understanding interorganizational cooperation public private collaboration in regulating financial market innovation this paper examines how a collaborative effort between the private and public sectors called the derivatives policy group dpg helped shape current regulation of financial innovation in 1994 and 1995 this group of six large financial firms developed procedures for risk management internal controls and reporting for largely unregulated areas of finance in cooperation with the united states securities and exchange commission and commodity futures trading commission the process succeeded despite strong competition among the firms themselves and incentives for both the public and private sectors to resort to adversarial lobbying and legal challenges the derivatives policy group was a path setting event in the development of flexible regulation of financial innovation that is now the norm for related policy making the case is important in and of itself the financial markets are a major concern of national and international economic policy but here we treat it as an instance of a larger class of problems organizational science constantly encounters settings that involve numerous participants who compete or have histories of conflicts who are interdependent and collectively would gain and even individually gain long term by cooperating rather than competing on an issue who fall under different governance systems and who try as a group to design rules and principles governing their behavior four factors appear repeatedly in the research on the success or failure of such arrangements these are 1 the initial dispositions toward cooperation 2 the extant issues and incentives 3 leadership and 4 the number and variety of organizations involved this paper focuses on how these factors shaped the development and consequences of the derivatives policy group and the general implications of this process for interorganizational cooperation

the importance of financial considerations in divorce decisions i introduction one of the most dramatic and commonly cited consequences of divorce is the fall in family money income especially for households headed by divorced women using the panel survey of income dynamics duncan and hoffman 1985 estimate that the family income of divorced and separated women fell by 19 percent during the year following divorce or separation a study by nestel et al 1983 using data from the mature women s cohort of the national longitudinal survey of labor market experience indicates that the poverty rate for households headed by women who were divorced during the survey and did not remarry rose from 10 percent just prior to divorce to 25 percent immediately after dovorce similar results are reported by mott and moore 1982 and espenshade 1979 these statistics however may overestimate the long term negative consequences of divorce because they ignore the possibility of an improvement in financial circumstances through remarriage 1 mott and moore 1982 find that even for women who do not remarry economic status improves over time due primarily to better employment prospects given the large financial costs of divorce especially in the short run it is reasonable to ask how important are financial considerations in divorce decisions this paper explores the linkages between the financial consequences of divorce and the decision to become divorced the paper extends previous work by measuring these consequences over a period of time rather than at one point in time in particular the paper addresses two issues 1 do the expected financial consequences of divorce affect the decision to become divorced and 2 what is the relative importance of short versus long run considerations a standard choice theoretic model predicts that the smaller are the financial costs of divorce the greater is the probability of divorce the financial opportunity cost of divorce is measured as the difference in the expected present values of the income streams within marriage and at divorce the expected income stream at divorce includes the financial value attached to a possible remarriage as well as income from employment welfare alimony and child support payments the empirical analysis utilizes data from the national longitudinal survey of work experience of young women nls a sample of those divorced between 1973 and 1978 is observed over time during marriage after divorce and for some during a remarriage thus the actual income changes resulting from divorce and remarriage are measured income changes for a sample of continuously married women are also measured over a comparable period the expected changes in income for each subsample are estimated as a function of socio economic variables and the values are imputed for the entire sample to explore the relationship between these expected income streams and decisions about divorce the result indicate that the expected short term financial consequences of divorce are a better predictor of subsequent divorce than are the longer term consequences this evidence implies that individuals behave as if they face high discount rates ii economic models of divorce one of the first economic models of divorce was developed and emphirically tested by becker landes and michael 1977 as in any choice theoretic model divorce occurs when the gains from that choice exceed the benefit from remaining married gains from marriage include both a pecuniary component such as pooled household income from the market work of the husband and wife and a non pecuniary component such as children love companionship and household goods from home production gains from divorce include own labor market income home production which may differ between the divorced and married states and the expected value of potential new relationship e g remarriage marriage specific capital such as children has a higher value within marriage and increases the opportunity cost of divorce

distributed energy infrastructure paradigm community microgrids in a new institutional economics context abstract this paper provides a theoretical framework based on new institutional economics nie concepts to guide the development of community microgrids given limited application thus far of such energy systems this paper also draws on empirical studies and experiences from the planning and development of other public community infrastructure and utility services in the development of this framework it links an efficient ownership and governance structure with transactional characteristics such as asset idiosyncrasy frequency and uncertainty defined in section 3 1 the key role of the customers and the microgrid service provider and more specifically their bilateral monopoly relationship and its effects on the choice of institutional structure is highlighted the paper examines the optimum conditions for public private or hybrid financial ownership and for unified or network governance through long term contracting this allows ex ante investment uncertainty and ex post appropriation risks to be efficiently managed the analysis suggests that long term contract completeness future demand for electricity and level of uncertainty are the determining factors in the selection of institutional structure this has significant real world implications for the communities seeking to achieve electricity self sufficiency and environmental benefits through community microgrids service providers and other private or public actors

