Unemployment and Catching Up: Europe Vis-à-vis the USA

This paper develops a two-region two-sector endogenous growth model with a dual labour market based on efficiency wages. Growth is driven by research done in the (high-tech) tradeables sector. The follower region tends to catch up in terms of labour productivity with the leader region. Differences in unemployment compensation systems can lead to relative convergence, i.e., a steady state with the backward region lagging behind the leader region. The reason for this is that high social welfare compensations generate high unemployment and reduce the amount of labour employed for R&D purposes.     

Input specificity and global sourcing

This paper identifies a new industry-equilibrium channel through which a firm’s productivity affects its organizational choice. In a two-country model with firm heterogeneity and incomplete contracts, we show that the degree of input specificity and the hold-up friction in an outsourcing relation become a function of the final good firm’s productivity when inputs are not completely specific. We examine the implications for the equilibrium international sorting pattern of firms.     

Regulating the Anticommons: Insights from Public‐Expenditure Theory

This article offers a new interpretation of the traditional Cournot complements problem, or anticommons, by using the theory of public goods to gain a perspective on the problem. Specifically, I examine the pricing strategies and regulation of multiple monopolies that produce products which consumers view as perfect complements. I show that collusion by the firms increases total social welfare and that the collusion problem can be reinterpreted as a problem of provision of public goods from the point of view of the firms. I take this insight further and derive the familiar concepts of the Samuelson marginal condition and the ratio equilibrium for the firms. I compare these outcomes to the first best solution and then apply incentive‐compatible mechanisms to strategically implement the Pareto superior ratio‐equilibrium outcome and the optimal marginal‐cost pricing outcome. Finally, I show how this methodology can be applied to the more familiar Cournot model of oligopoly.     

Does GDP Distort Mexico's Economic Performance?

Between 1961 and 1980, Mexico's gross domestic product (GDP) per capita grew nearly 3.50% annually. During the 1980s, however, it shrank about 0.50% per year. GDP figures suggest that there was sustained economic growth for the 1960s and 1970s, changing suddenly to contraction in the 1980s. This impression may be misleading. GDP does not account for housework or informal production outside households. Further, GDP also may be distorted by transactional activities, which are expenditures to support transactions, not actual output consumed. This study recalculates output for Mexico for the 1961-1990 sample period, controlling for transactional activities and nonmarket production. We find that GDP misstates Mexico's “actual” economic growth. In the 1960s, the economy expanded more quickly than GDP suggests. But in the 1970s, growth was less than half that of the 1960s. The economy indeed slumped in the 1980s, but not as terribly as the official figures indicate. Mexico's economy did not collapse suddenly in the early 1980s; actual economic growth had slowed dramatically during the 1970s.     

Gender differences in formal credit approaches: rural households in Vietnam

In Vietnam, women have poorer access to formal credit than men. This article determines the extent to which borrowing constraints restrict women’s access to formal credit and identifies the socioeconomic characteristics that determine formal credit discrimination. The study used secondary data from the Vietnam Access to Resources Household Survey (VARHS) published in 2013–14, and analysis was undertaken by econometric approaches such as logistic and multiple linear regression models and propensity score matching methods. The results show that among those participants who successfully obtained credit, approximately 85 per cent of women obtained less credit than men; and the amount of credit that women obtained was also less (on average, approximately 1.8 per cent less). Gender, number of years of schooling, marital status, participation in agricultural activities, off‐farm employment, and ownership of agricultural land for a male‐headed household positively influenced discrimination in obtaining credit and the amount of credit obtained. Moreover, the propensity score matching results found that the average increase in the credit obtained by males was 220,000 Vietnamese Dong (VND) and this is mainly due to discrimination in favour of men. The results suggest that policy action is needed to avoid discrimination in credit disbursement on the basis of gender.     

Mills,cranes, and the great divergence: the use of immovable capital goods in western Europe and the Middle East,ninth to sixteenth centuries

This article contributes to the ongoing debate on the causes of the great divergence by comparing the use of expensive labour‐saving capital goods—water‐mills, windmills, and cranes—in medieval western Europe and the Middle East. Using novel ways of measuring, we find that whereas the use of these goods increased in Europe, in the Middle East their prevalence decreased, or they were not used at all. We investigate several possible explanations and reject most of them, including religion, geography, technological knowledge, and disparities in wages and cost of capital. Our analysis shows that differences in lordship systems and the security of property rights best explain the patterns found.