Self-selection bias in estimated wage premiums for earnings risk

This note develops a simple occupational choice model to examine three types of selection biases that may occur in empirically estimating the premium for uncertain wages. Individuals may select themselves into risky (wage-uncertain) jobs because they have (1) lower risk aversion, or (2) lower income risks, or (3) higher individual ability. We show that (1) gives no bias, (2) biases the OLS estimate of the risk-premium in a wage regression upward, and (3) yields a bias that analytically may be positive or negative, but empirically is more likely to be negative if our occupational choice model is correct.     

Is Competition Law an Impediment to CSR?

This paper provides an empirical case study of the relationship between corporate social responsibility (CSR) and the new competition regulation in the Netherlands. The leading question in this case study is whether the new institutional arrangement has allowed for the possibility that reasonable exceptions can be made to the principle that inter-firm cooperation is prohibited. That is to say: does the new institutional arrangement allow for the possibility of `well organized but not `perfect’ markets’? The investigation focuses on the Netherlands, which constitutes an exemplary case as the Dutch are committed to both strengthen the competitiveness of the market and allow for exceptions on behalf of non-economic values such as CSR. The authors expect that the Dutch context will prevent a doctrinal and categorical rejecting of any good argument to make an exception to the rule that inter-firm cooperation must be prohibited.