an economic theory of self control the concept of self control is incorporated in a theory of individual intertemporal choice by modeling the individual as an organization the individual at a point in time is assumed to be both a farsighted planner and a myopic doer the resulting conflict is seen to be fundamentally similar to the agency conflict between the owners and managers of a firm both individuals and firms use the same techniques to mitigate the problems which the conflicts create this paper stresses the implications of this agency model and discusses as applications the effect of pensions on saving saving and the timing of income flows and individual discount rates

employer matching and 401 k saving evidence from the health and retirement study abstract employer matching of employee 401 k contributions is often touted as a powerful incentive to save for retirement and is a key component in pension plan design in the united states using detailed administrative contribution earnings and pension plan data from the health and retirement study this analysis formulates a life cycle consistent econometric specification of 401 k saving and estimates the determinants of saving accounting for non linearities in the household budget set induced by matching the participation estimates indicate that an increase in the match rate by 25 cents per dollar of employee contribution raises 401 k participation by 5 percentage points the parametric and semi parametric estimates for saving indicate that an increase in the match rate by 25 cents per dollar of employee contribution raises 401 k saving by 365 in 1991 dollars overall the analysis reveals that the 401 k saving response to matching is quite inelastic and hence matching is a rather poor policy instrument with which to raise retirement saving

the effects of human resource management practices on productivity a study of steel finishing lines the authors investigate the productivity effects of innovative employment practices using data from a sample of thirty six homogeneous steel production lines owned by seventeen companies the productivity regressions demonstrate that lines using a set of innovative work practices which include incentive pay teams flexible job assignments employment security and training achieve substantially higher levels of productivity than do lines with the more traditional approach which includes narrow job definitions strict work rules and hourly pay with close supervision their results are consistent with recent theoretical models which stress the importance of complementarities among work practices

precautionary saving and endogenous labor supply with and without intertemporal expected utility we analyze precautionary saving behavior in a framework with labor and nonlabor income risks an endogenous supply of labor and a representation of preferences that disentangles attitudes towards risk attitudes towards intertemporal substitution and ordinal preferences for consumption and leisure this preference structure allows us to disentangle and to describe in an intuitive way the different forces that determine precautionary saving in the small and in the large

technological learning environments and organizational practices cross sectoral evidence from britain this study explores the co occurrence of technological and organizational learning processes by analyzing the adoption and use of four types of human resource management hrm practices rewarding problem solving top down management and decentralization in the 1990s across different technological learning environments using a sample of british workplaces we show that the level of use of diverse hrm practices aimed at creating different learning incentives is persistently heterogeneous across technological learning environments suggesting that hrm forms an essential part of the technological learning structure of firms copyright 2011 the author 2011 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

hrm practices r d expenditure and innovative investment evidence from the uk s 1990 workplace industrial relations survey wirs uk labour flexibility is often portrayed as necessary for an innovative economy using evidence from the uk s 1990 workplace industrial relations survey we investigate the relationships between firms human resource management practices and innovation our results suggest that low road hrm practices short term contracts etc are negatively correlated with investment in r d and new technology high road work practices high commitment organization and other systems are positively correlated with investment in r d and new technology copyright 1999 by oxford university press

saving incentives for low and middle income families evidence from a field experiment with h r block this paper analyzes the effects of a large randomized field experiment carried out with h r block offering matching incentives for ira contributions at the time of tax preparation about 15 000 h r block clients in 60 offices in predominantly low and middle income neighborhoods in st louis were randomly offered a 20 percent match on ira contributions a 50 percent match or no match the control group brookings institute

formative experiences and portfolio choice evidence from the finnish great depression we trace the impact of formative experiences on portfolio choice plausibly exogenous variation in workers exposure to a depression allows us to identify the effects and a new estimation approach makes addressing wealth and income effects possible we find that adversely affected workers are less likely to invest in risky assets this result is robust to a number of control variables and it holds for individuals whose income employment and wealth were unaffected the effects travel through social networks individuals whose neighbors and family members experienced adverse circumstances also avoid risky investments

in search of inclusion informal sector participation in a voluntary defined contribution pension system abstractthis paper examines who contributes and who persists in contributing in a national voluntary defined contributory pension programme where the government provides the incentive of matching contributions of a minimum amount usd 16 the paper uses proprietary data from a financial services firm where 12 per cent of customers 37 000 individuals chose to participate in this programme the evidence shows that only about 50 per cent of contributors reach the minimum amount for the co contribution but that participants persist in contributing even if they failed to contribute the minimum amount in a given year while this paper does not provide causal estimates it does present evidence of considerable interest among the informal sector in a state run voluntary pension programme in an emerging market where access to formal finance is otherwise poor

