Private rates of return to education of Africans in South Africa for 1995: a Double Hurdle model

In this study, the private rates of return to education of African males and females in South Africa are estimated. Both Heckman's (1976) two-stage selection model and the more recent Double Hurdle model, with correlated errors between the participation and employment equations, is found to be more suitable for the earnings analysis than the one with uncorrelated errors. This might imply that people make the decisions to participate in the labour force and to take up a job offer simultaneously. The private rate of return to education of Africans is found to be 12 and 11 per cent for males and females, respectively. These rates are significantly higher than those found in previous analyses of rates of return to education in South Africa. In these older studies, the private rate of return to education of Africans was found to vary from 2,5 to 7,7 per cent.     

Persistent differences in national productivity growth rates with a common technology and free capital mobility: The roles of private thrift, public debt, capital taxation, and policy toward human capital formation

The paper develops a two-country endogenous growth model to investigate possible causes for the existence and persistence of productivity growth differentials between nations despite a common technology, constant returns to scale, and perfect international capital mobility. Private consumption is derived from a three-period overlapping generations specification. The source of productivity (growth) differentials in our model is the existence of a nontraded capital good (“human capital”) whose augmentation requires a nontraded current input (time spent by the young in education rather than leisure). We consider the influence on productivity growth differentials of private thrift, public debt, the taxation of capital and savings, and policy toward human capital formation.     

Bridging Sustainability and Finance: The Value Driver Adjustment Approach

Even though most large corporations view sustainability considerations and concerns as having the potential to affect their revenue and profits, and studies have shown that sustainability can affect stock returns, investors and corporate managers continue to struggle to incorporate such concerns into their financial decision‐making. As a consequence, the valuation effects of sustainability issues are not fully reflected in either the valuation of companies by investors or in capital investment decisions by corporate managers. The author argues that sustainability can be integrated into both of these kinds of financial decision‐making by linking it to business models, competitive positions, and value drivers using what the author calls a “value‐driver adjustment” (VDA) approach. The basic idea is simple: material sustainability issues affect business models and competitive positions, which in turn affect the company's value drivers—notably, sales, margins, and capital. The VDA approach explicitly considers these linkages by taking three steps: (1) identifying a company's material sustainability issues; (2) analyzing how these issues are expected to affect the company's business model and competitive position; and (3) quantifying the effects of such changes in business model and competitive position on the company's value drivers, including its cost of capital. In the first part of the article, the author provides an investor perspective that shows how sustainability can be integrated into investment decisions by asset managers. There he explains how and why ESG integration has so far failed to become mainstream, and what needs to be done to make it successful. The second part of this article takes the corporate perspective and shows how sustainability can be linked to value drivers using much the same ingredients as in asset management, but slightly different tools that can help corporate managers incorporate sustainability concerns into strategy and operations, including the finance function. And in closing, the author brings together corporate and investor perspectives while showing how sustainability programs can be used to make the relationship between companies and their shareholders both stronger and longer‐lasting.     

Non-competition Goals and Their Impact on South African Merger Control: An Empirical Analysis

Review of Industrial Organization - Merger control regimes in various jurisdictions—especially in Africa—feature non-competition objectives in addition to conventional goals, such as...     

Delimitation of the class of budget-constrained utility maximizing partially linear consumer expenditure functions: An alternative approach

Zusammenfassung Dieser Aufsatz behandelt eine alternative Herleitung notwendiger und hinreichender Bedingungen, denen Nachfragefunktionen, die linear im Einkommen jedoch nicht notwendigerweise linear in den Preisen sind, genügen müssen, um zu sichern, daß bei gegebenem Einkommen ein Nutzenmaximum realisiert wird. Diese Bedingungen erscheinen weniger einschränkend als jene, die Gorman (1953, 1961) abgeleitet hat. Beispiele für derartige Funktionen werden im dritten Abschnitt angeführt. Einige kritische Anmerkungen beschließen den Aufsatz.

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The author is indebted to Mr. P. M. C. de Boer, Dr. J. van Daal, and Mr. W. J. Keller, staff members of the Netherlands School of Economics, Erasmus University Rotterdam, for their helpful criticisms and suggestions.     

The effect of exchange rate variability on US shareholder wealth

We examine the relationship between financial crisis exchange rate variability and equity return volatility for US multinationals. Empirical analysis of the major financial crises of the last decades reveals that stock return variability increases significantly in the aftermath of a crisis, even relative to the increase in stock return volatility for other firms belonging to the same industry and market capitalization class. In conjunction with this increase in total volatility, there is also an increase in stock market risk (β) for multinational firms. Moreover, trade and service oriented industries appear to be particularly sensitive to these changing exchange rate conditions.