Return migration, wage differentials, and the optimal migration duration

In simple static models, migration increases with the wage differential between host- and home-country. In a dynamic framework, and if migrations are temporary, the size of the migrant population in the host country depends also on the migration duration. This paper analyses optimal migration durations in a model which rationalises the decision of the migrant to return to his home country, despite persistently higher wages in the host country. The analysis shows that, if migrations are temporary, the optimal migration duration may decrease if the wage differential grows larger. Using micro data for Germany, the second part of the paper provides empirical evidence which is compatible with this hypothesis.     

Bidding for the future: signaling in auctions with an aftermarket

This paper considers auctions where bidders compete for an advantage in future strategic interactions. When bidders wish to exaggerate their private information, equilibrium bidding functions are biased upwards as bidders attempt to signal via the winning bid. Signaling is most prominent in second-price auctions where equilibrium bids are “above value.” In English and first-price auctions, signaling is less extreme since the winner incurs the cost of her signaling choice. The opportunity to signal lowers bidders’ payoffs and raises revenue. When bidders understate their private information, separating equilibria need not exist and the auction may not be efficient.     

Quantitative growth effects of subsidies in a search theoretic R&D model

Should government subsidize R&D and does it matter how these subsidies are allocated? We examine these questions in a dynamic model where R&D is described as sequential sampling from a distribution of new ideas. Successful discoveries affect future available resources and incentives for further R&D. Consequently, there may be under-investment in R&D. We study the effect of government interventions aimed at fostering growth through R&D. Calibrating the model with aggregate data from the Israeli business sector allows us to quantitatively compare two forms of support resembling those actually used to encourage R&D in the Israeli business sector: (i) an unrestricted subsidy that may be used at the recipients' discretion to finance R&D or other investments, (ii) a subsidy earmarked by the government for R&D activities only. While there is no theoretical way to determine which of the two subsidies will have a greater impact on search for new ideas and growth, we find that in the calibrated economy both subsidies have a significant but similar impact on the economy's output and TFP growth rates. Accordingly, in the case of the Israeli business sector, the incentives to conduct R&D were sufficiently strong, and no R&D-specific encouragement was needed. However, a sensitivity analysis reveals that for economies characterized by other parameter values this result may not be true. Correspondence to: B. Bental     

Commitment and choice of partner in a negotiation with a deadline

This paper analyses the effects of partially revocable endogenous commitments of a seller in a negotiation with a deadline. In particular, we examine when commitment is a source of strength, a source of inefficiency and when it does not affect the bargaining outcome at all. We show that when commitment possesses a minimum amount of irrevocability this crucially determines the bargaining outcome. In the bilateral bargaining case, commitment becomes a source of inefficiency since it causes a deadline effect. In the choice of partner framework, however, the deadline effect disappears and there is an immediate agreement and, moreover, commitment becomes a source of strength since it increases the seller's equilibrium payoff by triggering off competition between the buyers.     

Is Private R & D Spending Sensitive to Its Price? Empirical Evidence on Panel Data for Italy

In this paper empirical evidence is presented on theelasticity of private R & D spending on its price. Acensored panel-data regression model with random effectsis applied to a balanced panel of 726 Italian firms overthe 1992–1997 period. Implied estimates point out thatItalian firms' response to policy measures (including taxcredits), aimed at reducing the user cost of R & D capital,is likely to be substantial (1.50–1.77). Furthermore, wealso find that the elasticity of R & D spending is higherin recession (2.01) than in expansion (0.87).     

Can R&D-inducing green tariffs replace international environmental regulations?

This paper investigates the link between trade and environment by exploring the effects of green tariffs on innovation, location of production and the environment. It shows that tariffs levied on polluting goods could result in less world pollution than global harmonization of environmental standards by inducing more pollution-abatement R&D effort and generating lower unit emissions from production. Specifically, green tariffs reduce pollution by (1) shifting production to the region where environmental standards are respected, (2) inducing the firm in the clean country to engage in more abatement R&D by granting it a higher market power/share in its home market, (3) instigating green R&D investment by deterring delocation. When these outweigh the R&D-creating effect of environmental harmonization in the dirty country, green tariffs bring about a cleaner environment.     

Reserve price signaling

In a general auction model in which bidders’ signals are affiliated, we characterize the unique separating equilibrium in which the seller can use reserve prices to credibly signal her private information. When the buyers’ signals are independent, the optimal reserve price is shown to be increasing in the number of bidders under certain conditions. We also demonstrate that the probability that the item is sold at the reserve price can increase as the number of bidders increases, which indicates a more central role for reserve prices than perceived in the standard auction models.     

R＆D、R＆D溢出、内生增长和内生收敛

根据强调知识与技术创新、知识与技术溢出重要性的当代内生增长理论，本文建立了一个将R＆D和R＆D溢出与资本积累之间、R＆D和R＆D溢出与总产出增长之间直接关联起来的动态模型。面板数据协整检验实证分析结果表明R＆D和R＆D溢出与资本积累之间、R＆D和R＆D溢出与总产出增长之间分别存在显著的正面长期协整关联。进一步的分析表明，R＆D与资本积累之间、R＆D与总产出增长之间分别存在显著的长期双向格兰杰因果关系。由此观知，R＆D乃长期经济增长源泉之所在。另一方面，尽管资本积累或总产出增长并不格兰杰导致R＆D溢出，证据表明R＆D溢出格兰杰导致资本积累和总产出增长。这种由R＆D溢出到资本积累和总产出增长的单向格兰杰因果关系意味着尽管知识与技术的跨国传播并非必然发生。其实为世界经济增长的重要动力。     

Exploitation and time

This paper analyses exploitation and class formation in a dynamic context. An intertemporal model of a subsistence economy is set up and, among other results, it is proved that, in an interior equilibrium, Differential Ownership of (Scarce) Productive Assets is an inherent feature of a capitalist economy, while exploitation tends to disappear in the long run. Asset inequality is therefore proved to be a normatively secondary (though causally primary) wrong. It is also argued that these results raise several doubts about the possibility of providing robust micro-foundations to Marxian concepts by means of Walrasian general equilibrium models.     

Educational Attainment and Family Background

Abstract. This paper analyses the effect of aspects of family background, such as family income and parental education, on the educational attainment of persons born from 1967 to 1972. Family income is measured at different periods of a child's life to separate long-term versus short-term effects of family income on educational choices. We find that permanent income matters to a certain degree, and that family income when the child is 0–6 years old is an important explanatory variable for educational attainment later in a child's life. We find that short-term credit constraints have only a small effect on educational attainment. Long-term factors, such as permanent family income and parental education, are much more important for educational attainment than are short-term credit constraints. Public interventions to alleviate the effects of family background should thus also be targeted at a child's early years, the shaping period for the cognitive and non-cognitive skills important later in life.