pension plan characteristics and framing effects in employee savings behavior abstract defined contribution pensions in many postsecondary institutions are funded by a combination of an employer premium and a mandatory employee premium individuals can also contribute to a supplemental savings account holding constant total compensation standard reasoning suggests that supplemental savings should depend negatively on the sum of the employer and employee pension contributions contrarily we find that the supplementary savings of professors are significantly more sensitive to employee contributions than to employer contributions this asymmetry is consistent with different marginal propensities to save out of the salary and pension components of compensation nevertheless impacts on lifetime utility are relatively modest

equilibrium in securities markets with heterogeneous investors and unspanned income risk abstract in a finite time horizon incomplete market continuous time setting with dividends and investor incomes governed by arithmetic brownian motions we derive closed form solutions for the equilibrium risk free rate and stock price for an economy with finitely many heterogeneous cara investors and unspanned income risk in equilibrium the sharpe ratio is the same as in an otherwise identical complete market economy whereas the risk free rate is lower and consequently the stock price is higher the reduction in the risk free rate is highest when the more risk averse investors face the largest unspanned income risk

technological accumulation diversification and organisation in uk companies 1945 1983 a survey of more than 4 000 significant innovations and innovating firms in the uk from 1945 1983 shows that the scope and organisation of technological activities vary greatly as functions of firms principal activities and size 1 technological opportunities and threats are greatest in firms in chemicals and engineering opportunities in such science based and specialist supplier firms in general emerge horizontally in related product markets and downstream in user sectors in scale intensive e g steel vehicles and supplier dominated e g printing construction firms opportunities tend to be upstream in related production technologies breakthrough innovations in science based firms also induce clusters of technological opportunities upstream for suppliers horizontally for partners and downstream for users their effective exploitation requires diversity of firms technological activities greater than that strictly required for current output 2 the nature of technological opportunities and of organisation for their exploitation also varies with firm size firms with fewer than 1 000 employees have major opportunities with specialised strategies in mechanical engineering and instruments the prevalence of broad front technological strategies and of divisionalisation increases sharply with firm size together with dependence on formal r and d activities the size of innovating divisions has diminished sharply over the period divisionalisation improves the goodness of fit between the core business of innovating divisions and the innovations themselves but 40 have remained consistently outside the core business of divisions 3 these findings help identify the key tasks of technological strategy in firms in different industries and of different sizes thus in large firms divisionalisation can create the small size of unit conducive to effective implementation but it cannot absolve central management from the continuous task of matching technological opportunities with organisational forms and boundaries

why did male pension coverage decline in the 1980s this analysis of 1979 and 1988 may current population survey data suggests explanations for why male pension coverage declined during the 1980s and why the decline was particularly pronounced among young workers during the 1980s employment shifted toward jobs with lower pension coverage and this shift was more pronounced among young workers than among older workers more important than the reduction in the percentage of workers offered pensions however was reduced participation in pension plans one factor contributing importantly to declining participation rates was the growing share of pensions that were 401 k plans under such plans participation is more voluntary than it is under other plans and young workers are more likely than older workers to decline to participate

on the optimality of activist policies with a less informed government abstract i investigate whether a government should lead an activist policy in a rigorous utility maximizing framework under rational expectations the economy is one with preset wages and is subject to both demand and supply shocks it is assumed that the government can never act on the basis of information superior to that of the private sector moreover wages are set after government policy has been carried out we find that the optimal policy is nevertheless an activist countercyclical one it has the remarkable property that although the economy is hit each period by stochastic shocks after wages have been preset this optimal policy will nevertheless succeed in keeping the economy on a full employment track

pensions and wages an hedonic price theory approach this paper examines whether a trade off exists between the level of pension benefits and wages the 1983 survey of consumer finance is used to match detailed information on pension plans to worker characteristics for a random sample of the population the pension wage tradeoff is estimated using both a contractual model of the labor market and the spot market model used in previous studies the results indicate a large negative tradeoff in the contractual model but only a negligible tradeoff in the spot market model results from estimating the underlying structural equations for pensions are also presented copyright 1992 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

information decisions and productivity on board computers and capacity utilization in trucking productivity reflects not only how efficiently inputs are transformed into outputs but also how well information is applied to resource allocation decisions this paper examines how information technology has affected capacity utilization in the trucking industry estimates for 1997 indicate that advanced on board computers obcs have increased capacity utilization among adopting trucks by 13 percent these increases are higher than for 1992 suggesting lags in the returns to adoption and are highly skewed across hauls the 1997 estimates imply that obcs have enabled 3 percent higher capacity utilization in the industry which translates to billions of dollars of annual benefits jel d24 l92 o33 o47

