The Incidence and Intensity of Employer Funded Training: Australian Evidence on the Impact of Flexible Work

The interaction between the growth of flexible forms of employment and employer funded training is important for understanding labour market performance. In particular, the idea of a trade‐off has been advanced to describe potential market failures in the employment of flexible workers. This study finds that evidence of a trade‐off is apparent in both the incidence and intensity of employer funded training. Flexible workers receive training that is 50–80% less intense than the workforce average. Casual workers – especially males – suffer more acutely from the trade‐off. This suggests that flexible production externalities may seriously reduce human capital formation in the workforce.     

The Effect Of Statistical Discrimination On Black–White Wage Inequality: Estimating A Model With Multiple Equilibria*

This article presents the structural estimation of the parameters of a statistical discrimination model. Although the model is capable of displaying multiple equilibria, an estimation strategy that identifies both the model parameters and the equilibrium selected by the economic agents is developed and empirically implemented. A comparison between the selected equilibria and the other potential equilibria reveals that the decline in wage inequality experienced in the U.S. economy cannot be attributed to changes in the equilibrium selection. Nonetheless, a counterfactual experiment shows that in a color‐blind society blacks' wage would have been on average more than 20% higher.     

How Useful Is the Genuine Savings Rate as a Sustainability Indicator for Regions within Countries? Australia and Queensland Compared

This article shows how macroeconomic indicators of sustainable development can be applied to the Queensland economy. While recognising the complex and contentious theoretical and practical issues in deriving the Genuine Savings Rate (GSR) to serve as such an indicator, we use the World Bank's methodology, which includes only mineral depletion, deforestation and carbon dioxide emissions as environmental terms, to estimate GSRs for Queensland for the period 1989 to 1999, and compare these to World Bank estimates of Australia's GSR for the same period. We find that Queensland has a higher rate of natural resource depletion and a lower GSR than the whole of Australia. We also examine how well the World Bank GSR performs as a ‘headline’ measure of overall sustainability, review criticisms of the GSR, and compare its implicit policy implications with those of net state savings, and of the GSR plus a suite of other indicators.     

Country Differences in Material Deprivation in Europe

This paper assesses to what extent differences in the characteristics of individuals (micro‐level perspective) and country‐specific factors (macro‐level perspective) can explain country differences with respect to material deprivation levels. Thus, our work aims to simultaneously consider the macro dimension and the predominantly individually‐oriented study field of material deprivation using multilevel techniques. We make use of the European Union Statistics on Income and Living Conditions. Our results show that country‐specific factors seem to be much more relevant than individual effects in explaining country differences in material deprivation. We estimate that the introduction of country‐specific factors reduces the proportion of total variance due to between‐country differences in deprivation by 72.7 percent, while individual‐level variables reduce this proportion by only 9.4 percent. We also show, through interaction variables, that the effect of sociodemographic characteristics can be shaped by institutional and structural factors, especially by the level of GDP.     

Severance Pay and Corporate Finance: Empirical Evidence from a Panel of Austrian and Italian Firms

This paper examines the empirical link between severance pay and corporate finance. Severance pay is an economic debt of the employer and hence should be taken into account by the market in its assessments of risk. Using a hand-collected dataset of accounting data from Italy and Austria we find there is only a limited relationship between severance pay and market risk indicators. This suggests that arguments that severance pay systems destroy corporate value may need to be reassessed.     

Analyse der Abwicklung von gesetzlichen Krankenkassen per sozialrechtlicher Schließung oder per Insolvenzverfahren

Private as well as statutory health insurers have various ways of insolvency. Although the Insolvency Act has been applied for statutory health insurance since 2010, these new options were not used up to now. Anyway, the legislators laid the preference out of closure. This article investigates how the priority of closure could be in contradiction to the applicability of the Insolvency Act. It is asked, whether the introduction of the insolvency capability of health insurance funds was rather to assimilate the frame conditions relating to pension promises than creating a real alternative. One reason could be, that the Insolvency Act is not only generally applicable in the liquidation of a health insurance fund, but potentially even the best alternative. The insolvency proceedings for example are advantageous for health insurance funds within the same group because the maximum load is split and lower than it would be by a closure by social law and in addition to that the PSV is obligatory. The results show, that the generally-accepted, not limited standard preference of closure as laid out by the legislators in § 171b (3) S. 2 SGB V, seems inexplicable. The paper draws parallels to private health insurance companies under Solvency II and opens up new perspectives for legislative measures.     

