MIGRATION AND INSTITUTIONS: EXIT AND VOICE (FROM ABROAD)?

A rapidly growing body of research examines the relationship between migration and institutions. Three strands of studies can be distinguished. Some studies focused on the role of domestic and foreign institutions in the decision to migrate. Others were interested by the impact of migration on institutional reforms in migrants' countries of origin. Recent studies focus on how migrants affect social and informal institutions in the destination countries. This survey puts together these three strands of literature with three purposes. First, we offer a short definition and synthetic typology of institutions, which provide a guide to understand several studies we have critically reviewed. Second, our analysis is presented following the analytic framework exit, voice, and loyalty of Hirschman in order to highlight the brain gain phenomenon for developing countries, from an institutional point of view. Third, we review the limited existing work on the very timely topic, whether migrants are harmful or not to institutions in the host countries.     

Extending the Lee–Carter model: a three-way decomposition

In this paper, we focus on a Multi-dimensional Data Analysis approach to the Lee–Carter (LC) model of mortality trends. In particular, we extend the bilinear LC model and specify a new model based on a three-way structure, which incorporates a further component in the decomposition of the log-mortality rates. A multi-way component analysis is performed using the Tucker3 model. The suggested methodology allows us to obtain combined estimates for the three modes: (1) time, (2) age groups and (3) different populations. From the results obtained by the Tucker3 decomposition, we can jointly compare, in both a numerical and graphical way, the relationships among all three modes and obtain a time-series component as a leading indicator of the mortality trend for a group of populations. Further, we carry out a correlation analysis of the estimated trends in order to assess the reliability of the results of the three-way decomposition. The model's goodness of fit is assessed using an analysis of the residuals. Finally, we discuss how the synthesised mortality index can be used to build concise projected life tables for a group of populations. An application which compares 10 European countries is used to illustrate the approach and provide a deeper insight into the model and its implementation.     

Exports and labor costs: evidence from a French policy

We investigate the role that labor costs hold in exporters’ performance. To do so, we exploit a large-scale French reform that granted most firms a tax credit proportional to the wagebill of their employees paid below a given threshold. This policy effectively translated into a cut in labor cost whose magnitude varies depending on firm-specific wage structures. We use the predicted treatment intensity based on pre-reform composition of the labor force as an instrument for the actual policy-induced firm-level change in labor costs. Although our point estimates are consistent with commonly estimated firm-level trade elasticities combined with reasonable labor shares in total costs, coefficients are found to be very noisy, suggesting lack of robust evidence of a causal effect of the policy. We discuss several potential explanations for our results as well as their implications.     

Transition and the output fall

We present a model to explain why in the transition economies of Central andEastern Europe an important output fall has been associated with price liberalization. Its key ingredients are search frictions and Williamsonian relation-specific investment, implying that new investments are made only after having found a new long-term partner. When all firms search for new partners, output may fall because of three effects: a) disruption of previous production links, b) a fall in investment, and c) capital depreciation due to the absence of replacement investment. We show that forms of gradual liberalization like the Chinese 'dual-track' price liberalization may avoid the transitory output fall.
JEL classification: D21, D50, E30, E61, P41, P51.     

Nonparametric Efficiency Analysis under Price Uncertainty: A First-Order Stochastic Dominance Approach

This paper extends the nonparametric approach to efficiency analysis to deal with uncertainty of input-output prices. We generalize the notion of economic efficiency to derive necessary and sufficient first-order stochastic dominance (FSD) efficiency conditions. Interestingly, the FSD conditions include as limiting cases the traditional conditions for economic efficiency and technical efficiency. Furthermore, we propose empirical tests for these FSD conditions, which require minimal assumptions concerning the preferences of the decision-maker and the statistical distribution of the prices. From operational point of view, the FSD conditions can be tested empirically using standard mathematical programming techniques. An empirical application to the Dutch electricity distribution sector illustrates the approach.     

New patterns of consumer protection under warranty law: Lessons from the U.S. magnuson-moss warranty act

Warranty law appears to be a relevant instrument for granting protection to consumers against product disappointment. However, empirical studies concerning some warranty markets both in the United States and in West-European countries show that there continues to be no bargaining on warranties between sellers and buyers, that the most serious risks are all allocated to the user of the product, and that consumers are generally not granted an actual opportunity of challenging a breach of warranty and getting adequate compensation for losses sustained. The Magnuson-Moss Warranty-Federal Trade Commission Improvement Act which was enacted in the United States in 1975 constitutes a first comprehensive and consumer-oriented reform of traditional warranty law. It foresees new patterns of consumer protection under warranty statutes, combining warranty substance regulation with warranty information, administration, and litigation procedures. This paper first describes the Act's major provisions; it also points out some of its deficiencies. Although criticisms are formulated against the Act's ideology or basic assumptions, it is the author's opinion that it represents a decisive step towards legislative and administrative participation in the formulation of warranties. The Act undoubtedly suggests some, though not identical, avenues of reform that legislators and authorities of European countries and confederations should now propose in order to increase consumer protection against defective or unsatisfying products.     

Power in the multinational corporation in industry equilibrium

Recent theories of the multinational corporation introduce the property rights model of the firm and examine whether to integrate or outsource firm activities locally or to a foreign country. This paper focuses instead on the internal organization of the multinational corporation by examining the power allocation between headquarters and subsidiaries. We provide a framework to analyse the interaction between the decision to serve the local market by exporting or FDI, market access and the optimal mode of organization of the multinational corporation. We find that subsidiary managers are given decision power to run the firm at intermediate levels of host country competition. We then provide comparative statics on the optimal organization of the multinational corporation for changes in fixed FDI entry costs, trade costs, as well as changes in information technology.      

The curious destiny of a heterodoxy: The Austrian economic tradition

The Austrian School has had a curious destiny: while contributing many concepts to contemporary economic theory, it is either ignored or criticised by much of modern economic literature. This article discusses possible reasons for this institutional sidelining and the main futures of a renewal of Austrian thought.

Globalization and the empowerment of talent

Many experts have identified globalization as the new way in which firms organize their activities and the emergence of talent as the new stakeholder in the firm. This paper examines the role of trade integration in the changing nature of the corporation. International trade leads to a ‘war for talent’ which makes it more likely that an organizational equilibrium emerges in the integrated world economy in which control is delegated to lower levels of the firm's hierarchy empowering human capital. Furthermore, trade integration is shown to lead to waves of decentralization and to convergence in corporate cultures across countries.