decentralization hierarchies and incentives a mechanism design perspective separation of ownership from management multidivisional firm organizations delegation of production decisions to worker teams delegation of pricing and advertising decisions to retail franchisers reliance on intermediaries in trade or finance and distribution of regulatory authority across different agencies represent examples of organizations that delegate and distribute decision making authority instead of centralizing it this paper reviews literature on costs and benefits of delegated decision making in hierarchical organizations or contracting networks with regard to problems of incentives and coordination it starts by describing incentive and coordination costs of delegation in simple canonical examples of hierarchies where both information and incentives of different decisionmakers differ one class of models pertain to contexts where the classical revelation principle applies i e where costs of contractual complexity information processing or communication are absent agents do not collude and the mechanism designer can commit to the mechanism delegation may conceivably entail a loss of control and coordination arising from the divergence of information and incentives sufficient and necessary conditions for this loss to be mitigated entirely include risk neutrality top down contracting and monitoring of transfers or production assignments between subordinates the next class of models introduces communication costs that restrict the performance of centralized arrangements relative to delegation owing to a resulting loss of flexibility which has to be traded off against possible control losses of delegation finally consequences of collusion among agents is discussed which typically enlarge the range of circumstances under which delegation can attain optimal second best outcomes the paper concludes with a discussion of the relevance of this theoretical literature to recently emerging empirical studies of industrial organizations where delegated decision making plays an important role adoption of innovative human resource management practices new information technologies and retail franchising

opportunities incentives and the collective patterns of technological change in a few pages in the introductory article for this debate vernon ruttan succeeds in the unlikely task of flagging many issues at the core of the economic interpretation of technological change and by doing so he implicitly addresses also a few sensitive spots for the economic discipline at large here i will not attempt to provide any thorough view of what i consider the achievements and limitations of the current state of the art see however freeman i 994 for a critical survey which i largely share rather i shall put forward a series of remarks which hopefully could be seen as part of a much wider and still largely unexplored research programme as a premise just note that some form of attention to technology related phenomena has spread over the last 20 30 years from small enclaves of heterodox economists and economic historians to become an important concern even for quite mainstream theories of e g the firm industrial organisation macroeconomics trade growth etc from patent races all the way to new trade and new growth theories and even real business cycle macro models technical change has drawn a consideration which is less by default than it was say in robert solow s original growth models orjoe bain s barriers to entry views on industrial structures and in parallel empirical studies at the levels of specific technologies firms sectors and countries have boomed for overviews cf dosi i988 nelson i993 freeman i982 i 994 cohen i 995 and granstrand i 994 among others so at least in this sense those decreasing returns to the economics of technical change suggested by ruttan do not seem to have set in however ruttan s paper raises also substantive questions about the relative success of three interpretative perspectives which he calls induced evolutionary and path dependent in the following i shall argue that an evolutionary perspective broadly defined can easily accommodate both inducement effects and path dependent patterns of technical change let me start from what i consider the major building blocks of an

intergenerational risk sharing and risk taking of a pension fund abstract by using their financial reserves efficiently pension funds can smooth shocks on their asset returns and can thus facilitate intergenerational risk sharing in addition to the primary benefit of improved time diversification this form of risk allocation affords the additional benefit of allowing these funds to take better advantage of the equity premium which also favors the consumers in this paper our aim is twofold first we characterize the socially efficient policy rules of a collective pension plan in terms of portfolio management capital payments to retirees and dividend payments to shareholders we examine both the first best rules and the second best rules where in the latter case the fund is constrained by a solvency constraint and by a guaranteed minimum return to workers contributions second we measure the social surplus of the system compared to a situation in which each generation would save and invest in isolation for its own retirement we estimate that the certainty equivalent return of the pension saving scheme goes from 3 23 per year to 3 76 when intergenerational risk sharing is introduced one of the main results of the paper is that better intergenerational risk sharing does not reduce the risk born by each generation rather it increases the expected return to the workers contributions

portfolio choice with non expected utility in continuous time non expected utility preferences which can distinguish intertemporal substitution from attitudes towards risk are extended to continuous time the consumption savings and portfolio problem is solved for constant intertemporal elasticity of substitution and constant relative risk aversion

change and complementarities in the new competitive landscape a european panel study 1992 1996 this paper addresses three weaknesses in the literature on new organizational forms the limited mapping of the extent of contemporary organizational change confusion about how contemporary changes link together and the lack of systematic testing of the performance consequences of this kind of change drawing on a large scale survey of organizational innovation in european firms the paper finds widespread but not revolutionary change in terms of organization structure processes and boundaries using the economics notion of complementarities the paper develops contingency and configurational approaches to suggest that organizational innovations will tend to cluster in particular ways and that the performance benefits of these innovations depend on their clustering complementarities in performance are explored from both inductive and deductive perspectives consistent with the expectations of complementarity theory high performing firms appeared to be innovating more and differently than low performing firms again consistent with complementarities piecemeal changes with the exception of it were found to deliver little performance benefit while exploitation of the full set of innovations was associated with high performance though few european firms were found to exploit the complementarities of new organizational practices those that did enjoyed high performance premia

