Explaining post-1964 earnings gains by black women: Race or sex?

This article examines the earnings position of black females relative to white males for the post-1964 period. It finds that over 70 percent of the 1965–78 growth in black female relative median earnings remains after controlling for previous trends, education, and cyclical and labor supply changes. For full-time, year-round workers, the post-1964 trend independently implies a growth rate about 50 percent higher than that actually observed. Approximately one-half of the gains are attributable to race and the rest to the interaction of race and sex. The study finds no support for the censoring hypothesis that allocates a substantial portion of the growth to labor supply decreases. While it suggests occupational mobility to be nonextraneous in the earnings equation, the author argues that the black female now faces a mobility constraint more formidable than previously.     

Corporate Multinationality and Acquirer Returns

This paper provides evidence on how corporate multinationality from the perspective of acquiring firms relates to M&A returns. Using multivariate regressions and a large dataset of over 6,000 M&As (both cross-border and domestic) by UK firms during 1987 to 2014, the paper finds multinationality to be associated with significantly higher short-run announcement returns and long-run operating performance. While the multinationality premium (higher M&A returns for multinationals) persists over time, it seems to be restricted to firms with superior resource/managerial capabilities and minimal agency problems. Finally, the multinationality premium appears to be driven by foreign acquisitions into advanced economies. The results are robust to correcting for sample selection bias and controlling for several firm and deal characteristics, as well as accounting for firm-, industry-, and year-fixed effects. Collectively, the findings imply that multinationality could be a source of value creation for acquiring firms, particularly in foreign acquisitions, which tend to be complex, and, thereby, require superior managerial capabilities to succeed.     

The External Debt‐Servicing Constraint and Public‐Expenditure Composition in Sub‐Saharan Africa

Abstract: In the light of the current global financial and economic crises, how would governments in sub‐Saharan Africa (SSA) allocate their budgets across sectors in response to a binding debt‐servicing constraint? Within a framework of public‐expenditure choice, the present paper estimates constraint‐consistent debt‐service ratios and employs them in a Seemingly Unrelated Regression involving a five‐year panel for up to 35 African countries over 1975–94, a period preceding the Highly Indebted Poor Countries (HIPC) initiatives. While observed debt service is found to be a poor predictor of expenditure allocation, constraining debt servicing shifts spending away from the social sector, with similar impacts on education and health. The implied partial elasticity of the sector's expenditure share with respect to debt is estimated at 1.5, the highest responsiveness by far among all the explanatory variables considered, including external aid. Thus, if the social sector is to be protected, sufficient debt relief for SSA countries should be pursued.     

Labor force participation of black and white married women: Evidence from urban labor markets

The study theoretically argues that differential economic conditions constitute an important rationale for structural differences in labor force participation (LFP) between black and white married women. Empirical evidence based on 1980 census data for metropolitan statistical areas provides support for the concomitant hypotheses. Not only is the LFP propensity for black wives larger, but also it is relatively insensitive to the arguments of the LFP function. Thus policies designed to influence the LFP of these two racial groups must internalize the differential economic conditions between them.     

The Effect of Income Distribution on the Ability of Growth to Reduce Poverty: Evidence from Rural and Urban African Economies

The present study examines the extent to which income distribution affects the ability of economic growth to reduce poverty, based on 1990s data for a sample of rural and urban sectors of African economies. Using the basic‐needs approach, an analysis‐of‐covariance model is derived and estimated, with the headcount, gap, and squared gap poverty ratios serving as the respective dependent variables, and the Gini coefficient and PPP‐adjusted incomes as explanatory variables. The study finds that the responsiveness of poverty to income growth is a decreasing function of inequality, albeit at varying rates for the three poverty measures: lowest for the headcount, followed by the gap and fastest for the squared gap. The ranges for the income elasticity in the sample are estimated at: 0.02–0.68, 0.11–1.05, and 0.10–1.35, respectively, for these poverty measures. Furthermore while, on average, the responsiveness of poverty to income growth appears to be the same between the rural and urban sectors, there are substantial sectoral differences across countries. The results suggest the need for country‐specific emphases on growth relative to inequality.     

Implications of the External Debt-servicing Constraint for Public Health Expenditure in Sub-Saharan Africa

The paper explores the implications of the external debt-servicing constraint for public health spending in sub-Saharan Africa (SSA), where the health challenges have been great and debt servicing particularly burdensome. Using 1975–94 5-year panel data for 35 African countries, the study finds that although actual debt servicing has little impact, a binding debt-servicing constraint that reflects the debt burden would shift expenditure away from health. Although increases in external aid and constraints on the government executive tend to divert spending in favour of health, the debt-burden effect is dominant. The paper also uncovers an upward trend in public health spending, a result that appears to contradict the popular belief that the structural adjustment programmes undertaken in many SSA countries as of the 1980s may have reduced government expenditure on health.     

Transforming Economic Growth to Human Development in Sub-Saharan Africa: The Role of Elite Political Instability

In the light of the increasing attention on human development (HD) as well as the importance of political instability (PI) in economic performance, this paper examines the role of PI in the transformation of economic growth to HD. It finds that élite PI—the frequency of coups d'état in sub-Saharan Africa—adversely affected the transformation of economic growth to HD, measured as the change in an index of life expectancy and literacy, between 1970 and 1985. Coupled with an additional indirect negative effect on GDP growth, élite PI is found to have engendered a significant adverse impact on HD.     

Capital structure,product market competition and firm performance: Evidence from South Africa

This paper investigates the relationship between capital structure and firm performance, paying particular attention to the degree of industry competition. The paper applies a novel measure of competition, the Boone indicator, to the leverage-performance relationship. Using panel data consisting of 257 South African firms over the period 1998–2009, this paper examines the effect of capital structure on firm performance and investigates the extent to which the relationship depends on the level of product market competition. The results suggest that financial leverage has a positive and significant effect on firm performance. It is also found that product market competition enhances the performance effect of leverage. The results are robust to alternative measures of competition and leverage.     

Will African Agriculture Survive Climate Change?

Measurement of the likely magnitude of the economic impact ofclimate change on African agriculture has been a challenge.Using data from a survey of more than 9,000 farmers across 11African countries, a cross-sectional approach estimates howfarm net revenues are affected by climate change compared withcurrent mean temperature. Revenues fall with warming for drylandcrops (temperature elasticity of –1.9) and livestock (–5.4),whereas revenues rise for irrigated crops (elasticity of 0.5),which are located in relatively cool parts of Africa and arebuffered by irrigation from the effects of warming. At first,warming has little net aggregate effect as the gains for irrigatedcrops offset the losses for dryland crops and livestock. Warming,however, will likely reduce dryland farm income immedia-tely.The final effects will also depend on changes in precipitation,because revenues from all farm types increase with precipitation.Because irrigated farms are less sensitive to climate, wherewater is available, irrigation is a practical adaptation toclimate change in Africa.