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.     

Technology Gap Matters on Spillover

This paper develops an oligopoly model with endogenous technology spillovers through foreign direct investment (FDI). The foreign entrant brings a superior technology and therefore may spend resources to prevent spillovers of its technology to the home firm. The home firm has an incentive to spend resources to gain these spillovers. After firms strategically choose their expenditures to influence technology spillovers, they compete in a Cournot–Nash quantity game. This study provides theoretical insight on the positive and negative empirical spillover results of FDI on productivity of local firms. Up to a critical bound, the larger the initial technology gap between the foreign and home firms, the more the home firm spends to gain spillovers. Past that boundary, the home firm decreases spending. As a result, the home firm's profits from spillovers vary, but larger technology gaps engender greater net profit losses from FDI.     

Financial repression and external openness in an endogenous growth model

An endogenous growth model has been developed that extends Sidrauski (1967), Roubini and Sala-i-Martin (1992,1995) and Lucas (1988) by combining financial development, human capital investment, and external openness. Financial development and trade liberalization are shown to increase the economic growth rate by increasing the marginal benefits of human capital investment. Expansionary governments are, however, provided with an incentive to increase the money supply growth rate, to repress the financial sector, to close its economy, and to impose a high proportional income tax rate.     

Regional patterns of employment changes of less-educated men in Japan: 1990–2007

We investigate regional patterns in employment of less-educated men in Japan from 1990 to 2007. The employment–population ratio of junior high school graduate men (9 years of compulsory schooling) decreased from 1990 to 2007. Wage growth across regions had a unique pattern during this period: it was high in the low-wage regions in the 1990s but high in the high-wage regions in the 2000s. We use these regional variations in wage growth to identify the labor supply elasticity of less-educated men. The estimated elasticity of the employment-to-population ratio of junior high school graduate men is around 0.15.     

Precautionary saving under liquidity constraints: Evidence from rural Pakistan

This paper investigates precautionary saving under liquidity constraints in Pakistan using household panel data. In particular, while it estimates Kimball's [Kimball, M.S. Precautionary saving in the small and in the large. Econometrica 1990; 58; 53–73.] prudence parameter based on a framework that is similar to Dynan [Dynan, K.E. How prudent are consumers? Journal of Political Economy 1993; 101; 1104–1113.], this study deviates from the framework by explicitly considering liquidity constraints, as in Zeldes [Zeldes, S.P. Consumption and liquidity constraints: an empirical investigation. Journal of Political Economy 1989; 97; 305–346.]. By doing so, this paper attempts to differentiate the standard precautionary saving caused by uncertainty from that caused by liquidity constraints. Furthermore, endogenous liquidity constraints are used in order to resolve issues of selection biases. We find substantial evidence of the presence of precautionary saving in Pakistan. More specifically, the estimated prudence is significantly higher for liquidity-constrained households as compared with unconstrained ones. The finding suggests that the precautionary saving motives appear stronger when households see that their access to credit markets is limited.     

A Comparison of Wage Structures in the United States and Japan: Results from Cell Mean Regressions

This paper discusses three issues in estimating wage regressions by using the aggregated data from the Japanese Basic Survey of Wage Structure (BSWS). The issues include: (1) the order of taking averages and logs, (2) the usage of differently aggregated tables in the BSWS, (3) the treatment of the bonus variable for workers who have just joined a firm. To address them, I present regression results from the US Current Population Survey (CPS). I find that using differently aggregated tables sometimes affects the estimates significantly. I also present the results from wage regressions from the differently aggregated BSWS data.
JEL Classification Number: J30.     

Firms' open innovation policies,laboratories' external collaborations,and laboratories' R&D performance

The value of the open innovation approach is now widely recognized, and the practice has been extensively researched, but still very little is known about the relative impact of firm‐level and laboratory‐level open innovation policies and practices on R&D performance. This study attempts to measure that impact by analyzing a sample of 203 laboratories of Japanese firms located in Japan. It examines simultaneously the effects of firm‐level open innovation policy and laboratory‐level external collaborations on laboratory R&D performance. The study aims to go beyond a general understanding of the importance of open innovation; it shows how an open innovation policy can have a positive and significant effect on collaborations between a laboratory and local universities or business organizations. The results also show how an open innovation policy can contribute to the laboratory's R&D performance by facilitating external collaborations by the laboratories. It demonstrates how these factors affect R&D performance in different ways, depending on the type of R&D tasks. Our findings suggest several theoretical and practical implications in the field of R&D management.     

Government industrial policy for a healthy world economy

The Japanese concept of “industrial policy” is the subject of this presentation. The central role of the Ministry of International Trade and Industry in the formulation of industrial policy for Japan over the past 35 years is reviewed. Several strategic phases are identified: 1945–1952, reconstruction of the economy; 1952–1960, comparative advantage strategy in capital-intensive industries; 1960–1973, transition to an open economy; 1973 to present, positive support policy for promising industries, e.g., subsidies for high-tech sectors and adjustive policy for declining industries (e.g., disposing of excess capacity in the textile sector). The advantages of National industrial policies for the world economy are indicated.     

Socioeconomic Changes and the Decline in Poverty: A View from Three Villages in the Philippines, 1985–1997*

The present paper examines socioeconomic changes and decline in rural poverty using a panel dataset collected in the Philippine villages in 1985, 1993 and 1997. The most important finding is the transition of the rural economy away from a regime of low nonfarm income to a regime of high nonfarm income accompanied by a marked decline in poverty. The relative contribution of access to land on rural poverty reduction declined, whereas the relative contribution of human capital, more importantly represented by college schooling, increased over time.