Why Did Income Inequality in Germany Not Increase Further After 2005?

While income inequality in Germany considerably increased in the years before 2005, this trend stopped after 2005. We address the question of what factors were responsible for the break in the inequality trend after 2005. Our analysis suggests that income inequality in Germany did not continue to rise after 2005 for the following reasons. First, we observe that the general rise in wage inequality that explained a lot of the inequality increase before 2005, became less steep (but did not stop) after 2005. Second, despite further increases in wage inequality after 2005, inequality in annual labour incomes did not increase further after 2005 because increased within‐year employment opportunities compensated otherwise rising inequality in annual labour incomes. Third, income inequality did not fall in a more marked way after 2005 because also the middle and the upper part of the distribution benefited from the employment boom after 2006. Finally, we provide evidence that the effect of a wide range of other factors that are often suspected to have influenced the distribution such as capital incomes, household structures, population ageing, changes in the tax and transfer system and the financial crisis of 2008 did not significantly alter the distribution after 2005.     

Reversed servitization paths: a case analysis of two manufacturers

The literature on service business in manufacturing companies posits that manufacturers “servitize” by increasing the proportion of services offered. This study presents two paths that are contrary to such forward-unidirectional servitization, indicating “reversed servitization.” In the first case, a capital goods manufacturer lost visibility to its installed base due to evolving product technology. We use the case of photocopier manufacturer Xerox to support our findings; a regulation change forced Xerox to move from a service-based toward a product-based business model. We thus propose that influencing environmental factors need to be researched and that the literature of organizational ecology may serve as a complementary perspective.     

Testing a model of exploration and exploitation as innovation strategies

We suggest a structural model that specifies firm growth as a function of firm-specific parameters, market-specific parameters, and competition for purchasing power. The model distinguishes between two firm innovation strategies: exploration and exploitation. On the basis of a set of simulations of this model, we derive a number of empirically testable hypotheses. A subset of these have already found support in the empirical literature. We take these as evidence in favor of the explanatory power of the model. In addition, we are able to derive further testable propositions on the interaction of firm-demographic processes, innovative behavior and market structure that go beyond the existing literature and that we suggest for further research. We conclude that the approach chosen here provides a fruitful pathway for further research.     

Banks’ Interest Rate Risk and Search for Yield: A Theoretical Rationale and Some Empirical Evidence

We investigate German banks’ exposure to interest rate risk. In finance, higher demand for a risky asset is typically associated with higher expected return. However, employing a utility function which implies both risk‐averse and risk‐seeking behavior depending on the level of profits, we show that this relationship may get weaker and even change its sign at low profit levels. For the period 2005–14, we find not only the common positive relationship of higher expected returns and rising interest rate exposure but also that this relationship does become weaker with falling operative income, its sign eventually changing.     

The Economic Consequences of Mr Trump

The Trump administration has embarked upon two large economic policy initiatives at a time of full employment: increasing the budget deficit by cutting personal and corporate tax rates; and increasing protection, especially against countries with which the United States has bilateral trade deficits. These initiatives are meant to reduce trade deficits and increase employment and incomes in the US manufacturing sector. Economic analysis tells us that the result will be larger trade deficits, and weaker total tradeables, including manufacturing employment. There may or may not be a net gain for employment and incomes in those industries which have been the greatest beneficiaries of protection. Trump's protection policies will damage incomes in the United States and the rest of the world; the damage will be greater if other countries retaliate or emulate. Alternative policies that compensate losers from free trade would give better results.     

THE RELEVANCE FOR DEVELOPING COUNTRIES OF RECENT DEVELOPMENTS IN MACROECONOMIC THEORY

This article reviews recent developments in macroeconomic theoryand considers their relevance for developing countries. Particularemphasis is given to the rational expectations revolution. Thearticle asks whether government policies are systematic andsuggests the need to study the expectations on which governmentsbase their decisions. Also discussed are the neo-Ricardian theorem,the implications of real wage rigidity and of supply side modelswith sectoral income effects, and recent models involving largegroup interaction.      

Japan in Wales: a new IR

Following a brief consideration of the historical pattern of Japanese company start-up, and trades union recognition, this article goes on to analyse the contents of their single union agreements under the following headings: membership and representation; flexibility; communications; consultation; and continuity of production. The wider implications of the ‘new industrial relations' among Japanese companies in Wales are then examined.     

Quality undersupply and oversupply

I analyze a market in which a price-taking buyer buys a variable-quality good from a population of sellers, contrasting the case where quality is a seller's private information to that where it is public information. Average quality traded under private information can be either higher (quality oversupply) or lower (quality undersupply) than under public information, depending on sellers’ preferences. We are likely to see quality undersupply if (i) sellers’ preferences exhibit substitutability between the variable-quality good and the numéraire good, and/or (ii) sellers view the numéraire good as a luxury good relative to the variable-quality good. Reverse arguments hold for quality oversupply.     

Considering the effects of imprecision and uncertainty in ecological footprint estimation: An approach in a fuzzy environment

This paper demonstrates the development of the Ecological Footprint within a fuzzy environment. The approach taken provides a means to understand the impacts of imprecision and uncertainty in the input-output framework, which forms a cornerstone of many recently constructed Footprint estimates. The paper uses, as a basis, an example of Footprint construction presented in the paper of Bicknell et al. [Bicknell, K.B., Ball, R.J., Cullen, R., Bigsby, H.R., 1998. New methodology for the Ecological Footprint with an application to the New Zealand economy. Ecological Economics 27, 149-160]. The analysis considers levels of fuzziness surrounding the technical coefficients in the underlying input-output framework. The results presented fully exposit the effect of the defined analysis, including the presentation of; fuzzy sector Ecological Footprints and overall fuzzy Ecological Footprint. Accompanying these findings, the fuzzy versions of certain moments associated with these Footprints are also presented, namely possibilistic mean and variance. The findings contribute to the elucidation of the potential policy impacts afforded when acknowledging imprecision and uncertainty in the data used in estimating Ecological Footprints.