Subsidy competition and imperfect labor markets

This study presents a two‐country model of subsidy competition for manufacturing firms under labor market imperfections. Because subsidies affect the distribution of firms, subsidies influence unemployment rates and welfare in both countries. We show that when labor market frictions are high, subsidy competition is beneficial, although subsidies under subsidy competition are inefficiently high. In the coordinated equilibrium, the supranational authority provides a subsidy to firms that equal the expected total search costs, which increases the number of firms relative to laissez‐faire and improves welfare relative to laissez‐faire and subsidy competition. Finally, we find that a rise in a country's labor market frictions raises the equilibrium subsidy rate, affects unemployment rates, and lowers welfare.     

Demographic change,human capital accumulation and R&D‐based growth

Employing an overlapping generations model of R&D‐based growth with endogenous fertility and education decisions, we examine how demographic changes induced by an increase in life expectancy influence the long‐run growth rate of the economy. We demonstrate that life expectancy, when relatively low (high), positively (negatively) affects economic growth. This paper also compares the growth implications of child education subsidy policies (i.e., policies for enhancing basic education) and child rearing subsidy policies (i.e., pro‐natal policies) and demonstrate that while the child education subsidies consistently foster economic growth, child rearing subsidies may negatively affect economic growth.     

Testing for negativity in a demand system: A Bayesian approach

The paper introduces Bayesian inference into a demand model. This allows us to test for the negativity condition of the substitution matrix which is difficult to handle directly in the traditional approach. To illustrate the Bayesian inference procedures, we estimate the Rotterdam model and test the demand properties using Japanese data. The empirical results show the importance of specifically considering negativity in demand analysis. First version received: September 1997/final version received: February 1998     

Long-term effects of labor market conditions on family formation for Japanese youth

This study aims to examine how each cohort’s family formation is affected by labor market conditions experienced in youth in Japan. Although the deterioration in youth employment opportunities has often been blamed for Japan’s declining fertility rate, the effect of slack labor market conditions on fertility is theoretically unclear. We estimate the effects of regional labor market conditions at entry to the labor market and contemporaneous conditions on fertility, controlling for nation-wide year effects and prefecture fixed effects, and find the following. First, high school-educated women who experienced a recession while entering the labor market are less likely to have children. In contrast, a recession rather increases fertility among college-educated women. When summed up, the aggregate impact of labor market conditions experienced in youth on fertility is weak. Second, the unemployment rate at entry to the labor market is positively correlated with the probability of having two or more children conditionally on having at least one child. Third, the contemporaneous unemployment rate is negatively correlated with marriage of women in the local labor market, although the correlation is weak and concentrated on the less educated group.     

Dynamic Patterns of Trade Imbalances with Recursive Preference

Based on the recursive preference approach, the dynamic and global properties of the two‐country open economy are examined with one good and inputs of labor and capital, with capital being freely traded internationally. First, by showing that the world's consumption increases (decreases) with an increase (decrease) in the world's capital, the global stability of the economy is obtained. Secondly, the nonmonotonicity of consumption between impatient country 1 and patient country 2 is established. Thirdly, with the Cobb–Douglas‐type production function and country 1's technological superiority, the dynamic trade patterns and the asset–debt position are derived.     

The Minimum Wage Law and Teenage Crime: Evidence From the US

What is the effect of minimum wage regulation on youth crime? Masanori Hashimoto, of Ohio State University, argues that in the USA the evidence suggests that the minimum wage causes both unemployment and teenage crime.     

Incentive Travel: A View from the Top

Meetings, incentives, conventions, and exhibitions are an important segment of the hospitality and tourism industry. The extant study focuses on the incentives or incentive travel. While incentive travel has existed for decades it is a relatively under-researched sub-field of hospitality. The goal of this article is to examine the current state of incentive travel, how it has changed over the past few years, and how it is likely to change in the future. Rather than examine every aspect of incentive travel, this research only looks at “buyers” of incentive travel rather than users or recipients and obtains data only from top-level corporate executives. Thus, the results are of the highest level and highest caliber. It was found that companies have been using incentive travel for decades and find it to be an effective employee motivator and as an incentive to sell product. It also builds morale and relationships.     

Using DEA to evaluate the state of society as measured by multiple social indicators

This paper presents an approach for discussing the state of society, which is measured by multiple social indicators, using data envelopment analysis (DEA). Replacing inputs and outputs in DEA with negative and positive social indicators respectively, we analyze the desirability of living in the 47 prefectures of Japan. This is also a proposal for the potential use of DEA in multi-dimensional evaluation analysis other than the standard DEA efficiency analysis. The results using eight social indicators identify 26 DEA desirable prefectures out of the 47 and present other useful knowledge and information. It is concluded that DEA, which can avoid uniform evaluation by an a priori weighting system, provides availability as a comprehensive evaluation tool different from traditional ones.     

Sunspots and Hopf bifurcations in continuous time endogenous growth models

First we treat a three-dimensional continuous time abstract stationary model that includes one predetermined variable and two non-predetermined variables. We construct stationary sunspot equilibria in this model under the following two alternative conditions: (i) a steady state has two stable roots and one unstable root; and (ii) A closed orbit has a two-dimensional manifold on which it is asymptotically stable. Next, we apply these results to the models due to Lucas and Romer that undergo Hopf bifurcations for some parameter values. We construct sunspot equilibria in these models.