Minimum Living Level and Consumer Price Index: What's in a name?

The Minimum Living Level (MLL) denotes the minimum financial requirements of members of a household to maintain an acceptable living standard, which is above the Poverty Line. Sufficient quantities of relevant expenditure items based on minimum health standards are allowed for when calculating the MLL, but rational expenditure on them is assumed. The MLL is measured in monetary value. The Consumer Price Index (CPI) is a measurement of changes in the prices over time of a basket of typical consumer goods and services and is measured by an index or percentage. The basket of expenditure items used in the CPI depends on household expenditure surveys. This article sets out to differentiate between the MLL, CPI and the Poverty Line, since the latter and the MLL are sometimes used in the same context in South Africa.     

HETEROGENEITY IN REAL WAGE CYCLICALITY

This paper presents evidence that real wage cyclicality can be a particularly heterogeneous parameter, depending on different worker characteristics and also on the specific stage of the business cycle. Using matched employer–employee panel data for Portugal covering the period 1986–2004, real wages are shown to be considerably more procyclical during recessions than during expansions, resulting in relatively moderate overall levels of cyclicality (about −0.6). However, most of the procyclicality during downturns is shown to be driven by the younger employees, as older workers appear to be insulated from the business cycle. Moreover, movers between firms typically display higher cyclicality than workers that stay in the same firm, regardless of whether the latter move or not between job levels. Most results also hold when considering basic wages instead of total wages, except that the procyclicality of movers during downturns is substantially higher.     

Mandatory dividend rules: Do they make it harder for firms to invest?

What are the costs and benefits of mandatory dividend rules? On the one hand, they make it harder for controlling shareholders to divert corporate assets. On the other hand, they reduce the internal funds available for firms to invest, possibly leading to the loss of valuable projects. To assess this trade-off, we look at investment and dividend decisions in a sample of public firms in Brazil. We show that a significant fraction of these firms use loopholes of Brazil's mandatory dividend rules to avoid paying dividends. And yet, the dividend rules are effective. They help explain why the average dividend yield in Brazil is higher than in the U.S., without making it harder for firms to invest.     

Testing the significance and the non-linearity of the Phillips trade-off in the Euro Area

This paper tests the significance and the non-linearity of the Phillips trade-off in the aggregate Euro Area, in an unobserved components model of stochastic NAIRU and trend output featuring the Phillips equation and the Okun law as main identifying equations, with quarterly data for 1970:I-2002:III. The Phillips curve turns out to be linear and its trade-off statistically significant, while non-linearity shows up in the Okun relation. The results prove to be robust to alternative lag length structures of the model, and to alternative non-linear functional forms. The trend-cycle decompositions estimated with the model capture the main features of the Euro Area’s recent macroeconomic record.First version received: 1 September 2003 / Final version received: June 2004CEMPRE - Centro de Estudos Macroeconómicos e Previsão - is supported by the Fundação para a Ciência e a Tecnologia, Portugal, through the Programa Operacional Ciência, Tecnologia e Inovação (POCTI) of the Quadro Comunitário de Apoio III, which is financed by FEDER and Portuguese funds.We thank comments on earlier versions by Fabio Canova, Miguel St Aubyn, Alvaro Almeida, Pete Richardson, Kevin Ross, and two anonymous referees. We acknowledge James D. Hamilton’s help with the confidence bands. The usual disclaimer applies.     

Groups of companies in the Recast European Insolvency Regulation: Around and about the “group”

Regulation (EU) 2015/848 (Recast European Insolvency Regulation/Recast EIR) contains a set of articles dedicated to the insolvency proceedings relative to members of groups of companies. No substantial consolidation or any procedural nature is envisaged. Article 2(13) of Regulation 2015/848 clarifies that, for the purposes of the same, a “group of companies” must be understood as “a parent undertaking and all its subsidiary undertakings.” However, many doubts arise when one goes deeper into that definition. The author deals with some of those problems and gives some suggestions to overcome them.     

Measuring financial risks with copulas

This paper is concerned with the statistical modeling of the dependence structure of multivariate financial data using the concept of copulas. We select some special copulas and identify the type of dependency captured by each one. We fit copulas to daily returns and simulate from the fitted models. We compare the effect of the choice of copula on risk measures and assess the variability of one-step-ahead predictions of portfolio losses. We analyze extreme scenarios and fit extreme value copulas to the block maxima and minima from daily returns. The stress scenarios constructed are compared to those obtained using models from the extreme value theory. We illustrate the usefulness of the copula approach using two stock market indexes.     

Returns to education and wage equations

The paper shows why considering a number of education-dependent covariates in a wage equation decreases the coefficient of education in that equation. This result is illustrated empirically with a meta-analysis for Portugal. The education coefficient decreases when covariates are used that can be considered post-education decisions; on the other hand, it is independent of sample size, tenure and whether hourly or monthly wages are used. These results support the use of a simple specification of the Mincer equation for the study of the total returns to education.     

Employment discrimination in a former Soviet Union Republic: Evidence from a field experiment

We provide the first experimental evidence about ethnic and gender discrimination in the labor market of a former Soviet Union country, Georgia. We randomly assign Georgian and non-Georgian, male and female, names to similar resumes and apply for jobs as advertised on help-wanted websites in Georgia. We find that gender has no effect on the probability of callback, but a job applicant who is ethnically Georgian is more than twice as likely to be called for a job interview than an equally skilled ethnic non-Georgian (Azerbaijani or Armenian). The 113% ethnic gap in callbacks (167% among males and 79% among females), which is substantially larger than the gap typically documented in the existing literature for both developed and developing countries, is statistically significant and cannot be abridged by having more experience or education. There is no evidence of gender discrimination in callbacks, both within the Georgian group and the non-Georgian group.     

Adoption and Implementation of Internal Marketing Systems by Ghanaian Small- and Medium-Sized Enterprises

This paper explores the concept of internal marketing (IM) as an internal supportive system that could provide the infrastructure for a strategic business take-off. It investigates how IM, as a concept, is understood and made practical in the context of Ghanaian small- and medium-sized enterprises (SMEs). This qualitative research method was used due to the nature of the enquiry. The government of Ghana is constantly searching for more effective ways of assisting SME performance, through various strategic growth and development schemes. Despite the fact that much has been said in the literature, the IM concept remains elusive. Most SMEs are not aware of IM and demonstrate little understanding of the concept. And SMEs have problems with the implementation of IM. The manufacturing sector demonstrates more IM orientation than does the service sector. This paper unravels sociocultural factors that frustrate the practice of IM among Ghanaian SMEs and calls for a greater awareness of the concept by stakeholders. Suggestions include more general business support for SMEs to improve performance and subsequently grow. The paper finishes by drawing attention to management implications within the practice of IM.