Individual heterogeneity in the returns to schooling: instrumental variables quantile regression using twins data

Considerable effort has been exercised in estimating mean returns to education while carefully considering biases arising from unmeasured ability and measurement error. Recent work has investigated whether there are variations from the “mean” return to education across the population with mixed results. We use an instrumental variables estimator for quantile regression on a sample of twins to estimate an entire family of returns to education at different quantiles of the conditional distribution of wages while addressing simultaneity and measurement error biases. We test whether there is individual heterogeneity in returns to education and find that: more able individuals obtain more schooling perhaps due to lower marginal costs and/or higher marginal benefits of schooling and that higher ability individuals (those further to the right in the conditional distribution of wages) have higher returns to schooling consistent with a non-trivial interaction between schooling and unobserved abilities in the generation of earnings. The estimated returns are never lower than 9 percent and can be as high as 13 percent at the top of the conditional distribution of wages but they vary significantly only along the lower to middle quantiles. Our findings may have meaningful implications for the design of educational policies.     

Does Psychological Contract Violation Moderate the Impact of Severity and Recovery Satisfaction on Boycott? An Analysis of Halal Violation

Halal violation is a critical issue in the Islamic market, but little is known on its impact on the Muslim consumer. Thus, this study investigates the effect of psychological contract violation (PCV), recovery satisfaction, and severity of halal violation on product boycott. The moderating role of PCV in the relationship between recovery satisfaction and seriousness of a violation on the product boycott is also examined. Data collected from a sample of 360 customers were analyzed using PLS-SEM. The results show that recovery satisfaction, severity, and PCV significantly influence product boycott and PCV significantly moderates the relationship between recovery satisfaction and product boycott. This study provides new insights into the relationships among recovery satisfaction, the severity of the halal violation, psychological contract violation, and product boycott and helps the managers to design recovery action toward halal violation.     

The microstructural foundations of leverage effect and rough volatility

We show that typical behaviors of market participants at the high frequency scale generate leverage effect and rough volatility. To do so, we build a simple microscopic model for the price of an asset based on Hawkes processes. We encode in this model some of the main features of market microstructure in the context of high frequency trading: high degree of endogeneity of market, no-arbitrage property, buying/selling asymmetry and presence of metaorders. We prove that when the first three of these stylized facts are considered within the framework of our microscopic model, it behaves in the long run as a Heston stochastic volatility model, where a leverage effect is generated. Adding the last property enables us to obtain a rough Heston model in the limit, exhibiting both leverage effect and rough volatility. Hence we show that at least part of the foundations of leverage effect and rough volatility can be found in the microstructure of the asset.     

Political instability and inflation in Pakistan

This study investigates the effects of political instability on inflation in Pakistan. Applying the Generalized Method of Moments technique and using data from 1951 to 2007, we examine this link through two different models. The results of the ‘monetary’ model suggest that the effects of monetary determinants are rather marginal and that they depend upon the political environment of Pakistan. The ‘nonmonetary’ model's findings explicitly establish a positive association between political instability and inflation. This is further confirmed through analysis based on interactive dummies that reveal political instability significantly leading to high (above average) inflation.     

How Large Looms the Ghost of the Past? State Dependence versus Heterogeneity in Coordination Games

In games with multiple, Pareto‐rankable equilibria and repeated play, does a history of playing an inefficient equilibrium make it harder for players to reach the efficient equilibrium? In other words, can people “get stuck” in bad equilibria? Previous studies have found support for this, but they have relied on naturally occurring variation in precedent. I implement randomized control to establish that precedent effects are important, but that naturally occurring variation exaggerates the importance of precedent. I present evidence that some of the endogeneity of naturally occurring precedents is due to variation in risk attitudes. This is because in the coordination games used, the inefficient equilibrium is associated with a safe strategy. Understanding the causal effect of precedent is important since many development problems are viewed as coordination games. Moreover, an appreciation of the way in which potential heterogeneity may interact with the policy is essential when trying to lift groups out of bad precedents.     

The trade balance effects of infrastructure services regulation

This paper addresses the relationship between the design of incentives to firms under regulation, mainly the rule for adjusting tariffs, and trade balance performance of the country. We also explore whether this relationship is relevant or not for a typical developing economy like Argentina. We find it is. To study these issues we perform comparative static numerical exercises using a CGE model where service obligation and no entry in regulated industries are assumed. We show that the capital account openness and the rate of exchange regime could be key elements to match with the regulatory regime. The potential inconsistency between the international trade regime and the regulatory regime should not be rejected a priori.     

Political and Interlocking Connections in the Boardroom on Private Equity Placements

This study examines the influence of directors who are politically connected and/or have boardroom interlocking on private equity placements (PEPs) in Chinese listed firms. We document that interlocked directors can significantly influence the propensity to apply for PEPs and approval of PEPs and reduce the cost of PEPs while providing greater access to proceeds from PEPs through lowering information asymmetry and information cost. Although politically connected directors have a significant role in the approval of PEPs, they are more likely to reduce the monitoring effects and increase agency problems, which lead to increased cost of PEPs and reduced proceeds from PEPs. The results also reveal that political connection diminishes the benefits of interlocking directors for firms having directors with both interlocking and political ties.     

UK Cross‐Border Cooperation: Extending Rescue to Jersey Debtors on a ‘Passporting’ Basis

This article looks at the scope of using, via the Letter of Request method, the insolvency laws of another jurisdiction in circumstances where the laws of the requesting jurisdiction do not adequately cater for the type of proceeding required. Copyright © 2013 INSOL International and John Wiley & Sons, Ltd.     

Market orientation practices among small and medium hotels (SMHS) in tourist destination island of Langkawi

The purpose of the study is to investigate the underlying components of market orientation practices and their effect on the Small and Medium Hotels (SMHs) performances on tourist destination island of Langkawi. Fifty SMHs were randomly selected from a sampling frame of a list of SMHs registered with Malaysian Tourism Board. For data collection purposes, structured questionnaires were personally delivered and collected. Rotated component matrix factor analysis of the data extracted four underlying factors that explain seventy nine point four six percent of the total variances and alpha reliability coefficient of ninety eight percent. Those components were named as customer orientation, interfunctional orientation, service orientation, and competitor orientation. One sample Kolmogorov‐Smirnov Test indicates that SMHs in Langkawi practices market orientation in their operations and businesses. However, the finding of the study showed that their performances in 1998 was lower than 1997. We believe that this outcome is due to the effect of national and regional economic downturn in 1998.     

Virtual Instant Global Entrepreneurship

International entrepreneurship must be hard, because so few firms attempt it. If true, perhaps it is hard because it requires knowledge about people and places far away. It is hard because it requires mastering processes to handle business across borders. And it is hard because it requires trust in the processes and eventually in the customers elsewhere. These three elements, knowledge, mastery and trust in international business are essential to the success of international entrepreneurship for SMEs.