealers’ satisfaction and performance in Spain. Due to the small sample size (46 dealers), the model based on causal modeling compelled us to use the optimization method based on the partial least squares (PLS) regression techniques coupled with a bootstrapping to enable some generalization of the results.

Implicit and explicit preferences for brand name sounds

This research shows that people implicitly and explicitly prefer sounds that are more common among top brand names (e.g., “S,” “M,” “L,” and “E”). Implicit preferences correlate with explicit willingness to pay more for hypothetical brands with preferred sounds. This suggests that the prevalence of certain sounds among top brands may be a reflection of people’s phonetic preferences. We examine possible processes underlying phonetic preferences, and offer evidence excluding phonetic embodiment, pronunciation-based fluency, and familiarity-based fluency. The results suggest a phonetic frequency process account. Substantively, these findings indicate that certain sounds should be given priority when crafting brand names.