Management Practices, Work--L ife Balance, and Productivity: A Review of Some Recent Evidence

Increasing product-market competition is believed to be a drivingforce behind higher productivity. However, even those criticsof globalization who accept this argument claim that there isa hard trade-off because tougher competition comes at the priceof reducing work—life balance (WLB). Optimists, by contrast,argue that competition can spur better WLB practices and thereforehigher productivity, so there is a ‘win—win’situation. To address this issue we use an innovative surveytool to collect the first international data on management practicesand WLB practices, surveying 732 medium-sized manufacturingfirms in the USA, France, Germany, and the UK. We find thatthe USA has the best management practices but the worst work—lifebalance. When we look within countries, however, we reject thepessimistic ‘trade-off’ model. First, WLB outcomesare significantly associated with better management, so thatwell-run firms are both more productive and offer better conditionsfor their employees. Second, tougher competition increases averagemanagement quality but does not negatively affect employees'working environment. As with many other studies, better WLBpractices are associated with significantly higher productivity.This relationship disappears, however, after controlling forthe overall quality of management. Footnotes ¹ E-mail addresses: nbloom{at}stanford.edu; j.vanreenen{at}lse.ac.uk     

On optimal growth models when the discount factor is near 1 or equal to 1

The aim of this paper is to fill the gap between intertemporal growth models when the discount factor is close to one and when it equals one. We show that the value function and the policy function are continuous with respect both to the discount factor, β, and the initial stock of capital,   x ₀  . We prove that the optimal policy   g ^β( x ₀)  is differentiable and that   Dg ^β( x ₀)  is continuous with respect to  (β, x ₀)  . As a by-product, a global turnpike result is proved.     

The Millennium Development Goals, How Realistic Are They?

Summary In its Millennium Declaration of September 2000, the United Nations adopted the Millennium Development Goals (MDG), to be reached in 2015 through concerted efforts worldwide. According to UN-calculations, the estimated costs in terms of additional development aid of meeting the MDGs in all countries vary from 121 billion US dollars in 2006 to 189 billion US dollars in 2015. The present communication reviews the figures reported. It appears that while Asia is well on track to achieve the goals, essentially through efforts of its own, Africa is lagging behind, albeit that according to detailed survey data on weight-for-length among adults collected in Africa for the US aid agency, rates of undernutrition are about 58 percent of the levels used as a reference by the UN, which are based on assessment of food production. Yet, child undernutrition comes out higher in these surveys. Besides mentioning reservations about the adequacy of these MDG-yardsticks, we consider the cost estimates for Africa as presented in the UN-reports and subsequently assessed in the literature. It appears that these estimates are too low, even if all MDG-funds were concentrated on this continent, essentially because they are set up as shopping lists that are necessarily incomplete and, among others, disregard many of the indirect cost of delivering the goods to the target beneficiaries, including the cost of providing adequate security and avoiding corruption. Nonetheless, recalling how hopeless the situation looked some 30 years ago for China, India, and Bangladesh, where unprecedented numbers have now escaped extreme poverty during the past decade and a half, we submit that over a time horizon of about twice the 15 years of the MDG’s and with adequate international support, realization of the MDG-targets should be possible for Africa too. An erratum to this article can be found at     

Greasing the Wheels of Trade: A Profile of the Dutch Transaction Sector***

How many resources does a nation spend on transactions costs to ‘grease the wheels of trade’? To examine this question the Dutch economy is used as a case study. The Netherlands are known as a nation of traders and this image was derived in the seventeenth century from successes in long distance trade, shipping and financial innovations. Despite its historical background the trading sector has never been adequately measured. In this paper, we present a first attempt in measuring and describing the Dutch transaction sector. Measurement by means of occupational data points out that approximately 25% of Dutch workers is employed in transaction jobs, and 29% if one includes transport tasks. We make the case that traditional industrial sector categories overestimate the true transaction character of an economy. Traditional ‘trade’ sectors employed 13% of the workers in 1807 and 39 percent in 1998, but these figures conceal the fact that all organizations employ jobs which have transformation and transaction tasks. A counterfactual exercise suggests that the growth of the transaction sector share in employment over two centuries was not 200% but 42%.     

International financial integration through the law of one price: The role of liquidity and capital controls

This paper takes advantage of the fact that some stocks trade both in domestic and international markets to characterize the degree of international financial integration. The paper argues that the cross-market premium (the ratio between the domestic and the international market price of cross-listed stocks) provides a valuable measure of international financial integration and the effectiveness of capital controls. Using autoregressive (AR) models to estimate convergence speeds and non-linear threshold autoregressive (TAR) models to identify non-arbitrage bands, the paper shows that price deviations across markets are rapidly arbitraged away and bands are narrow, particularly so for liquid stocks. The paper also shows that regulations on cross-border capital flows effectively segment domestic markets. As expected, the effects of both types of capital controls are asymmetric but in the opposite direction: controls on outflows induce positive premia, while controls on inflows generate negative premia. Both vary with the intensity of capital controls.     

Impact of Agriculture on Rural Tourism: A Hedonic Pricing Approach

The increased awareness of farmers' role in the maintenance of rural landscapes may contribute to a reassessment of the place of agriculture in society. In this paper, we look at how this role, in relation to landscape, is valued by rural tourists or, in other words, whether it is a response to a societal demand, as is argued by defenders of multifunctional agriculture. The results from a hedonic pricing analysis indicate that landscape features associated with agricultural activities (such as meadows and grazing cattle) positively influence the demand for rural tourism and have a positive impact on the price tourists are willing to pay for rural accommodation. This is also illustrated by the adverse impact of perceived negative externalities from agricultural production (such as intensive maize cultivation) on this price.     

The timing of pay

There exists large and persistent variation in not only how, but when employees are paid, a fact unexplained by existing theory. This paper develops a simple model of optimal pay timing for firms. When workers have self-control problems, they under-save and experience volatile consumption between paychecks. Thus, pay whose delivery matches the timing of workers' consumption needs will reduce wage costs. The model also explains why pay timing should be regulated (as it is in practice): although the worker benefits from a timing profile that smoothes her consumption, her lack of self-control induces her to attempt to undo the arrangement, either by renegotiating with her employer or by taking out payday loans. Regulation of pay timing and consumer borrowing is required to counter these efforts, helping the worker help herself.     

Index Future Trading and Spot Market Volatility in Frontier Markets: Evidence from Ho Chi Minh Stock Exchange

Asia-Pacific Financial Markets - This study investigates the impact of index futures trading on the spot market volatility for Ho Chi Minh Stock Exchange (HOSE). The data used in this study are...