Worker replacement

Consider a labor market in which firms want to insure existing employees against income fluctuations and, simultaneously, want to recruit new employees to fill vacant jobs. Firms can commit to a wage policy, i.e. a policy that specifies the wage paid to their employees as a function of tenure, productivity and other observables. However, firms cannot commit to employ workers. In this environment, the optimal wage policy prescribes not only a rigid wage for senior workers, but also a downward rigid wage for new hires. The downward rigidity in the hiring wage magnifies the response of unemployment to negative shocks.     

The impact of branding on low‐income adolescents: A vicious cycle?

This study examines the impact of consumerism and consumer culture on low‐income British adolescents. Specifically, it investigates the effects of branding and advertising on the formation of selfconcept clarity (SCC) and consumer susceptibility to interpersonal influence (CSII). A comparative study was conducted between two groups, low‐ and high‐income teenagers, assessing SCC and CSII by means of quantitative scales. It was found that low‐income teenagers are less clear in their self‐concept and are more susceptible to interpersonal influence than their high‐income counterparts. A significant negative correlation between the two scales revealed that the less clear one's self‐concept is, the more susceptible one is to interpersonal influence. It is proposed that an inability to “keep up” with the latest fashion trends (due to restricted consumption opportunities) may result in a damaged self‐concept among low‐income teenagers, which leads to heightened susceptibility to consumption pressures and hence heightens the negative socio‐psychological impacts of living in poverty. The results of the study are reviewed in terms of branding, advertising, and consumer behavior and a proposed conceptual model of branding's impact on low‐income teenagers is presented as a “vicious cycle.” © 2008 Wiley Periodicals, Inc.     

Company Influence on Foreign Aid Disbursement: Is Conditionality Credible when Donors Have Mixed Motives?

When donors enforce conditionality upon recipients who do not implement the conditions, companies can suffer from cancellation of their contracts with the recipient when aid dries up. A strategic recipient may avoid implementing controversial conditions by only granting a contract to a company that puts pressure on the donor to keep aid flowing. In our model, each of these three agents takes account of each of the two other agents' actions. We show that this triadic structure can be crucial when explaining recipients' use of companies to influence donors to give aid unconditionally, and we offer a time-consistent explanation for the failure of conditionality.     

Understanding interfirm relations in mediation industries with special reference to the Nordic mobile communication industry

Telecommunication operators exemplify firms that employ a mediating technology to organize exchanges among customers. This paper develops a framework for understanding interfirm relations in such industries by considering mediation-specific properties of division of labor and the associated resource interdependencies. We apply the concept of primary and secondary relationship functions developed by Håkansson and Johansson to a mediation value system. The findings have implications for management of cooperative and competitive relationships in mediation industries.     

Explicit Representation of the Minimal Variance Portfolio in Markets Driven by Lévy Processes

In a market driven by a Lévy martingale, we consider a claim ξ. We study the problem of minimal variance hedging and we give an explicit formula for the minimal variance portfolio in terms of Malliavin derivatives. We discuss two types of stochastic (Malliavin) derivatives for ξ: one based on the chaos expansion in terms of iterated integrals with respect to the power jump processes and one based on the chaos expansion in terms of iterated integrals with respect to the Wiener process and the Poisson random measure components. We study the relation between these two expansions, the corresponding two derivatives, and the corresponding versions of the Clark-Haussmann-Ocone theorem.     

Modelling the joint behaviour of electricity prices in interconnected markets

The liberalization of energy markets worldwide during recent decades has introduced severe implications for the price formation in these markets. Especially within the European day-ahead electricity markets, increased physical connections between different market areas and a joint effort on optimizing the aggregate social welfare have led to highly connected markets. Consequently, observing the exact same hourly day-ahead prices for two or more interconnected electricity markets in Europe happens frequently. This affects the modelling of such prices and in turn the valuation of derivatives written on prices from these market areas. In this paper, we propose a joint model for day-ahead electricity prices in interconnected markets composed of a combination of transformed Ornstein–Uhlenbeck processes. We discuss the properties of the model and propose an estimation procedure based on filtering techniques. Furthermore, the properties of the model reveal that analytical prices are attainable for, e.g., forwards and spread options.     

Transitions From School to Work and the Early Labour Market Experience

We consider transitions from school to work and the early market experience. The duration of post-school unemployment, wages, and job duration are estimated simultaneously. We find that individuals with higher levels ofschooling get jobs more quickly and have longer employment durations. Apprentices have shorter unemployment periods and stay longer in their jobs than others at the same educational level. Females have shorter unemployment periods and lower wages, and also stay in the first job longer. The unemployment duration and the accepted wage affect job duration positively, but the estimated covariance terms suggest unobserved factors working in the opposite direction.     

Formalisation of land rights in the South: An overview

Formalisation of property rights has recently been proposed as a way of reducing poverty. The poor, it is said, do not lack assets, they lack only the formal, protected rights necessary to make these assets engines of entrepreneurship, thriving markets, and information networks. Historical evidence with regard to formalisation programmes is, however, mixed at best, and current universalist proposals contain numerous flaws. A more context-specific and flexible approach is needed, with greater attention to local settings and specific objectives and tools. Property formalisation should not be considered merely a technical tool but must take account of politics and culture.