Why Have Workers Stopped Joining Unions? The Rise in Never‐Membership in Britain

This paper tracks the rise in the percentage of employees who have never become union members (‘never‐member’) since the early 1980s and shows that it is the reduced likelihood of ever becoming a member, rather than the haemorrhaging of existing members, that is behind the decline in overall union membership in Britain. We estimate the determinants of ‘never‐membership’ and consider how much of the rise can be explained by structural change in the labour market and how much by change in preferences among employees.     

Reputation and turnover

We consider a repeated duopoly game where each firm privately chooses its investment in quality, and realized quality is a noisy indicator of the firm's investment. We focus on turnover equilibria in which a low‐quality realization is penalized by lowering future demand of the firm that delivered this quality. We determine when a turnover equilibrium that gives higher welfare than the static equilibrium exists and how this relates to market fundamentals. We also derive comparative statics properties, and we characterize a set of investment levels and, hence, payoffs that turnover equilibria sustain.     

MULTIVARIATE SUBORDINATION OF MARKOV PROCESSES WITH FINANCIAL APPLICATIONS

This paper develops the procedure of multivariate subordination for a collection of independent Markov processes with killing. Starting from d independent Markov processes with killing and an independent d‐dimensional time change , we construct a new process by time, changing each of the Markov processes with a coordinate . When is a d‐dimensional Lévy subordinator, the time changed process is a time‐homogeneous Markov process with state‐dependent jumps and killing in the product of the state spaces of . The dependence among jumps of its components is governed by the d‐dimensional Lévy measure of the subordinator. When is a d‐dimensional additive subordinator, Y is a time‐inhomogeneous Markov process. When with forming a multivariate Markov process, is a Markov process, where each plays a role of stochastic volatility of . This construction provides a rich modeling architecture for building multivariate models in finance with time‐ and state‐dependent jumps, stochastic volatility, and killing (default). The semigroup theory provides powerful analytical and computational tools for securities pricing in this framework. To illustrate, the paper considers applications to multiname unified credit‐equity models and correlated commodity models.     

Building knowledge to improve enterprise performance from inventory simulation models

This paper describes the process of building knowledge to improve enterprise performance. This allows managers both to identify unknown risks and to develop solutions that mitigate these risks. One of the most critical risks that the enterprise faces involves the unidentified presence of serial-correlation components on the demand patterns. Depending upon the levels of such correlation, inventory control policies can be appreciably inaccurate. We propose to use a knowledge management portfolio that allows managers to capture and build knowledge from their complex systems. We find that the error generated from ignoring identified risk factors exponentially grows as the autocorrelation increases. We construct an enhanced simulated annealing algorithm that provides superior solutions to this type of problem.     

Voter turnout in a multidimensional policy space

Many factors influence the likelihood of citizens turning out to vote. In this paper we focus our attention on issue voting, that is, on the likelihood that different policies offered by politicians affect the probability of voting. If voters consider both the benefits and the costs of voting, rational voters will only vote when politicians offer differentiated policies. In a multidimensional policy space this implies that citizens only vote when they perceive enough difference on the issues they care about the most. We investigate the role of voter abstention due to indifference in a unidimensional and a multidimensional policy setting using data from the US National Election Studies for 1972–2000 and find support for our predictions: voters perceiving a small difference between the platforms of the Democratic and Republican parties are less likely to vote; and voters who perceive the two parties as more different on a larger number of issues are significantly more likely to vote.     

Inflation, Inflation Variability, and Corruption

We present a model where agents can inflate the cost of goods needed to start an investment project and inflation variability increases monitoring costs. We show that inflation variability can lead to higher corruption and lower investment. We document a positive relationship between corruption and inflation variability in a sample of 75 countries. The effect is robust to the inclusion of country fixed effects, other controls, and 2SLS estimation. The results are economically significant: a one standard deviation increase in inflation variance from the median increases corruption by 12 percent of a standard deviation and reduces growth by 0.33 percentage points. Our paper highlights a new channel through which inflation reduces investment and growth, thus bridging the perception gap over the costs of inflation between economists and the public. We also find evidence that political competition reduces corruption and that corruption is pro-cyclical.