Internalizing externalities of loss prevention through insurance monopoly: an analysis of interdependent risks

When risks are interdependent, an agent’s decision to self-protect affects the loss probabilities faced by others. Due to these externalities, economic agents invest too little in prevention relative to the socially efficient level by ignoring marginal external costs or benefits conferred on others. This paper analyzes an insurance market with externalities of loss prevention. It is shown in a model with heterogenous agents and imperfect information that a monopolistic insurer can achieve the social optimum by engaging in premium discrimination. An insurance monopoly reduces not only costs of risk selection, but may also play an important social role in loss prevention.

Sustainability and Wealth of Rural Households: Measurement and Inequality Analysis

A small but growing literature is linking well-being with the value of assets, measured comprehensively. This measure, called comprehensive wealth, has appeared as a leading economic indicator of sustainability by reflecting the potential of future well-being. Despite the concerns of sustainability for policy interventions at the micro-level, the existing literature is limited to country-level estimations. This paper applies the general framework of weak sustainability to measure wealth at the household level. Using data from three rounds of household survey, market prices, and yield data from rural Burkina Faso, we measure wealth, income, and consumption per adult. The results show that wealth has consistently increased over time in contrast to income and consumption which have fluctuated. Wealth is also less unequally distributed. Finally, consumption is found to be more correlated with wealth. This suggests that wealth-based interventions are more likely to improve well-being in a sustainable way.     

The rise of corporate governance in corporate control research

This article has two related tasks. First, we review the articles published in this Special Issue on Corporate Control, Mergers, and Acquisitions. These articles provide new evidence on several aspects of corporate control and governance including the value and performance effects of various ownership groups, the impact of internal governance structures, the effects of regulatory changes on specific industries and evidence on bidding strategies in takeovers. This analysis leads us to our second task – to examine the evolution of corporate control research, broadly defined. Our analysis shows a movement in research from mergers and acquisitions to a broader analysis of corporate governance, especially internal governance features. We suggest that there is a trend toward an increase in the relative importance of internal governance compared to discipline from the market from corporate control. This trend reflects an important change over the past several decades in the means through which the market disciplines corporate behavior.     

Technological Progress with Segmented Labor Markets

It is argued here that with segmented labor markets, all types of technological progress in the fixed wage organized sector always hurts the unorganized or informal workers. However, such technical progress in the informal sector always helps the informal workers. This result is independent of the factor intensity ranking between the sectors.     

A multivariate study of over‐indebtedness' causes and consequences

This paper proposes a comprehensive explanatory model to explain both causes and consequences of over‐indebtedness. It presents as causes some borrower aspects, such as propensity to indebtedness and low financial literacy. Other causes are borrower circumstances: adverse external shocks, borrower internal problems and financial institutions' pressure. The model incorporates consequences on the borrower, the lender and the society. The model has been tested with a survey filled in by experts and over‐indebted individuals. Results have been analysed using multivariate techniques, including canonical correlations. There are differences in the opinions of experts and individuals: the latter blame external shocks or financial institutions' pressure, while the former find relevant factors the financial illiteracy or the tendency to imitate others. Experts and individuals agree on the consequences: poverty growth in the society and declining borrower's welfare. The paper concludes with the need to improve financial literacy, especially in the risks involved in over‐indebtedness.     

International briefing 8 Training and development in France

Two main features characterise training and development in France: the influence of the school‐based model and a strong institutionalisation of continuing vocational training which is regulated by law and collective bargaining at national and sectoral levels. In the last decade training has been affected by four major changes: the development of alternating training programmes for young people and unemployed persons; a process of decentralisation which gives to regions an essential role of coordination; strengthening of links between training and employment; and an increasing responsibility of firms in the management of training. As a result, training is on an upward trend yet large inequalities in access still exist.     

On improving the robustness of Asian management theories: Theoretical anchors in the era of globalization

A careful review of the history of research on global strategy and cross-cultural management reveals that considerable attention has been paid to the functioning of organizations located in the Asian context in comparison with their Western counterparts. While research in this tradition has generated some useful insights, there is a need for improving robustness of management theories that are applicable in the Asian context. In this paper, we advance a taxonomy of cross-cultural management theories and suggest methods of deriving research propositions well-grounded in the latest findings in cross-cultural research. It is suggested that robustness of management theories that are uniquely applicable to the Asia Pacific countries is best achieved by addressing the complex interplay of cultural variations found in these countries with globalization-related influences.     

Irreversibilities,uncertainty and underemployment equilibria

In a competitive overlapping generations model, technological irreversibilities and idiosyncratic uncertainty generate a misallocation of resources among segments, which takes the form of underemployment and underutilization of capacities at the aggregate level. This affects the qualitative properties of the equilibrium path. Indeed, increases in the variance of the technological shock can be responsible, a.o., for an “inescapable poverty trap,” or for periodic orbits generating endogenous fluctuations in underemployment.     

Labor market dynamics when effort depends on wage growth comparisons

We present an efficiency wage model in which workers' disutility of effort depends on the level and on the growth rate of their wage relative to an alternative wage. Using data for four countries (US, UK, FR, GY), the implications of the model are examined and are found to be in accordance with the information in the non-stationary data. The restrictions implied by the model dynamics are not rejected by the data and the structural parameters are found to be constant through time. One interesting result is that the workers' disutility of effort depends less on relative wages growth and more on relative wage levels in the US than in the three European countries analyzed. First version received: September 1998 / Final version accepted: November 1999