International migration and “educated unemployment”

This paper provides a novel explanation of “educated unemployment”, which is a salient feature of the labor markets in a number of developing countries. In a simple job-search framework we show that “educated unemployment” is caused by the prospect of international migration, that is, by the possibility of a “brain drain”. In addition, the analysis shows that a developing country may end up with more educated workers despite the brain drain and educated unemployment.     

Will a government find it financially easier to neutralize a looming protest if more groups are involved?

We study a policy response to an increase in post-merger social stress. If a merger of groups of people is viewed as a revision of their social space, then the merger alters people’s comparators and increases social stress: the social stress of a merged population is greater than the sum of the levels of social stress of the constituent populations when apart. We use social stress as a proxy measure for looming social protest. As a response to the post-merger increase in social stress, we consider a policy aimed at reversing the negative effect of the merger by bringing the social stress of the merged population back to the sum of the pre-merger levels of social stress of the constituent populations when apart. We present, in the form of an algorithm, a cost-effective policy response which is publicly financed and does not reduce the incomes of the members of the merged population. We then compare the financial cost of implementing such a policy when the merger involves more or fewer groups. We show that the cost may fall as the number of merging groups rises.     

A policy response to a downside of the integration of economies: An impossibility theorem

Recent research shows that the merger of economies increases aggregate stress. This paper shows that there is no income distribution policy which will ensure that the wellbeing of the individuals belonging to merging economies does not fall below their pre-merger level.     

Human capital depletion, human capital formation, and migration: a blessing or a “curse”?

We specify conditions under which a strictly positive probability of employment in a foreign country raises the level of human capital formed by optimizing workers in the home country. While some workers migrate, “taking along” more human capital than if they had migrated without factoring in the possibility of migration (a form of brain drain), other workers stay at home with more human capital than they would have formed in the absence of the possibility of migration (a form of brain gain).     

A concern about low relative income, and the alignment of utilitarianism with egalitarianism

A utilitarian social planner who maximizes social welfare assigns the available income to those who are most efficient in converting income into utility. However, when individuals are concerned about their income falling behind the incomes of others, the optimal income distribution under utilitarianism is equality of incomes.     

Demand for investment in productive and financial capital

The paper deals with an entrepreneur who operates in imperfect capital markets, making rational decisions about productive and financial investment. Using the economic rule that the allocation of assets between productive and financial purposes is carried out according to the equality of the marginal productivity and the marginal factor costs of debt, the paper analyses the factors which determine the size of the firm, the size of debt, and the optimal dynamic path.     

Options as a Marketing Tool: Pricing a Promotional Scheme for a Product with a Secondary Market

Adding options to durable products allows new opportunities for manufacturers and retailers in markets with a secondary market to create better segmentation schemes, provide creative means to differentiate their products and services, and increase the value they offer consumers. This raises the need for sellers to properly price such options. This work presents a few examples of incentive programs for the car industry, develops models and calculates their cost to the seller, demonstrating the applicability of the proposed methodology. Our numerical results indicate that such options are surprisingly inexpensive for car manufacturers and dealers. Copyright © 2015 John Wiley & Sons, Ltd.     

Congestable local public goods in an urban setting

In this paper, we recognize two types of unpure local public goods (LPGs): congestable and pollutable. This paper and the forthcoming one (Clubs in an urban setting, mimeo, 1980) are devoted to congestable LPGs (CLPG). In Part I we define, classify, and characterize CLPGs. CLPGs may vary in their degree of congestability between zero, in the case of a pure LPG, and one, in the case of a private good. Spatially, we recognize two types of LPGs: the dispersed LPG (DiLPG) and the concentrated LPG (CoLPG). The first is distributed throughout the residential ring and the second is provided in specific locations to which households must travel. The second part of this paper is devoted to the investigation of the properties of a CDiLPG in an urban setting. The properties of CoLPG are investigated in (Clubs in an urban setting, mimeo, 1980). A version of Samuelson's rule as to the optimal allocation of pure public goods is extended on one hand to local dispersed public goods and on the other hand to CLPGs. Two corrective Pigouvian taxes are identified: congestion tolls levied on households, and a residential land tax. These two taxes cover total government expenditure on the LPG. The fraction of the expenses on the LPG covered by congestion tolls is α, and that covered by land taxes is (1 − α), where α is the degree of congestability. Efficiency can also be achieved by zoning the residential ring and regulating the housing density in it. This procedure may replace taxation and its advantage is that we can control a large number of externalities by a single set of zoning rules and regulations. An a posteriori rule to guide the local government as to the desirability of its actions is provided.