Cyclicality of fiscal policy and the shadow economy

A survey of recent literature on cyclical properties of fiscal policy reveals that fiscal policy is procyclical in many developing countries whereas it is countercyclical in developed ones. However, there is no consensus on what drives the difference in this specific cyclical property of fiscal policy. Using cross-section and panel data sets for 78 countries we document that procyclicality of fiscal policy is more pronounced in countries with a larger size of the shadow economy. We also show that policies reducing the size of the shadow economy lead to a less (more) procyclical (countercyclical) fiscal response to shocks.     

Segmenting the market through the determinants of involvement: The case of fair trade

The fair trade market includes several types of actors, ranging from world shops to supermarkets, and from restaurants to clothing stores, involving a heterogeneous clientele. An analysis of fair trade consumers must be sufficiently granular to capture their different expectations, attitudes, and motivations; hence the need to segment the market. Through the concept of involvement, the objective of this research is to analyze and compare by segments the determinants of behavior of fair trade consumers. The research consists of three phases: segment identification, behavioral analysis by segment, and synthesis of the managerial implications. Two out of four hypothesized criteria prove to be effective in segmenting the fair trade market, namely age and distribution channel preference (whereas gender and education are not significant criteria). The analysis shows that the drivers of the involvement in the decision to buy fair trade products vary by segment. Thus, the article concludes with the development of communication axes that can trigger or strengthen the desired behaviors in each segment. It provides fair trade marketers with an efficient communication content that can be used for fair trade advertising, product packaging, branding, or merchandising. © 2011 Wiley Periodicals, Inc.     

Workers’ tenure and firm productivity: New evidence from matched employer-employee panel data

Using rich longitudinal matched employer-employee data on Belgian firms, we explore the impact of workers’ tenure on firm productivity. To do so, we estimate production functions augmented with firm-level measures of tenure. We deal with the endogeneity of standard inputs and tenure, which arises from unobserved firm heterogeneity and reverse causality, by applying a modified version of Ackerberg et al.’s (2015) control function method, which explicitly removes firm fixed effects. Consistently with recent theoretical predictions, our analyses point to positive, but decreasing, returns to tenure. We also find that the impact differs widely across several firm dimensions. Tenure is particularly beneficial for productivity in contexts characterized by a certain degree of routineness and low job complexity. Along the same lines, our findings indicate that tenure exerts stronger positive impacts in industrial and capital-intensive firms, as well as in firms less reliant on ICT-intensive and knowledge-intensive processes.