sectoral patterns of technical change towards a taxonomy and a theory abstract the purpose of the paper is to describe and explain sectoral patterns of technical change as revealed by data on about 2000 significant innovations in britain since 1945 most technological knowledge turns out not to be information that is generally applicable and easily reproducible but specific to firms and applications cumulative in development and varied amongst sectors in source and direction innovating firms principally in electronics and chemicals are relatively big and they develop innovations over a wide range of specific product groups within their principal sector but relatively few outside firms principally in mechanical and instrument engineering are relatively small and specialised and they exist in symbiosis with large firms in scale intensive sectors like metal manufacture and vehicles who make a significant contribution to their own process technology in textile firms on the other hand most process innovations come from suppliers these characteristics and variations can be classified in a three part taxonomy based on firms 1 supplier dominated 2 production intensive 3 science based they can be explained by sources of technology requirements of users and possibilities for appropriation this explanation has implications for our understanding of the sources and directions of technical change firms diversification behaviour the dynamic relationship between technology and industrial structure and the formation of technological skills and advantages at the level of the firm the region and the country

equilibrium consumption and precautionary savings in a stochastically growing economy abstract the derivation of a closed form solution for consumption based on the constant elasticity utility function in the presence of stochastic labor income has proved to be intractable this paper derives a closed form equilibrium relationship between consumption and wealth one that holds along a balanced growth path in a stochastic romer endogenous growth model by employing more general recursive preferences we can disentangle the coefficient of relative risk aversion from the intertemporal elasticity of substitution the effects of key structural parameters on equilibrium consumption and its tradeoff with leisure are analyzed a significant aspect of our analysis concerns the extent to which current risk in the economy is shared between labor and capital this plays an important role in determining the impact of risk on the economy in general and on consumption in particular formal analysis is supplemented with extensive numerical simulations

monopolistic competition as a foundation for keynesian macroeconomic models a general equilibrium macroeconomic model based on monopolistic competition is presented the model exhibits a traditional multiplier in the short run but due to free entry the multiplier disappears in the long run by construction all agents are fully rational the keynesian results are a consequence of the assumption of monopolistic competition which creates a divergence between optimal private behavior and optimal social behavior

a preliminary exploration on stochastic dynamic asset allocation models under a continuous time sticky price general equilibrium this article studies asset allocation problems under endogenous macroeconomic dynamics and monetary policy rules by merging a continuous time sticky price general equilibrium model based on the ne

do 401 k contributions crowd out other personal saving during the late 1980s contributions to 401 k plans eclipsed contributions to individual retirement accounts iras as the leading form of tax deferred individual retirement saving in the united states in this paper we describe patterns of participation in 401 k plans contrast these patterns with ira participation and evaluate the net impact of 401 k contributions on personal saving we find that 401 k participation conditional on eligibility exceeds 60 at all income levels in contrast ira participation at the height of that program rose sharply with income we use two methods to evaluate the net saving effect of 401 k contributions on personal saving we compare the financial assets of families who are eligible for 401 k saving with the assets of those who are not eligible and we consider the change over time in the assets of like groups of savers we find little evidence that 401 k contributions substitute for other forms of personal saving including ira contributions

participation in and contributions to 401 k pension plans evidence om plan data k plans differ from traditional employer sponsored pension plans in that employees are permitted to make voluntary pre tax contributions hence the sensitivity of participation and contributions to plan charac teristics notably the employer matching rate may play a critical role in retirement saving using plan level data from form 5500s filed annu ally with the internal revenue service ifind that substantial increases occur when an employer moves from a zero to a small or moderately sized match but that at higher match rates employee contributions fall

does 401 k eligibility increase saving evidence from propensity score subclassification abstract by comparing 401 k eligible and ineligible households wealth this paper estimates that on average about one half of 401 k balances represent new private savings and about one quarter of 401 k balances represent new national savings responses to eligibility vary considerably however with households who normally save the most largely contributing funds they would have saved anyway this paper improves on previous research by 1 employing propensity score subclassification to control more completely for observed household characteristics 2 controlling for more household characteristics including several correlated with unobserved savings preferences and 3 adjusting the observed measure of households wealth to reduce measurement error

the intra firm diffusion of new process technologies the study of intra firm diffusion has largely been neglected and the limited extant literature overwhelmingly relies upon uncertainty reduction via information spreading or epidemic learning as the main driver in this paper an alternative approach is taken whereby the intra firm diffusion of new process technologies reflects the profitability of new technology adoption as proxied by firm characteristics the approach is tested using data relating to the diffusion of computer numerically controlled machine tools within firms in the uk engineering and metalworking sectors the empirical analysis does not reject the hypothesis that profitability considerations are important with a number of firm characteristics being isolated as of special relevance including firm size and the use of complementary technologies and managerial techniques however there is little support for the traditional epidemic effect