the multinational corporation and global governance modelling global public policy networks globalization has increased the economic power of the multinational corporation mnc engendering calls for greater corporate social responsibility csr from these companies however the current mechanisms of global governance are inadequate to codify and enforce recognized csr standards one method by which companies can impact positively on global governance is through the mechanism of global public policy networks gppn these networks build on the individual strength of mncs domestic governments and non governmental organizations to create expected standards of behaviour in such areas as labour rights environmental standards and working conditions this article models gppn in the issue area of csr the potential benefits of gppn include better overall coordination among industry and government in establishing what social expectations the modern mnc will be expected to fill

mergers acquisitions and innovation performance in the telecommunications equipment industry the worldwide telecommunications equipment industry has experienced an enormous number of mergers and acquisitions m a this article examines the innovation determinants of m a activity a

incentive effects of the u s welfare system a review the author would like to acknowledge support for prior work on this topic from the u s department of health and human services and helpful comments from three anonymous referees rebecca blank howard chernick john fitzgerald irwin garfinkel peter gottschalk edward gramlich david greenberg judith gueron james heckman v joseph hotz robert hutchens michael keane frank levy larry mead michael murray robert plotnick anuradha rangarajan philip robins howard rolston jeffrey smith and daniel weinberg all opinions and errors are those of the author alone

welfare benefits and female headship in u s time series whether welfare benefits affect marriage and fertility decisions of the low income population has been the subject of much research the substantial bias in the u s welfare system toward female headed families relative to either married couples or single childless individuals provides a clear financial incentive for early nonmarital childbearing postponement of marriage divorce postponement of remarriage and other behaviors that make eligibility for welfare benefits more likely or that avoid the loss of eligibility after it has been achieved the findings in the cross sectional research literature through 1995 summarized in moffitt 1998 exhibit a clear central tendency pointing toward an effect of welfare on some aspects of family structure namely marriage and fertility however there is also agreement that the time series evidence is inconsistent with that from crosssectional data for real benefits have been falling for over 20 years while female headship has been rising moreover bringing other programs such as food stamps and medicaid into the picture helps explain rising female headship increases in the late 1960 s and early 1970 s when those programs were introduced and solidified but does less well in explaining the

ethical issues in outsourcing the case of contract medical research and the global pharmaceutical industry the outsourcing of medical research has become a strategic imperative in the global pharmaceutical industry spurred by the challenges of competition the need for speed in drug development and increasing domestic costs pharmaceutical companies across the globe continue to outsource critical parts of their value chain activities namely contract clinical research and drug testing to sponsors across the globe typically into emerging markets while it is clear that important ethical issues arise with this practice unraveling moral responsibility and the allocation of responsibility is not so clear considering that contracts by their very definition transfer responsibility from the principal to the agent this research provides a framework for exploring some of the ethical issues including attributions of moral responsibility associated with contract medical research using a theory of strategic and moral behavior the research shows that both clients and sponsors in contract research have individual and collective responsibility to ensure that due care and diligence is exercised in the performance of clinical research the research suggests some guidelines for stakeholder action

work and welfare as determinants of female poverty and household headship this paper formulates and estimates a model of the determinants of female household headship headship responds to variations in the levels of well being a woman can expect if she marries or if she heads her own household the authors measure the opportunity cost of female headship and the effects of welfare benefits and womens work in the market on female headship and poverty they find that if welfare benefits were reduced there would be small reductions in the proportion of women heading households for whites and nonwhites but a substantial increase in poverty for nonwhites they also find that wives work in the market reduces poverty and female headship for nonwhites and reduces poverty but increases headship for whites the study is based on 1975 u s data excerpt

medicaid afdc and family formation this paper uses the fact that states joined the medicaid programme at different times between early 1966 and early 1970 to estimate the effect of health insurance availability on childbearing and marital choice data on women aged 15 to 45 during the 1964 to 1972 period from the march current population survey cps is used to estimate medicaid s effect on the probability that a woman has recently given birth and is not married it is found that the introduction of medicaid led to a small but statistically significant increase in the probability that a woman is single and has recently given birth specifically the introduction of medicaid led to a 0 3 percentage point increase in the probability that a woman is a single mother of young children this is an approximately 10 increase relative to the average fraction of single mothers in the sample of about 3 although nonwhite women are on average more likely to be single mothers than white women are it is found that medicaid did not significantly contr

does being r d intensive still discourage outsourcing evidence from dutch manufacturing being r d intensive has traditionally been seen as an impediment to outsourcing this study confirms that empirically this was the case for a set of manufacturing industries in the netherlands in the early 1990s but also shows that r d intensity became a positive predictor for changes in outsourcing levels over the 1990s suggesting firms in r d intensive industries have increasingly started to rely on partnership relations with outside suppliers this confirms the need to move the analysis from scale opportunism and appropriation concerns to a relational perspective when studying outsourcing in r d intensive industries

