Labor market dynamics when effort depends on wage growth comparisons

We present an efficiency wage model in which workers' disutility of effort depends on the level and on the growth rate of their wage relative to an alternative wage. Using data for four countries (US, UK, FR, GY), the implications of the model are examined and are found to be in accordance with the information in the non-stationary data. The restrictions implied by the model dynamics are not rejected by the data and the structural parameters are found to be constant through time. One interesting result is that the workers' disutility of effort depends less on relative wages growth and more on relative wage levels in the US than in the three European countries analyzed. First version received: September 1998 / Final version accepted: November 1999     

Land rents as a criterion for regionalization—The case of wheat growing in Croatia

The paper explores and tests one of the contemporary principles of economic regionalization of agriculture by using differential land rents in wheat production as a model. The analysis is based upon the assumption that differential rents could serve as a valid principle for regional planning, particularly differential rent I. On the basis of the food self-sufficiency principle declared by the Rome Declaration on World Food Security, the model assesses the economic justification of the Croatian wheat incentives system in relation to wheat production potentials in the counties, starting from those with high potential (the most favourable agroecological conditions for wheat production) towards the counties with low potential, to the level of self-sufficiency as a long-term Croatian strategic vision.The model shows that Croatia can meet its requirements for industrial wheat processing at the level of cumulative farmland areas of three counties, while total consumption can be covered by production of eight counties. This model compromises the fundamental principle of regional economics of wheat production, because up to 2003 incentives were given for 78,000 ha more than what was economically justified for wheat production intended for industrial processing, i.e. for 19,000 ha for total wheat demand. But, wheat production is practised all over Croatia—in all agricultural regions because of tradition on the one side and crop rotation requirements on the other side. This conclusion points to an uneconomic allocation of budget funds for wheat incentives to the counties, whose output results do not justify the incentives. The current subsidy model stimulates production by applying the criterion of a minimum three-hectare area required for wheat incentives. Consequently, a part of wheat production is excluded from the incentive system in the counties with high potential farmland, i.e. in the counties collecting a differential land rent for wheat production, which is uneconomical in terms of macroeconomics.Even though the model featured in this paper exemplifies wheat production in this particular situation, it can be easily used to evaluate the efficiency of incentives for all the crops included in the incentive system, while applying the standards of economics and agricultural regionalization. It can also be used to determine subsequent, more economical distribution of production incentives by channelling uneconomically allocated budget funds into implementation of other agricultural policies and measures.     

Feasibility of conservation agriculture in the Amu Darya River Lowlands,Central Asia

Human-driven land degradation threatens economic and environmental sustainability of irrigated agricultural production such as in Central Asia. Many current challenges can be eased by implementing Conservation Agriculture (CA), with however unknown financial consequences under the predominating irrigated conditions. We applied the linear programming to compare costs and benefits of four CA production systems, which are cotton-based rotation systems including (i) cotton-cotton and (ii) cotton-wheat-maize rotations under conventional tillage (CT), as well as (iii) cotton-cover crop-cotton, and (iv) cotton-wheat-maize rotations with mulch cover (crop residue retaining) and both rotations under permanent-bed planting (PB) with minimum tillage. All systems were subjected to six levels of land quality and a series of crop pricing schemes. Data were extracted from empirical research on CA in Uzbekistan, complemented with data on input and output prices from surveys. The findings underpinned the financial advantages of more diversified cropping systems (cotton-wheat-maize) over the crop monoculture (cotton-cotton-based system). Crop cultivation on marginal land was unprofitable under CT. In contrast, crop production under PB could generate profits even on croplands with a lower productivity level considered. It is argued that PB with crop residue retaining and applied in cotton-wheat-maize rotation shows most promise for improving crop yields and income.     

Entrepreneurship after displacement

Small Business Economics - According to Hoetker and Agarwal (Academy of Management Journal, 50(2), 446–469, 2007), research on knowledge transfers related to business closures is scarce. This...     

Cross-sectional dependence robust block bootstrap panel unit root tests

In this paper we consider the issue of unit root testing in cross-sectionally dependent panels. We consider panels that may be characterized by various forms of cross-sectional dependence including (but not exclusive to) the popular common factor framework. We consider block bootstrap versions of the group-mean (Im et al., 2003) and the pooled (Levin et al., 2002) unit root coefficient DF tests for panel data, originally proposed for a setting of no cross-sectional dependence beyond a common time effect. The tests, suited for testing for unit roots in the observed data, can be easily implemented as no specification or estimation of the dependence structure is required. Asymptotic properties of the tests are derived for T going to infinity and N finite. Asymptotic validity of the bootstrap tests is established in very general settings, including the presence of common factors and cointegration across units. Properties under the alternative hypothesis are also considered. In a Monte Carlo simulation, the bootstrap tests are found to have rejection frequencies that are much closer to nominal size than the rejection frequencies for the corresponding asymptotic tests. The power properties of the bootstrap tests appear to be similar to those of the asymptotic tests.     

New firms and labor market entrants: Is there a wage penalty for employment in new firms?

In this paper, we explore the role of new firms as an entry point to the labor market. Because the vast majority of new firms are short-lived, it is a risky decision to accept employment in a new venture. It can be argued that individuals with little (or no) labor market experience are more willing to accept the high risks associated with employment in new firms. Hence, new firms may work as an entry point to the labor market. Nevertheless, some research concludes that one disadvantage of employment in a new firm is that new firms pay less (Shane in Small Bus Econ 33:141–149, 2009). However, this empirical conclusion is primarily based on literature on the wage penalty of small firms. In this paper, we study whether the wage penalty of employment in a new firm persists if we focus solely on labor market entrants. In the empirical analysis, we employ an employer-employee matched dataset that covers the Swedish population during the period from 1998 to 2008. We use the propensity score matching method to study the wage differences between labor market entrants employed in new and incumbent firms. We find an average wage penalty of 2.9 % for labor market entrants employed in new firms over the studied period.     

The Decision Usefulness of Financial Accounting Measurement Concepts: Evidence from an Online Survey of Professional Investors and their Advisors

In their current framework project, the IASB and the FASB identify decision usefulness as the objective of financial reporting. Unfortunately, accounting research has neither yet come up with an undisputed measure of decision usefulness, nor with a satisfying method to rank competing measurement concepts, such as fair value or historical cost, with regard to their relative decision usefulness. Thus, assessing the decision usefulness of different accounting measurement concepts ultimately poses an empirical question. We provide evidence to this question by surveying an important user group, namely professional investors and their advisors, about their opinions on the decision usefulness of different accounting measurement concepts. We find that our respondents clearly differentiate between mark-to-market and mark-to-model fair values. While they consistently rank mark-to-market fair values as most decision-useful, they generally rank mark-to-model fair values as least decision-useful. In addition, the ranking differs across asset classes.