the effects of financial education in the workplace evidence from a survey of households abstract we use a novel household survey to investigate the effects of employer based financial education on personal saving we explore cross sectional relations between the availability of employer based financial education and various measures of asset accumulation and we interpret these patterns in light of various potentially confounding factors our findings favor the hypothesis that employer based financial education stimulates saving both in general and for retirement

austrian and neoclassical economics any gains from trade austrian economics has been important to the development of modern economics but its role in current practice is much diminished the neoclassical approach dominates today s thinking many austrians bemoan this state of affairs most neoclassical economists just ignore it but austrian and neoclassical economics aren t mutually exclusive each represents a distinctive point of view although with little meaningful intellectual exchange between them these days this is unfortunate many different concepts are associated with both austrian and neoclassical economics to concentrate on where the most exchange of ideas might occur i am concerned about those aspects of austrian economics primarily dealing with the process of competition and that portion of neoclassical economics primarily dealing with the determination of economic equilibrium this in a nutshell is the main intellectual difference between them some consequences of this difference are discussed in what follows i hope to show that mutually advantageous gains from trade exist austrian economics offers a valuable perspective of the economy as an evolutionary process akin to biological evolution with entrepreneurial activities representing the main instruments of change it is primarily a macroeconomic theory of the economy as a whole with keen insights on the nature of decentralization and the process of competition that deserve more attention neoclassical economics offers a microeconomic theory of economic behavior that is especially useful for analyzing specific economic problems and for orienting analysis around more sharply described empirical phenomena and data

fiscal policy and entrepreneurship abstract this paper reexamines the effect of expansionary fiscal policy on real gdp in the presence of entrepreneurship when government expenditure partially crowds out private consumption as government expenditure cannot reflect changes in consumers tastes expansionary fiscal policy weakens the social role of firms activities to predict and adapt to idiosyncratic changes in consumers taste i show that expansionary fiscal policy can lower real gdp when idiosyncratic risk and the substitutability of goods are large and when firms have a strong ability to predict changes in consumer tastes i also investigate how expansionary fiscal policy influences firms investments in prediction ability

as time goes by an investigation of how asset allocation varies with investor age abstract we investigate how individuals asset allocations in their portfolios vary with age considering the relationship between individual attitudes and behavior we find individuals portfolios become more risk seeking with age even taking account of asset accumulation counter to their intuition

countercyclical retirement accounts abstract this paper examines an unconventional but potentially effective new fiscal policy tool that can increase saving during good times and increase spending during bad times a cyclical matching rate on contributions to retirement savings accounts the combination of matching rates and matching limits on retirement savings plans creates sharp kinks in intertemporal budget sets that induce many households to save exactly at the matching limit even when economic conditions might call for a fiscal policy to encourage spending rather than saving what if the matching rate instead disappeared during bad aggregate states i model an economy with liquid and illiquid savings accounts in which matching is suspended during downturns the economy features the usual sources of heterogeneity in education and earnings processes and it allows for time inconsistent preferences and heterogeneity in the discount rate although the theoretical effects of a countercyclical match are ambiguous due to income and substitution effects operating in different directions the simulations of the model indicate that the policy delivers a large average increase in consumption from a set of households that look like the wealthy hand to mouth of kaplan et al 2014 and crucially in contrast to conventional fiscal policy the stimulus associated with countercyclical retirement actually improves the government s financing

efficient portfolios when housing needs change over the life cycle abstract we address the issue of the efficiency of household portfolios in the presence of housing risk we treat housing stock as an asset and rents as a stochastic liability stream over the life cycle households can be short or long in their net housing position efficient financial portfolios are the sum of a standard markowitz portfolio and a housing risk hedge term that multiplies net housing wealth our empirical results show that net housing plays a key role in determining which household portfolios are inefficient the largest proportion of inefficient portfolios obtains among those with positive net housing who should invest more in stocks

individual financial decisions in retirement saving plans the role of participant direction abstract workers with individual retirement saving accounts often make decisions about contribution rates and asset allocation that affect ultimate retirement income this paper presents econometric evidence from two data sets on the role that participant investment choice plays in asset allocation contributions and account balances my preferred estimates indicate that participants with investment choice are 36 percent more likely to make an annual contribution these participants are estimated to invest 13 percentage points more in stocks contribute between one and three percentage points more of salary and have at least 9000 more in their account than comparable participants without investment choice

profit related pay and the u k small firm labour market this paper critically examines the relevance of profit related pay prp for the u k small firm sector since 1986 the u k government has actively encouraged prp which attracts generous tax breaks because it believed that prp would make pay more flexible downwards and would significantly improve employee identification morale and productivity an analysis of the theoretical arguments and the assumptions made regarding the nature of the u k small firm sector that underlay these claims suggests however that the likelihood of achieving either of these alleged benefits is small an appraisal of the available empirical evidence on the practical implementation and operation of prp schemes suggests that the tax relief simply encourages firms to introduce cosmetic schemes that have no appreciable impact upon the behaviour of either firms or employees moreover the experience of some firms that adopted prp schemes indicates that far from increasing morale and productivity prp often creates new tensions and conflict between owners and employees these and other unintended consequences illustrate the inherent difficulties of government attempts to use the tax system to alter the behaviour of agents engaged in a wide variety of complex and very heterogeneous bargaining situations