Downward wage rigidity and business cycle asymmetries

The growth rates of wages, unemployment and output of a number of OECD countries have a strongly skewed distribution. In this paper we analyze to what extent downward wage rigidities can explain these empirical business cycle asymmetries. To this aim, we introduce asymmetric wage adjustment costs in a New-Keynesian DSGE model with search and matching frictions in the labor market. Increasing wages is less costly than cutting them. It follows that wages increase relatively fast and thus limit vacancy posting and employment creation, but they decline more slowly, leading to a strong reduction in vacancies and employment. The presence of downward wage rigidities strongly improves the fit of the model to the observed skewness of labor market variables and the relative length of expansions and contractions in the output and the employment cycles. The asymmetry also explains the differing transmission of positive and negative monetary policy shocks from wages to inflation.     

A theory of risk disclosure

In this paper, we consider the price effects of risk disclosure. We develop a model in which investors are uncertain about the variance of a firm’s cash flows and the firm releases an imperfect signal regarding this variance. In our model, uncertainty over the riskiness of a firm’s cash flows leads to a variance uncertainty premium in its price. We demonstrate that risk disclosure decreases the firm’s cost of capital by reducing this premium and that the market response to risk disclosure is small when the expected level of risk is high. Moreover, we find that firms acquire and disclose more risk information when their cash flow risk is greater than expected. Finally, we demonstrate that in a multi-asset setting, only risk disclosure concerning systematic risks will impact the cost of capital.     

Cost-effectiveness of 3-month paliperidone treatment for chronic schizophrenia in Spain

Background: A 3-month long treatment of paliperidone palmitate (PP3M) has been introduced as an option for treating schizophrenia. Its cost-effectiveness in Spain has not been established.

Aims: To compare the costs and effects of PP3M compared with once-monthly paliperidone (PP1M) from the payer perspective in Spain.

Methods: This study used the recently published trial by Savitz et al. as a core model over 1 year. Additional data were derived from the literature. Costs in 2016 Euros were obtained from official lists and utilities from Osborne et al. The authors conducted both cost-utility and cost-effectiveness analyses. For the former, the incremental cost per quality-adjusted life-year (QALY) gained was calculated. For the latter, the outcomes were relapses and hospitalizations avoided. To assure the robustness of the analyses, a series of 1-way and probability sensitivity analyses were conducted.

Results: The expected cost was lower with PP3M (4,780€) compared with PP1M (5,244€). PP3M had the fewest relapses (0.080 vs 0.161), hospitalizations (0.034 v.s 0.065), and emergency room visits (0.045 v.s 0.096) and the most QALYs (0.677 v.s 0.625). In both cost-effectiveness and cost-utility analyses, PP3M dominated PP1M. Sensitivity analyses confirmed base case findings. For the primary analysis (cost-utility), PP3M dominated PP1M in 46.9% of 10,000 simulations and was cost-effective at a threshold of 30,000€/QALY gained.

Conclusions: PP3M dominated PP1M in all analyses and was, therefore, cost-effective for treating chronic relapsing schizophrenia in Spain. For patients who require long-acting therapy, PP3M appears to be a good alternative anti-psychotic treatment.     

Modeling default risk with support vector machines

Predicting default risk is important for firms and banks to operate successfully. There are many reasons to use nonlinear techniques for predicting bankruptcy from financial ratios. Here we propose the so-called Support Vector Machine (SVM) to predict the default risk of German firms. Our analysis is based on the Creditreform database. In all tests performed in this paper the nonlinear model classified by SVM exceeds the benchmark logit model, based on the same predictors, in terms of the performance metric, AR. The empirical evidence is in favor of the SVM for classification, especially in the linear non-separable case. The sensitivity investigation and a corresponding visualization tool reveal that the classifying ability of SVM appears to be superior over a wide range of SVM parameters. In terms of the empirical results obtained by SVM, the eight most important predictors related to bankruptcy for these German firms belong to the ratios of activity, profitability, liquidity, leverage and the percentage of incremental inventories. Some of the financial ratios selected by the SVM model are new because they have a strong nonlinear dependence on the default risk but a weak linear dependence that therefore cannot be captured by the usual linear models such as the DA and logit models.