Syllabus and economics: Reasoning with Generation “Why”

In this article, the authors propose to enhance the syllabus for economic courses with economic explanations. They argue that providing economic rationale for course policies can increase student interest in the course and at the same time positively affect student attitude toward course policies. The authors describe practical strategies for incorporating economic explanations into the syllabus and present insights from piloting the technique.     

Are there arbitrage gaps in the UK gilt strips market?

Evidence in financial markets of an opportunity for pure arbitrage, and therefore a violation of the law of one price, is considered an anomaly to be noted. This paper reports an apparent violation of the law of one price between UK government gilts and their separately traded principal and coupon strips over a sample period of nearly 14 years. There are persistent price differences, and hence opportunities for arbitrage, after allowance for the bid-ask spread; the strips package tends to be overpriced in relation to the corresponding gilt. The price differences may, in part, be due to a lack of liquidity and stale prices in the strips market.     

Housing tenure and labor market impacts: The search goes on

We develop two search-theoretic models emphasizing firm entry to examine the Oswald hypothesis, the idea that homeownership is linked to inferior labor market outcomes, and compare their predictions to three extant theories. The five models have surprisingly different predictions about the labor market at both the aggregate and micro levels. Using a suitable instrumental variable strategy, we estimate both micro and aggregate level regression models of wages and unemployment and compare the estimates to those predictions. We find that while homeowners are less likely to be unemployed, they also have lower wages, all else equal, compared to renters. In addition, higher regional homeownership rates are associated with a greater probability of individual worker unemployment and higher wages. The outcome of a horserace between our new search-theoretic models is mixed—the wage-posting model predicts observed unemployment impacts while a bargaining variant does a better job explaining observed wages and aggregate labor market outcomes. Overall, we conclude that firm behavior is important for understanding the labor market impacts of homeownership. Because this is the case, regional homeownership rates are not good instruments for individual tenure choice in empirical work. And while individual homeowners may have inferior labor market outcomes as compared to renters, from the viewpoint of society, higher homeownership rates may result in greater job creation and overall production, among other benefits.     

U.S. foreign direct investment in Latin America and the Caribbean: a case of remittances and market size

This article investigates the effect of remittances on U.S. foreign direct investment (FDI) flows to Latin America and the Caribbean (LAC). It covers 26 countries for the period 1983–2010. The results show a positive and significant impact of remittances on U.S. FDI flows. However, this effect depends upon the level of gross domestic product (GDP) per capita of the host country. On average, the results show that increasing remittances by one standard deviation increases U.S. FDI flows by 0.44 percent a year. Also, host country demand positively affects U.S. FDI flows, which supports the market size hypothesis.     

Extrapolating understanding of food risk perceptions to emerging food safety cases

Important determinants of risk perceptions associated with foods are the extent to which the potential hazards are perceived to have technological or naturally occurring origins, together with the acute vs. chronic dimension in which the potential hazard is presented (acute or chronic). This study presents a case study analysis based on an extensive literature review examining how these hazard characteristics affect people’s risk and benefit perceptions, and associated attitudes and behaviors. The cases include E. coli incidences (outbreaks linked to fresh spinach and fenugreek sprouts), contamination of fish by environmental pollutants, (organochlorine contaminants in farmed salmon), radioactive contamination of food following a nuclear accident (the Fukushima accident in Japan), and GM salmon destined for the human food chain. The analysis of the cases over the acute vs. chronic dimension suggests that longitudinal quantification of the relationship between risk perceptions and impacts is important for both acute and chronic food safety, but this has infrequently been applied to chronic hazards. Technologies applied to food production tend to potentially be associated with higher levels of risk perception, linked to perceptions that the risk is unnatural. However, for some risks (e.g. those involving biological irreversibility), moral or ethical concerns may be more important determinants of consumer responses than risk or benefit perceptions. (Lack of) trust has been highlighted in all of the cases suggesting transparent and honest risk–benefit communications following the occurrence of a food safety incident. Implications for optimizing associated risk communication strategies, additional research linking risk perception, and other quantitative measures, including comparisons in time and space, are suggested.     

Turnover's relationships with sales, tips and service across restaurants in a chain

This study used restaurant level data from a casual-dining restaurant chain in the Midwestern United States to examine turnover's relationships with sales, tips and service. Turnover was negatively correlated with sales and service among high-volume restaurants but not among low-volume restaurants. Interestingly, the opposite pattern was observed for turnovers’ relationship with tip percentages—turnover was negatively correlated with tip percentages among low-volume restaurants but not among high-volume restaurants. Plausible explanations for these findings are discussed along with their practical implications.     

Guest editorial: Female and ethnic minority entrepreneurship

There has been an increasing level of interest in diversity in small business enterprises. This diversity has been largely focused on female and ethnic minority entrepreneurs. Although there is evidence that female entrepreneurship can have a positive impact on economic prosperity, levels of earnings remain low. The articles in this special issue further our understanding of female and minority entrepreneurs. They examine important topics such as the differences between male and female entrepreneurs in terms of confidence, growth expectations, entrepreneurial orientation and social capital, developing management skills in female entrepreneurs, their management competencies and refugee entrepreneurship.     

Consumer adoption of the Internet: The case of apparel shopping

The theory of reasoned action and components of a theory of innovation adoption were integrated into a model of consumer adoption of the Internet for apparel shopping. The hypothesized model included psychological factors (beliefs and attitude), social factors (social support and social acceptance), and prior experience to explain intention to purchase apparel via the Internet. A questionnaire was mailed to a random national sample of households. All hypothesized variables were significant. Prior experience with the Internet had the strongest influence on intention to purchase apparel through the Internet. © 2003 Wiley Periodicals, Inc.