Profit Related Pay and the U.K. Small Firm Labour Market

This paper critically examines the relevance of profit related pay (PRP) for the U.K. small firm sector. Since 1986, the U.K. government has actively encouraged PRP, which attracts generous tax breaks, because it believed that PRP would make pay more flexible downwards and would significantly improve employee identification, morale and productivity. An analysis of the theoretical arguments and the assumptions made regarding the nature of the U.K. small firm sector that underlay these claims suggests, however, that the likelihood of achieving either of these alleged benefits is small. An appraisal of the available empirical evidence on the practical implementation and operation of PRP schemes suggests that the tax relief simply encourages firms to introduce cosmetic schemes that have no appreciable impact upon the behaviour of either firms or employees. Moreover, the experience of some firms that adopted PRP schemes indicates that, far from increasing morale and productivity, PRP often creates new tensions and conflict between owners and employees. These and other unintended consequences illustrate the inherent difficulties of government attempts to use the tax system to alter the behaviour of agents engaged in a wide variety of complex and very heterogeneous bargaining situations.     

Drug Policy‐making in Metropolitan Areas: Urban Conflicts and Governance

This article retraces the emergence and shows the implications of current regulative frameworks in the field of urban drug policy. Framed by an analytical perspective that is based on the concept of urban governance, the article focuses on the processes by which cooperation and coordination between various conflicting governmental and non‐governmental agencies are achieved to address drug‐related problems in the major agglomerations of Switzerland, as well as in the metropolitan areas of Amsterdam, Glasgow and Frankfurt am Main. In the first part, it is shown that these problems are structured and debated along a conflict between advocates of the public‐health approach and those of the public‐order approach in the field of drug policy, as well as, to a lesser extent, a conflict between core cities and fringe municipalities about spillover effects related to the provision of services for users of illegal drugs. It is argued that this stems from a general tension between the goals of an attractiveness policy aimed at enhancing local economic development, and the necessities of social policy needed to address urban social problems. The second part examines the emergence of mechanisms of governance aimed at addressing drug‐related urban problems. It is argued that a ‘social public order’ regime emerged to regulate drug‐related urban problems, controlling urban practices of drug users by a combination of police and social work. In addition, it is held that in Switzerland, where social policy is traditionally confined to municipalities, these mechanisms of governance contributed to the emergence of metropolitan regions as new territorial actors in the field of drug policy. Cet article retrace l'apparition et les implications des cadres régulateurs actuels dans le domaine de la politique urbaine contre la drogue. Dans une perspective analytique fondée sur le concept de gouvernance urbaine, il s'attache aux processus qui permettent coopération et coordination entre divers organismes antagonistes, gouvernementaux ou non, pour traiter des problèmes liés à la drogue dans les principales agglomérations suisses, ainsi que dans les zones métropolitaines d'Amsterdam, Glasgow et Francfort‐sur‐le‐Main. La première partie démontre que ces questions sont organisées et discutées au sein d'une opposition entre partisans de l'approche de santé publique et ceux de l'ordre public en matière de politique de lutte contre la drogue, ainsi que, dans une moindre mesure, au sein d'un conflit entre les villes centrales et les municipalités satellites sur les retombées des services mis en place pour les consommateurs de drogues; cette situation résulte d'une tension globale entre les objectifs d'une politique d'attraction visant à favoriser le developpement économique local, et les nécessités d'une politique sociale obligée de traiter les problèmes urbains. La deuxième partie étudie l'émergence de mécanismes de gouvernance en réponse aux problèmes urbains liés à la drogue; ainsi, un régime ‘d'ordre public social’ a vu le jour, les pratiques urbaines des consommateurs de drogue étant sous le contrôle combiné de la police et des travailleurs sociaux. De plus, en Suisse où la politique sociale est par tradition du ressort des municipalités, certaines zones métropolitaines sont devenues, grâce à ces mécanismes de gouvernance, de nouveaux acteurs territoriaux de la politique publique de lutte contre la drogue.     

Investment in vintage capital

We study an economy in which firms use labor and various vintages of capital in a CES production function for the final good. We explicitly solve for the investment in capital of a given vintage as a function of its age, and for the resulting stocks of capital. We show that for reasonable parameter values, inverted-U-shaped dynamics of investment and S-shaped dynamics for capital arise in equilibrium. We view the model as an explanation of intra-firm adoption lags, i.e., the observation that firms adopt innovations over time and not instantaneously.     

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