Collective Choice and Control Rights in Firms

Recent writers have asserted that firms controlled by workers are rare because workers have diverse preferences over firm policies, while investors all support wealth maximization. However, the source of the asymmetry between capital and labor remains unclear. We resolve this puzzle by arguing that because financial capital is exceptionally mobile, capital markets induce unanimity. The lower mobility of human capital implies that labor markets are monopolistically competitive and hence that unanimity cannot be expected in labor‐managed firms. Moreover, such firms are vulnerable to takeover by investors, while capital‐managed firms are substantially less vulnerable to takeover by workers.     

Organizational forms in the knowledge economy: a comparative institutional analysis

This paper provides a framework with which to analyze organizational forms in the knowledge economy. We focus on an important trade-off facing modern firms: firms can acquire the property of all the innovations developed by their employees and can greatly increase their profits, yet this type of private intellectual property rights regime can discourage the innovative effort of the very same workers. Allowing workers to carry their knowledge outside the firm eliminates this disincentive. Hence, strategic complementarities may exist between innovative partners and a disclosure driven intellectual property rights regime, and passive employees and a private intellectual property rights regime. An evolutionary game theoretic model demonstrates these strategic complementarities and shows when economies tend towards disclosure driven or private intellectual property rights regimes.     

Structuring Intergovernmental Grants to Local Governments: Lessons from South Africa

South Africa has been going through a period of transition over the past three years as it changes its system of public finance from a structure suited to the old apartheid system to one consistent with the new South African Constitution. While the former system was highly centralized, the new constitution makes a clear commitment to municipal governments as important providers of government services, with greater tax and spending powers. Even as local autonomy has been substantially increased, there remains uncertainty as to the most appropriate design of a system of intergovernmental fiscal grants to metropolitan areas and townships.     

A child health production function estimated from longitudinal data. Cebu Study Team

Collaborating researchers used a multi equation model to analyze 3080 mother-infant pairs living on the island of Cebu in the central Philippines and to estimate a child health production function. The econometric methods used eliminated obstacles such as heterogeneity and endogeneity of significant explanatory factors. They also maximized the longitudinal quality of the data. The results showed that morbidity in 1 period reduced infant weight in following periods. For example, diarrhea and febrile respiratory infection reduced growth in the time period following the illnesses. Further effects of some contributing factors were great near birth not diminished with age. For example, breast feeding promoted growth and protected against infection, especially diarrhea and febrile respiratory infection, more substantially near birth than it did later. Further, in urban areas, preventive health care positively affected growth independently of its indirect influence on reducing respiratory infection. Yet it had little effect on diarrhea. Diarrhea had a strong adverse effect on growth. Exposure of the infant to enteric pathogens had the greatest influence on production of diarrhea. In urban areas, exposure included water supply contamination, exposure to feces, a more pathogenic diet, and community crowding. In rural areas, however, exposure included community crowding and increased rainfall which presumably washed feces into the water supply. Household crowding in both urban and rural areas and irritation from smoke in urban areas only tended to bring about febrile respiratory infection.     

Assessing Cumulative Evidence within ‘Macro’ Research: Why Meta‐Analysis Should be Preferred Over Vote Counting

Understanding the conclusions a body of evidence offers involves accumulating findings. Two recent articles used vote counting to assess the evidence related to important macro theories: transaction cost theory and resource‐based theory. Each concluded that its focal theory is not well supported. In contrast, recent meta‐analyses of the same theories concluded that both are strongly supported. We explain why macro researchers should trust the findings of meta‐analyses but not those of vote counts. A direct implication is that researchers interested in advancing transaction cost and resource‐based theories need to build upon the meta‐analytic evidence. A broader implication is that, as the preferred method for accumulating evidence, meta‐analysis can be a catalyst for the re‐evaluation of established theories and the development of new theory.