Issues in the Design and Reform of Commodity Taxes: Analytical Results and Empirical Evidence

The motivation of this paper is two fold: (a) review the literature on design and reform of commodity taxes, (b) describe attempts at extending the traditional framework. The paper states the principal results in optimal commodity taxation with attention paid to assumptions made in their derivation. Empirical evidence on the structure of optimal commodity taxes is presented with special reference to the issue of uniformity versus selectivity, and the redistributive potential of commodity taxes. The paper, then, provides analytical and empirical evidence on the following extensions to the traditional framework: (i) presence of child subsidy and demographic effects on demand, (ii) fiscal federalism, (iii) tax evasion.     

Child Labor, Child Schooling, and Their Interaction with Adult Labor: Empirical Evidence for Peru and Pakistan

Using data from Peru and Pakistan, this article tests two hypotheses:there is a positive association between hours of child laborand poverty, and there is a negative association between childschooling and poverty. Both of these hypotheses are confirmedby the Pakistani data, but not by the Peruvian data. The reductionin poverty rates due to income from children's labor is greaterin Pakistan than in Peru. The nature of interaction betweenadult and child labor markets varies with the gender of thechild and the adult. In Peru rising men's wages significantlyreduce the labor hours of girls, whereas in Pakistan there isa strong complementarity between women's and girls' labor markets.Both data sets agree on the positive role that increasing adulteducation can play in improving child welfare.     

Generalised cost scaling: A new approach to demographic variables in demand analysis

A new approach to modelling equivalence scales and household demand systems is introduced and its usefulness empirically demonstrated. The empirical results suggest that price effects on the general equivalence scale are more important than utility effect.     

Delay and dynamics in labor market adjustment: Simulation results

We simulate numerically a trade model with labor mobility costs added, modeled in such a way as to generate gross flows in excess of net flows. Adjustment to a trade shock can be slow with plausible parameter values. In our base case, the economy moves 95% of the distance to the new steady state in approximately eight years. Gross flows have a large effect on this rate of adjustment and on the normative effects of trade. Announcing and delaying the liberalization can build – or destroy – a constituency for free trade. We study the conditions under which these contrasting outcomes occur.     

International Capital Mobility and Saving-Investment Relationship in the Newly Industrialized Countries

This paper investigates the Feldstein-Horioka coefficients and evaluates the degree of international capital mobility for ten newly industrialized countries (NICs) over the different sub-periods from 1970 to 2010. By applying the Pedroni and Westerlund cointegration tests, we find that saving and investment are indeed cointegrated. The estimated FH coefficients using FMOLS and DOLS are 0.24 and 0.33, respectively, for the period 1970–1980. Furthermore, the estimated FH coefficients reduce from 0.80 (FMOLS) in 1991–2000 to 0.36 (FMOLS) in 1970–1980. The small FH coefficients suggest that international capital mobility increased in the NICs during the sub-periods 1970–1980 and 2001–2010.     

Skilled-unskilled wage inequality and unemployment: A general equilibrium analysis

The paper develops a static three sector competitive general equilibrium model of a small open economy in which skilled labor is mobile between a traded good sector and the non-traded good sector and unskilled labor is specific to another traded good sector. Capital is perfectly mobile among all these three sectors. We introduce involuntary unemployment equilibrium in both the labor markets and explain unemployment using efficiency wage hypothesis. We examine the effects of change in different factor endowments and prices of traded goods on the unemployment rates and on the skilled-unskilled relative wage. Also, we introduce Gini-Coefficient of wage income distribution as a measure of wage income inequality; and show that a comparative static effect may force the skilled-unskilled relative wage and the Gini-Coefficient of wage income distribution to move in opposite directions in the presence of unemployment.     

Extending Business Education Beyond Traditional Boundaries: A Case Study in Negotiated Problem Resolution in a Remote Regional Indigenous Community in Australia

It is widely accepted that the concepts and practices of management can only be of benefit when they are anchored to the contextual architecture of people, processes, structures, and technologies. The challenge of establishing a bridging program for providing managerial competencies to Australian Indigenous people has become a serious one for multinational mining companies. As the wings of globalization interact with the long-ignored reality of marginalized local milieu, a need for an innovative management education system has become a major imperative compelling multinational mining companies to work collaboratively with the government, educational institutions, and Indigenous communities. The article outlines a specific decision-making dilemma in an Indigenous context, while explaining the imperatives for educators, who have the challenging task of instructing potential graduates how to manage the unique contextuality of rural Australian Aboriginal communities. The article presents implications for large-scale modern multinationals as they move to geographically remote regions of the world where large number of marginalized local people need to be drawn into the workforce not only as an act of a social responsibility imperative, but also as sound business pragmatism.     

How and how far to liberalize a developing economy with informal sector and factor market distortions

Whether a liberalizing developing economy should implement the entire WTO-prescribed package, and to what extent this is expedient, are two important questions, especially because the available empirical evidence suggests that developing countries have been facing substantial adjustment costs in their endeavour to implement trade and investment reform. The present paper makes a humble effort to provide answers to the above questions in terms of a three-sector general equilibrium model with informal sectors. Welfare implications of three liberalization policies: inflow of foreign capital, tariff reduction and labour market reform, have first been analysed in a full-employment framework. Later, the paper has been extended into a Harris?–?Todaro framework with an urban informal sector and capital market distortion. We have shown that welfare consequences of a tariff reform and/or a policy of deregulating the labour market crucially depend on the presence and magnitude of foreign capital in the economy. It is argued here that unless a proper choice among different prescribed policies, compatible with the internal institutional, technological and trade-related characteristics, is made, drastic implementation of reform measures may produce counterproductive results for the welfare of the relevant country.