A microfoundation for increasing returns in human capital accumulation and the under-participation trap

This paper considers educational investment, wages and hours of market work in an imperfectly competitive labour market with heterogeneous workers and home production. It investigates the degree to which there might be both underemployment in the labour market and underinvestment in education. A central insight is that the ex post participation decision of workers endogeneously generates increasing marginal returns to education. Although equilibrium implies underinvestment in education, optimal policy is not to subsidise education. Instead it is to subsidise labour market participation which we argue might be efficiently targeted as state-provided childcare support.     

ON THE EMERGENCE OF TOYBOYS: THE TIMING OF MARRIAGE WITH AGING AND UNCERTAIN CAREERS*

We explore how gender bias in career opportunities affects matching in a marriage market with search frictions and where an individual’s fitness decays with age. We document a “being left on the shelf” effect where young singles, who find the marriage market rapidly thins with age, rush into early partnership. Singles with stronger career opportunities, however, have a greater option value to defer marriage. More equal career opportunities for women (captured by greater schooling and better occupations) potentially explain the recent emergence of toyboy unions, in which the woman is at least 5 years older than her partner.     

THE EFFECTIVENESS OF INFORMATION SYSTEMS IN SUPPORTING THE EXTENDED SUPPLY CHAIN

The emergence of the Internet and new software applications has provided an opportunity for some companies to move towards an extended enterprise business model–one that enhances value across the total supply chain. The prime driver of this trend has been the implementation of Enterprise Resource Planning (ERP) systems. The research investigates whether traditional technology infrastructures, including information systems, have failed to deliver the level of support required to enable organizations to take advantage of the new extended business model. The research identifies a series of new and distinctive capabilities that influence the adoption of an extended business model. Supported by innovative technologies, leading companies are exploiting these distinctive capabilities to meet the challenge of the New Economy.     

Commentary. Stuck in low GEAR? Macroeconomic policy in South Africa, 1996-98

Despite its ideology while in opposition, once in power theANC government implemented an orthodox macroeconomic policywhich stressed deficit reduction and a tight monetary policy,combined with trade liberalisation. The stated purpose of thispackage (the Growth, Employment, and Redistribution programme,or GEAR) was to increase economic growth, with a 4.2% rate programmedfor 1996-2000. At mid-term of the programme, growth remainedfar below this target. The GEAR's lack of success cannot beexplained by unfavourable external factors; rather, the disappointingperformance seemed the result of fiscal contraction and excessivelyhigh interest rates.     

Jointness of growth determinants: Reply to comments by Rodney Strachan,Eduardo Ley and Mark F.J. Steel

This comment contrasts the jointness statistics proposed by Doppelhofer and Weeks ( 2009 ) with alternatives proposed by Strachan ( 2009 ) and Ley and Steel ( 2007 ). In contrast to the alternatives, our jointness statistic constitutes a formal test for dependence over the joint posterior distribution. The essential difference between our proposed measure and the alternatives is that our jointness measures uses the entire joint posterior distribution. We discuss differences in jointness, as well as inclusion and exclusion margins of the joint posterior distribution, and the impact on economic significance using the numerical examples given by Strachan ( 2009 ) and Ley and Steel ( 2009 ). Copyright © 2009 John Wiley & Sons, Ltd.     

Strategic Bargaining and Competitive Bidding in a Dynamic Market Equilibrium

This paper extends the bargaining and matching literature, such as Rubinstein and Wolinsky (1985), by considering a new matching process. We assume that a central information agency exists, such as real estate agencies in the housing market and employment agencies (or newspapers) in the labour market, which puts traders into direct contact with each other. With heterogeneity of trader preferences, equilibrium trade is characterized by existing traders on each side of the market trying to match with the flow of new traders on the other side (since existing traders have already sampled and rejected each other). Two procedures of trade co-exist, namely a strategic bilateral bargaining process and a competitive bidding process, depending on the number of potential matches a new trader obtains. We characterize the unique symmetric Markov perfect equilibrium to this stochastic trading game.     

Security Choice, Information Effects and Firm Characteristics: A Factor Analytic Approach

Abstract:   We examine the marginal choice between debt and equity securities using a factor analytic approach. This data reduction property eliminates the need to select the one best variable to proxy for a particular theoretical construct. Our results reinforce numerous existing findings using traditional methods and suggest both static tradeoff and asymmetric information based considerations are relevant in determining security choice. Two new results are presented related to the accounting liquidity of the firm. First, the preference for equity is increasing with liquidity as suggested by the window of opportunity hypothesis. Secondly, the market response to equity issuance announcements is inversely related to the liquidity of the firm. Profitability and growth measures support Jensen's (1986) agency cost of free cash flow as a potential explanation for the second finding.     

Organizing for disaster: Lessons from the military

Recent global events have highlighted the need for disaster planning by leaders in all types of organizations, civilian and military included. This article illustrates, from both academic and personal viewpoints, lessons learned during relief operations for the 2005 earthquake in Pakistan. Having participated in this effort, I detail guidance for designing resilient and robust organizational structures that can deal with the uncertainties of a disaster environment. For example, organizations frequently form temporary command centers to improve information flow in a crisis. Consequently, managers are advised to create temporary organizational structures with a common cognitive map to improve sense-making for employees during turbulent times. Other lessons presented include the establishment of a nuanced priority system for assessing potential courses of action, and the need to eliminate bureaucratic barriers to action to improve the speed of response when lives are at stake. This article concludes by pointing out that proper organizational structures need to be considered prior to disaster in order for organizations to be effective and efficient during the course of a mitigation effort.