can simple informational nudges increase employee participation in a 401 k plan we report results from a field experiment in which a randomized subset of newly hired workers at a large financial institution received a flyer containing information about the employer s 401 k plan and the value of contributions compounding over a career younger workers who received the flyer were significantly more likely to begin contributing to the plan relative to their peers in the control group many workers do not participate in their employers supplemental retirement savings programs even though these programs offer substantial tax advantages and immediate returns due to matching contributions from a survey of new hires we find that many workers choose not to contribute to the plan because they have other financial priorities however some nonparticipants lack the financial literacy to appreciate the benefit these findings indicate that simple informational interventions can nudge workers to participate in retirement saving plans and enhance individual well being and retirement income security

time preference and capital asset pricing models abstract results of the theory of individual optimal consumption investment choice under uncertainty are extended to a class of intertemporally dependent preferences for consumption streams these results are then used to show that with intertemporally dependent preferences which are more realistic than the separable time additive preference structure merton s 1973 multi beta intertemporal capital asset pricing model is still valid but it can no longer be collapsed to breeden s 1979 single consumption beta model

complementarities between obstacles to innovation evidence from france abstract this paper investigates obstacles to innovation faced by french manufacturing firms using cis2 data we distinguish between obstacles in postponed projects and obstacles in abandoned projects first we highlight the most important barriers to innovation faced by firms and find that lack of skilled personnel is one of these second based on descriptive analysis correspondence analysis and multivariate probit models we explore factors explaining the perception of obstacles and study complementarities between those obstacles we show that while adopting a package of policies increases the pace of innovation a more targeted choice among policies is needed to encourage firms to persevere in their innovative efforts

welfare effects of controlling labor supply an application of the stochastic ramsey model in this paper we extend merton s rev econom stud 42 1975 375 classic stochastic version of the ramsey model by allowing the government to control the expected growth rate of the labor supply we characterize the solution to this control problem for general time separable preferences and derive an analytical solution for the crra case the results show to what extent the planner or government increases consumption and welfare by taking an active role in controlling the economy we also explore the implications of government control of labor growth for the term structure of interest rates and the effects of taxes on capital

constrained labor supply and risk aversion abstract this paper extends previous work by showing that consumption constraints typically increase individuals risk aversion even if the illiquid good e g leisure has good substitutes calibrations indicate time use constraints may raise risk aversion considerably under many common scenarios

participation and investment decisions in a retirement plan the influence of colleagues choices abstract this paper investigates whether peer effects play an important role in retirement savings decisions we use individual data from employees of a large university to study whether individual decisions to enroll in a tax deferred account plan sponsored by the university and the choice of the mutual fund vendor for people who choose to enroll are affected by the decisions of other employees in the same department to overcome the identification problems we divide the departments into sub groups along gender status age and tenure lines and we instrument the average participation of each peer group by the salary or tenure structure in this group our results suggest that peer effects may be an important determinant of savings decisions

health and portfolio choices a diffidence approach the effect of health status on portfolio decisions has been extensively studied from an empirical viewpoint in this paper we propose a theoretical model of individuals choice of financial assets under bivariate utility functions depending on wealth and health our approach makes an extensive use of the diffidence theorem we establish the conditions under which the share of wealth held in risky assets falls as 1 individuals health status deteriorates and 2 individuals health status becomes risky these conditions are shown to be related to the behavior of the intensities of correlation aversion and of cross prudence as wealth increases

in search of complementarity in innovation strategy internal r d and external knowledge acquisition empirical research on complementarity between organizational design decisions has traditionally focused on the question of existence of complementarity in this paper we take a broader approach to the issue combining a productivity and an adoption approach while including a search for contextual variables in the firms strategy that affects complementarity analysis of contextual variables is not only interesting per se but also improves the productivity test for the existence of complementarity we use our empirical methodology to analyze complementarity between innovation activities internal research and development r d and external knowledge acquisition our results suggest that internal r d and external knowledge acquisition are complementary innovation activities but that the degree of complementarity is sensitive to other elements of the firms strategic environment we identify reliance on basic r dthe importance of universities and research centers as an information source for the innovation processas an important contextual variable affecting complementarity between internal and external innovation activities

