QUANTIFYING THE LAFFER CURVE ON THE CONTINUED ACTIVITY TAX IN A DYNASTIC FRAMEWORK*

It is argued that the tax on continued activity should be removed by implementing actuarially fair schemes. However, these schemes cannot fund the expected Social Security (SS) deficit. This article proposes to give individuals a fraction of the actuarially fair incentives in the case of postponed retirement. SS faces a trade‐off between giving enough incentives to make individuals delay retirement and giving little increase in pensions in order to help finance its expected deficit. This trade‐off is captured by a Laffer curve. Finally, when the SS system aims to maximize welfare, the optimal tax on postponed retirement is still strictly positive.     

Investment decisions in manufacturing: assessing the effects of real oil prices and their uncertainty

We investigate the effects of real oil prices and their uncertainty on investment decisions. Making use of plant‐level data, we estimate dynamic, discrete‐choice models that allow modeling investment inaction, under different assumptions related to initial conditions and unobserved heterogeneity. We find that increases in real oil price changes and in real oil price uncertainty significantly reduce the likelihood of investment action, in line with the predictions of irreversible investment theory. We also document that investment decisions exhibit strong, pure state dependence and are also significantly affected by initial conditions. Copyright © 2012 John Wiley & Sons, Ltd.     

The ties that bind: Buyer-supplier relations in the construction industry

This study considers the consequences of Inter Organisational relations at two levels: the micro level of the individual, and the macro level of the organisation. Merging Transaction Cost Economics with theories on the Social Embeddedness of relations, the paper tackles several hypotheses about problems in buyer–supplier relations. We amend the general hypothesis, as has been put forward by other researchers, that having a common past in combination with an expected common future in business will reduce the likelihood that problems and conflicts occur. Our focus lies on whether this shared past and future can preclude problems better when the organisational relations are at the micro level. Our analyses of survey data from 448 contractor–subcontractor relations from the contractor's perspective in the construction industry reveal mixed support for effects of a shared past or future. We hardly find any of the expected positive effects of a shared past on supplier performance. However, we do find support for the hypothesis that a larger likelihood of future business with the same business partner has a stronger (negative) effect on the occurrence of problems if the expected future business is at the level of individuals (instead of at the level of organisations).     

Voluntary contributions to a joint project with asymmetric agents

We revisit Admati and Perry (1991)'s model of voluntary contributions to a joint project. Their main result that equilibrium contributions are small appears not to be robust to the introduction of asymmetries.     

Intra‐European labour migration and low‐wage competition—comparing the Danish and Swedish experiences across three sectors

The article compares how low‐wage competition and labour migration from EU11 Member States affect industrial relations and working conditions for natives and migrants in three sectors (transport, cleaning and agriculture) in Denmark and Sweden. The analysis shows how already vulnerable sectors with below‐average union density and collective agreements—especially geographical dispersed sectors—are strongly affected.     

Agreeing on Efficient Emissions Reduction

We propose a simple contest‐based mechanism providing incentives to reduce harmful emissions to their efficient level without infringing upon productive efficiency. Participation in the most stylized form of the scheme is voluntary and individually rational; all rules are mutually agreeable and are unanimously adopted if proposed. The scheme balances its budget and requires no principal. In a perhaps more realistic stochastic output version, which could potentially inform policy decisions, we show that the transfers required by the efficient mechanism create a mutual insurance motive that can serve as an effective rationale for the (gradual) formation of international environmental agreements.     

The Role of Shocks and Institutions in the Rise of European Unemployment: the Aggregate Evidence

Two key facts about European unemployment must be explained: the rise in unemployment since the 1960s, and the heterogeneity of individual country experiences. While adverse shocks can potentially explain much of the rise in unemployment, there is insufficient heterogeneity in these shocks to explain cross-country differences. Alternatively, while explanations focusing on labour market institutions explain current heterogeneity well, many of these institutions pre-date the rise in unemployment. Based on a panel of institutions and shocks for 20 OECD nations since 1960 we find that the interaction between shocks and institutions is crucial to explaining both stylised facts.     

Are exports a monotonic function of exchange rate volatility? Evidence from disaggregated pork exports

Abstract.  Production and marketing lags in agri-food supply chains often force agricultural producers and food processors to commit to output targets before prices and exchange rates are realized. A theoretical model illustrates how the processor's degree of risk aversion and domestic sales may cause the relationship between volatility of the exchange rate and exports to be non-monotonic. The relationship between exchange rate volatility and Quebec pork exports to the United States and Japan is investigated using linear and non-linear estimation methods. The results support the hypothesis that the relationship between exports and volatility is non-monotonic.     

Governing ‘Sustainable Urban Development’ Through Self‐Build Groups and Co‐Housing: The Cases of Hamburg and Gothenburg

This article critically examines the governing of ‘sustainable urban development’ through self‐build cohousing groups in Gothenburg and Hamburg. The two case cities have been selected because both are currently involved in major urban restructuring, and have launched programmes to support self‐build groups and cohousing as part of their emphasis on promoting urban sustainable development through this process. Departing from a theoretical discussion on advanced liberal urban governance, focusing in particular on the contemporary discourse on sustainable urban development, we examine the interaction between political institutions, civil society and private actors in the construction of cohousing as a perceived novel and alternative form of housing that may contribute to fulfilling certain sustainability goals. Questions centre on the socio‐political contextualization of cohousing; concepts of sustainability; strategies of, and relations between, different actors in promoting cohousing; gentrification and segregation; and inclusion and exclusion. In conclusion we argue that, while self‐build groups can provide pockets of cohousing as an alternative to dominant forms of housing, the economic and political logics of advanced liberal urban development make even such a modest target difficult, particularly when it comes to making such housing affordable.     

Reassessing forest products demand functions in Europe using a panel cointegration approach

In a panel of European countries, we analyse paper products, sawnwood and wood panels consumption data. With this object, we use a classical demand model where national consumption depends on real GDP and real prices. In contrast to previous panel estimations in the literature, we highlight non-stationarity time series which can lead to spurious regressions. We explicitly take into account the issue by using recent panel cointegration techniques. Cointegration is present for printing paper and fibreboard, though less clear cut for other products. Then we estimate demand elasticities and find that GDP elasticities are significantly lower than estimates from the literature. Finally, we simulate the implications of modified demand elasticities by using a partial equilibrium model of the forest sector. For most products, changes in elasticities would lead to lower projected demand and lower prices over a 20-year time horizon. Lower demand for solid wood and wood fibre would lead to less tensions with fuel wood- and wood-based chemical markets. In a context of rising interest for renewable bio-based products, updated long-term demand models contribute to the analysis of the forest sector’s sustainability.