Labour Market Structure and Inequality: A Comparison of Italy and the U.S.

Markets with rigid labour regulations and centralized wage setting are often thought to be inefficient but egalitarian. Using a model of off-and on-the-job search and event-history, individual-level data for Italy and the U.S., we show that while the cross-sectional wage distributions of young Italian males are much more compressed than are the comparable distributions for young white U.S. males, the estimated search model implies that the distribution of lifetime welfare is no more disperse in the U.S. than it is in Italy. Our model implies that the high frequency of movements between labour market states leads to both a relatively equitable distribution of "long run" welfare in the U.S. and a high level of cross-sectional inequality.     

The rank and model specification of demand systems: an empirical analysis using United States microdata

A rank-three demand system is estimated with United States Consumer Expenditure Survey microdata. A unique price data set is also used, which permits the analysis of effects of systematic errors in price variables. It is found that errors in price variables bias test results for the rank-three hypothesis, in particular towards rejection. Other test results are affected to a lesser extent. Estimating smaller systems of demand equations, even when conditioning on excluded goods, yields significantly different results. Another important conclusion is that model specification is statistically significantly different for households of varying family sizes and housing tenure statuses. JEL Classifications: C31, D12.
Le rang et la spécification du modèle des systèmes de demande: une analyse empirique utilisant des microdonnées américaines. On calibre un système de demande de rang trois à l'aide de microdonnées américaines tirées de la United States Consumer Expenditures Survey. Un ensemble unique de prix est utilisé afin de permettre l'analyse des effets d'erreurs systématiques dans les variables de prix. Il appert que les erreurs dans les variables de prix distorsionnent les résultats du test de l'hypothèse de rang trois en faveur d'un rejet. D'autres résultats de tests sont affectés à un moindre degré. Si l'on calibre de plus petits systèmes d'équations de demande, même en posant des conditions sur des biens exclus, des résultats qui diffèrent de manière significative s'ensuivent. Une autre conclusion importante est que la spécification du modèle est différente de manière statistiquement significative pour les ménages selon la taille de la famille et le statut domiciliaire.     

Probable evolution of artificial-intelligence-based educational devices

The potential capabilities of artificial-intelligence-based educational devices are briefly described, and a technical forecast of an advanced instructional work station's attributes is presented. Forces driving implementation are delineated, and likely long-term consequences of adoption are assessed. The barriers that impede this evolution are discussed, and policy options are analyzed.     

Income Redistribution with Well-Informed Local Governments

This paper examines the problem of redistributing incomeacross jurisdictions and to mobile workers within jurisdictionswhen local governments have better information than the centralgovernment about local production conditions. Under the centralgovernments optimal policy, the subsidies or taxes that localgovernments provide to mobile workers normally depend on whetherthese governments are net recipients or net donors of interjurisdictionalincome transfers. Moreover, the public-input decisions of somelocal governments are distorted. The analysis demonstrates thatit may not be desirable to harmonize social policies across jurisdictions,even when the beneficiaries are quite mobile.     

Mill's ‘proof’ of Utility and the composition of causes

John Stuart Mill proposed that all policy precepts, be they in the areas of morality or prudence or aesthetics, are all subordinate to the precepts of the Art of Life. The value which he assumes in defining the Art of Life is the Principle of Utility. This principle, being normative rather than fact, can admit of no proof based solely on deductive inference. Yet Mill proposed considerations that he believed capable of rationally persuading one to accept his principle as the basic principle for the Art of Life. This paper aims to evaluate this argument. In particular, it tries to show that a crucial step, often thought to be a logical howler, is not to be so simply dismissed. It is shown that if one accepts certain theses from Mill's philosophy of science and of social science, concerning the composition of causes, then the crucial step is fully justified. It is also suggested that these theses of Mill's philosophy of science are mistaken. So Mill's proof of utility is, after all, unsound, but the reconstruction proposed shows it to be much more plausible and much more philosophically interesting than is often thought.     

Foreign-currency transactions and the recovery of German industry in the aftermath of the First World War: the case of Schering AG

While historians have for a long time recognized the importance of the First World War to the general flow of history, business economists do not fully appreciate the impact of the war on commercial relationships. The First World War transformed the political, economic, and social context, in which business was done, forcing companies to develop new strategies and activities, some of which were almost unimaginable before August 1914. This article focuses on one aspect of doing business: foreign exchange management. It argues that Schering AG and its parent, like many German companies after the First World War, were obliged to refocus their activities around their foreign exchange exposures and that the management of foreign exchange issues contributed to a much tighter relationship between businesses, government, and business associations than had existed before the war and for which some aspects of Germany's system of corporate control were not well adapted to handle.     

The Association Between Activity-Based Costing and Manufacturing Performance

This study examines the association between activity-based costing and manufacturing performance. Results using a cross-sectional sample of manufacturing plants indicates that extensive ABC use is associated with higher quality levels and greater improvements in cycle time and quality, and is indirectly associated with manufacturing cost reductions through quality and cycle time improvements. However, on average, extensive ABC use has no significant association with return on assets. Instead, we find weak evidence that the association between ABC and accounting profitability is contingent on the plant's operational characteristics.     

Incentive Fees and Mutual Funds

This paper examines the effect of incentive fees on the behavior of mutual fund managers. Funds with incentive fees exhibit positive stock selection ability, but a beta less than one results in funds not earning positive fees. From an investor's perspective, positive alphas plus lower expense ratios make incentive-fee funds attractive. However, incentive-fee funds take on more risk than non-incentive-fee funds, and they increase risk after a period of poor performance. Incentive fees are useful marketing tools, since more new cash flows go into incentive-fee funds than into non-incentive-fee funds, ceteris paribus.