intergenerational risk sharing and endogenous labour supply within funded pension schemes funded defined benefit pensions add to welfare on account of providing intergenerational risk sharing but lower it on account of inducing labour supply distortions we show that a properly designed funded defined benefit pension scheme involves a welfare improvement even if contributions are distortionary and even if individuals face potentially correlated wage and equity risks numerical calculations indicate that diversification gains from risk sharing are large compared to the losses related to labour supply distortions this result withstands a number of extensions like the introduction of a short sale constraint for individuals or the inclusion of a labour income tax

organizations firms and institutions in the generation of innovation abstract the purpose of this paper is to develop the innovation system analysis by bringing together the institutional and organizational dimensions of the process of innovation at the firm level the objective is to start elaborating a systemic theory of innovation in firms the paper summons up the contributions and limits of organizational and institutional approaches to innovation this preliminary investigation leads to a series of relevant questions in a second section an attempt is made to overcome the dichotomy and make progress towards a more exhaustive and better articulated representation of the innovation process considered at the firm level

labor supply flexibility and portfolio choice in a life cycle model abstract this paper examines the effect of the labor leisure choice on portfolio and consumption decisions over an individual s life cycle the model incorporates the fact that individuals may have considerable flexibility in varying their work effort including their choice of when to retire given this flexibility the individual simultaneously determines optimal levels of current consumption labor effort and an optimal financial investment strategy at each point in his life cycle we show that labor and investment choices are intimately related the ability to vary labor supply ex post induces the individual to assume greater risks in his investment portfolio ex ante

organisational change technology employment and skills an empirical study of french manufacturing this paper analyses the correlations between technological change organisational change and skill change using a survey on organisational change in manufacturing firms conducted in 1993 considerable diversity is allowed for in terms of the measure of technological and organisational change and the analysis shows a positive correlation between technological change and reorganisations whatever their types the paper then analyses the relationships between these changes and the employment behaviour of firms it shows that changes in the required skills and in the occupational structure of firms are more closely connected to organisational than to technological change although organisational change affects the work content and skill requirements of blue collar workers it is mainly indirect workers that are affected in terms of the number employed finally the analysis shows that technology tends to stabilise the workforce whereas the move towards the model of flexible enterprise favours its renewal copyright 2003 oxford university press

consumption and portfolio choice under internal multiplicative habit formation this paper explores the optimal consumption and investment behavior of an individual who derives utility from the ratio between his consumption and an endogenous habit we obtain closed form policies under general utility functionals and stochastic investment opportunities by developing a nontrivial linearization to the budget constraint this enables us to explicitly characterize how habit formation affects the marginal propensity to consume and optimal stock bond investments we also show that in a setting that combines habit formation with epstein zin utility consumption no longer grows at unrealistically high rates at high ages and investments in risky assets decrease

current accounts in debtor and creditor countries the authors reexamine a classic question in international economics what is the current account response to a transitory income shock such as a temporary improvement in the terms of trade a transfer from abroad or unusually high production to answer this question they construct a world equilibrium model in which productivity varies across countries and international borrowing and lending take place to exploit good investment opportunities despite its conventional ingredients the model generates the novel prediction that favorable income shocks lead to current account deficits in debtor countries and current account surpluses in creditor countries evidence from thirteen oecd countries broadly supports this theoretical prediction

firm organization industrial structure and technological innovation abstract the formal and informal structures of firms and their external linkages have an important bearing on the rate and direction of innovation this paper explores the properties of different types of firms with respect to the generation of new technology various archetypes are recognized and an effort is made to match organization structure to the type of innovation the framework is relevant to technology and competition policy as it broadens the framework economists use to identify environments that assist innovation

taxes fringe benefits and faculty the growth of employee benefits in academe has closely paralleled their economy wide growth this study estimates a complete system describing the demand for benefits and wages using panel data on 1477 institutions of higher learning the demand for benefits is very responsive to changes in real income and the tax price of benefits these conclusions are robust with respect to varying definitions of the tax price treating it as endogenous and accounting for unmeasured individual effects on demand simulations suggest that the tax reform act of 1986 sharply reduced the demand for benefits extrapolating the impact to the entire economy the annual flow of compensation shifted away from benefits by at least 15 billion copyright 1992 by mit press

why and how innovations get adopted a tale of four models scholars studying innovation have proposed several different models of the adoption process this essay identifies two broad dimensions which differentiate the principal models the strength of the evidence regarding an innovation s efficacy and the extent of increasing returns in this essay we propose that differences across these dimensions map to four models of the adoption diffusion process prominent in the literature we then analyze the diffusion patterns of six well studied innovations in terms these variables and discuss which models seems to fit them best

