Hours worked in selected OECD countries: an empirical assessment

In this paper, we empirically assess the evolution of the aggregate hours worked, with a particular emphasis on their age structure, in a sample of OECD countries, along the period 1970–2007. We show that the age composition of the workforce has a large and statistically significant effect on hours worked volatility. To exploit the multilevel structure of our data, we use a Mixed Linear Model to investigate the consequences of (i) demographic change, (ii) sector-specific, and (iii) country-specific factors on hours worked by ‘young’ (aged 15–29) and ‘prime-aged’ (29+) individuals. We show that changes in workforce demographics, captured by the ratio between population older than 29 and population younger than 29, are strongly and significantly correlated with the amount of hours worked by ‘young’ individuals. We also document the impact of sectoral capital intensity and profitability on the dynamics of (aggregate) hours worked. Finally, we show that productive public expenditure, here proxied by the public investment in ICT, is beneficial for the hours worked both by young and prime-aged individuals.     

Banking on ELR: How Hyman Minsky’s Ideas Can Help Tackle Unemployment

This article suggests a way of building a comprehensive program that can effectively eliminate unemployment using the employer-of-last-resort (ELR) scheme, which comes from the Minskyan tradition. According to this scheme, the state offers a job to everyone who is willing to work. In response to the many critiques the ELR program has received, we show that it is the best alternative to eliminating unemployment, instituting sound public finance, ensuring social and financial stability, and achieving long-term growth and international economic balances. We also make suggestions with a view of ensuring the efficiency of the ELR institutional design. In this context, we highlight the accountability issue that is largely ignored in the relevant literature, but that is paramount given the state of public finances after the 2008 crisis. We argue that accountability and efficiency should be taken as the core of the ELR project if it is to be politically viable, and they can be addressed alongside the analogy of lending of last resort. In particular, ELR projects should be supervised by a state bank that is set up to ensure the cost-effectiveness of the scheme, along with controls from below. We conduct a simulation of how much such an ELR program would cost for Italy, showing that its gross cost would be less than 2.0 percent of Italian GDP and its net cost would be negative.     

Optimal forecasting with heterogeneous panels: A Monte Carlo study

We contrast the forecasting performance of alternative panel estimators, divided into three main groups: homogeneous, heterogeneous and shrinkage/Bayesian. Via a series of Monte Carlo simulations, the comparison is performed using different levels of heterogeneity and cross sectional dependence, alternative panel structures in terms of T and N and the specification of the dynamics of the error term. To assess the predictive performance, we use traditional measures of forecast accuracy (Theil’s U statistics, RMSE and MAE), the Diebold–Mariano test, and Pesaran and Timmerman’s statistic on the capability of forecasting turning points. The main finding of our analysis is that when the level of heterogeneity is high, shrinkage/Bayesian estimators are preferred, whilst when there is low or mild heterogeneity, homogeneous estimators have the best forecast accuracy.     

An application of padé approximation to volatility modeling

This paper studies the dynamic relationship between future volatility and implied and historical volatility using data from Alegría and Rodríguez [1997]. The methodological approach forms part of the theoretical research being carried out in numerical analysis and especially from the rational Padé approximation. This tool helps to characterize simple computational methods in order to study questions about dynamic modelization of doubly infinite series. Considering noncausal series, where the expectations provided by economic theory or empirical evidence are included in available sample data, leads to dynamic specifications suitable not only from the perspective of fitting available data, but also from their predictive performance when compared to traditionally used formulae based merely on data analysis.     

Trade Credit or Financial Credit? An International Study of the Choice and Its Influences

Trade credit financing has usually been assumed to be an expensive source of funds. Recent studies, however, suggested that it can be available at either low or no cost. Using an international panel of firms, we provide an empirical answer to this matter. We analyze the type of firms and financial environments that are associated with a relatively more intense use of financial credit and, consistent with the mainstream literature, we find that trade credit financing is chosen by firms that have more restricted access to financial credit. These results appear to be stronger for firms located in emerging markets.     

A principled justification for business rescue laws: A comparative perspective (part I)

In 1992 the Federal Government of Australia introduced the voluntary procedure administration as an option for a company in financial difficulties. In the same year the Canadian Parliament introduced legislation with the same objective. The precursor to both Australian and Canadian initiatives is the American Chapter 11 procedure. However there are some significant differences between the approaches adopted. These differences are outlined as a precursor to an analysis of selected policies behind business rescue laws. By considering the aim of the legislation and objective criteria against which the legislation could be assessed the authors conclude that the Australian procedure is preferable to both its Canadian and American counterparts. Part II of this article will appear in the next issue of IIR.     

Why should black-owned businesses hire predominately black labor forces?

In the past, black-owned businesses appear to have hired a predominately black labor force. This article questions if incentives exist for them to continue to do so in the future. Various discrimination incentives are discussed and largely dismissed. It is concluded that the qualifications for gaining access to set-aside contracts and subsidies do provide incentives for black-owned businesses to hire a predominately black labor force.