endogenous labor leisure investment choice under time constraints we posit the opportunity cost of time required to manage risky investments including conducting research and performance monitoring as a potential explanation for the equity premium puzzle an economic agent who should allocate a limited amount of time to labor leisure and risky investment is subject to the opportunity time cost of investment activity which is foregone labor or leisure our model envisages its impact on equity premium and volatility in the presence of such a time constraint in particular with closed form solutions to the risky asset returns volatility and risk free rate in a simple equilibrium framework wherein agents have log utility the model is shown to yield excess return and volatility consistent with historical values observed in the u s stock market even with a small amount of time cost in addition the model enables us to sort out the impact of endogenous labor leisure choice on return dynamics by comparing it with the exogenous labor income case

household portfolio choice and retirement this study examines household portfolio choice through the retirement transition i show that couples significantly decrease their stock allocations after retirement whereas singles allocations remain relatively unchanged reallocations are concentrated among couples in which the wife is more risk averse than her husband husbands and wives respective retirement events are followed by opposite signed changes in stock allocations these findings are consistent with a model of collective household decision making in which spouses have heterogeneous risk preferences and suggest that dynamics in the distribution of intrahousehold bargaining power generate time varying household risk aversion

efficient gradualism in intertemporal portfolios abstract this paper examines intertemporal portfolio plans under autocorrelation in asset returns and considers whether these plans conform to the common advice that risky assets be bought gradually and then held in decreasing amounts as the investment horizon approaches given elliptical returns optimal portfolio plans with precommitment must be mean variance efficient then for arma 1 1 parameterizations with negative autocorrelation the age effect gradual diminishing of risky holdings as the horizon approaches is confirmed as is dollar cost averaging gradual entry into the risky asset for sufficiently distant horizons for a numerically analyzed alternative bivariate returns process only the age effect is confirmed

technological regimes and sectoral patterns of innovative activities this paper focuses on the relationships between observed patterns of innovative activities within a sector and the related context and underlying microeconomic processes that might account for them it claims that there are some invariant features with respect to relative prices and incentives mechanisms of learning and knowledge accumulation that greatly affect the rate and structure of innovative activity these features are different across sectors the paper proposes that the specific pattern of innovative activity of a sector can be explained as the outcome of different technological regimes that are implied by the nature of technology and knowledge the notion of technological regime provides a synthetic representation of some of the most important economic properties of technologies and of the characteristics of the learning processes that are involved in innovative activities copyright 1997 by oxford university press

profit sharing and employee share ownership profit sharing and employee share ownership saul estrin paul grout and sushil wadhwani this paper evaluates the likely effects of linking a part of a worker s pay to the employer s profits it has been suggested by weitzman that this would raise employment by lowering the cost of taking on an extra worker however this can only happen if existing workers are willing to let their share of value added fall and experience of those firms in the uk who already operate profit sharing schemes suggests that the weitzman mechanism is not operative there is however some evidence that profit related pay does boost productivity but there are other ways of raising productivity such as performance related pay which may be more effective productivity enhancing effects are likely to be greatest when employees are involved in decision making as well but this is likely to undermine the weitzman case still further even if the argument that profit sharing raises employment is not compelling it is sometimes suggested that it can do little harm however there is evidence that it may well be inflationary in which case the government would be advised to proceed cautiously we argue that there is very little case for the introduction of a permanent subsidy to encourage increased profit sharing although there may be a case for a temporary one to overcome managerial inertia however there is a danger that a subsidy will promote cosmetic schemes designed to be eligible for the subsidy but which do not reflect any real change in behaviour

technological regimes and sources of entrepreneurship this paper concerns the technological determinants of entrepreneurial behaviour by applying a typology of technological regimes which describes the nature of the technological environment in which firms operate this paper examines the sources and obstacles to entrepreneurial entry related to the process of technical change two major points are suggested first innovation in technologies of high or increasing opportunities is not always associated with entrepreneurial behaviour but can enhance the competitive advantage of existing firms second opportunities for entrepreneurship are shaped by the nature of knowledge underlying different technologies these points are illustrated using u s patent statistics classified by technical field and sector of firm s principal product activity different combinations of sources of technological entry barriers and technological opportunity are identified in science based technologies chemical technologies core technologies in complex systems product engineering technologies and process engineering technologies this paper argues that such a characterisation of the dynamics of knowledge accumulation is important for interpreting the variety of dynamics of industrial competition

the effects of financial education in the workplace evidence from a survey of employers we examine the effects of education on financial decision making skills by identifying an interesting source of variation in pertinent training during the 1990s an increasing number of individuals were exposed to programs of financial education provided by their employers if as some have argued low saving frequently results from a failure to appreciate economic vulnerabilities then education of this form could prove to have a powerful effect on behavior the current paper undertakes an analysis of these programs using a previously unexploited survey of employers we find that both participation in and contributions to voluntary savings plans are significantly higher when employers offer retirement seminars the effect is typically much stronger for non highly compensated employees than for highly compensated employees the frequency of seminars emerges as a particularly important correlate of behavior we are unable to detect any effects of written materials such as newsletters and summary plan descriptions regardless of frequency we also present evidence on other determinants of plan activity