does welfare play any role in female headship decisions abstract previous studies have examined whether the welfare system has contributed to the dramatic increase in single parent families this paper explores why the results in this literature are sensitive to the presence of state fixed effects it considers one natural explanation namely that the composition of the population differs across states in ways that are related to welfare program generosity after controlling for individual effects the results provide no evidence that welfare raises the propensity to form female headed households for either whites or blacks these results illustrate the potential pitfalls of assuming that state factors are fixed over a long period of time they also suggest that previous studies may have overstated the effect of welfare programs on family structure

the stability of american markets much of the evidence of coordination between corporations and their markets comes from cross sectional conducted within portions of the american economy during the past two decades we know especially for manufacturing during the late 1960s that certain structural qualities of markets predict profits and the organization of large firms but this evidence is open to an uncomfortable empirical question to what extent did the social structural qualities determining resource dependence in american markets change during the 1960s and 1970s so as to limit the generalizability of cross sectional evidence the analysis here shows that markets were dramatically stable in he social structure of production relations known to predict the structure of large firms relying principally on department of commerce data the article traces the american economy through the 1960s and 1970s in terms of 77 broadly defined markets describing the stability of market boundaries and patterns of transactions with suppliers and c

offshoring and the global distribution of work implications for task interdependence theory and practice a recent offshoring research network orn global survey of offshoring shows that since 2004 management concerns about operational issues on achieving the benefits of offshoring have increased significantly in this paper we examine inter task interdependence a key operational determinant of inter site interaction and communications in offshoring we analyze existing theories of interdependence to examine the extent to which they provide guidance for understanding the interaction and communication requirements between work segments that are offshored and distributed across the globe using a series of mini cases on globally distributed work gdw we show how the traditional typology of interdependence developed in the 1960s and 1970s is no longer adequate for understanding and managing task interdependencies in gdw we propose three concepts to address this problem integration interdependence hand offs and information stickiness we then show how our revised typology of interdependence enables a better understanding of the interactions and communication requirements between sites using this revised theory we propose guidelines for work design and examine their implications for practical offshoring and work distribution decisions implications for theory and practice for mnes engaged in offshore relationships are discussed

the determinants of female headship in jamaica results from a structural model much of the existing research on female headship in developing countries presumes that female headed households fhhs are the result of a breakdown in family relations such as abandonment out of wedlock pregnancy divorce or widowhood in other words the existence of fhhs is seen to be a constraint imposed on women by social or cultural forces however in jamaica fhhs represent 42 of all households this extremely high incidence one of the highest in the world indicates that the conventional assumptions about fhhs might not apply in jamaica indeed the sociological and anthropological literature suggests that jamaican women actively choose to live and raise children on their own and that fhhs are a response to local social and economic conditions this article departs from the previous research on headship by treating the formation of fhhs as endogenous and investigating the extent to which the rate of fhhs can be explained by economic forces recent game theory approaches to analyzing household behavior provide a convenient starting point for the household formation model developed here bargaining models assume that an individual s willingness to form a household with a partner depends on the outside opportunities available to that individual in essence an individual makes a comparison between the utility attainable inside and outside a union and chooses the living arrangement that gives the highest welfare following the bargaining framework the approach in this article is to explicitly allow alternative prospects threat points to influence a woman s choice of residence the method is to estimate each woman s welfare in the counterfactual status and compare it with her observed level of well being a test of the economic content of the household formation decision is to see whether the predicted welfare level in the counterfactual status influences a woman s headship choice most of the empirical work using the bargaining framework tests

internal capital markets and corporate politics in a banking group we analyze proprietary internal capital allocation data from a large retail banking group consisting of member banks and a headquarters organization we find that capital allocations from headquarters compensate for deposit shortfalls on the bank level suggesting that the headquarters offers deposit smoothing to member banks we then analyze how the distribution of influence within the group relates to capital allocations and lending behavior more influential banks are allocated more funds from headquarters and their loan growth is less sensitive to their deposit base the effects of influence are stronger if banks have a greater demand for deposit smoothing

costly information and the evolution of self organization in a small complex economy abstract the core idea of evolution is that order in living systems emerges from a simple process of variation and selection in biological systems we usually understand the source of variation as best described by the mechanisms of genetics if human social systems are evolutionary systems however it would seem the variation that most explains the sources of change in these systems occurs not from a genetic mechanism but from individual learning we use an evolutionary computational methodology to explore the way individual learning and adaptation lead to the evolution of persistent self organized social and economic activity the basic idea behind these explorations is that the character and extent of self organizing social and economic activity depends upon the way the environment frames the costs of individual learning and adaptation we consider three different kinds of costs affecting learning and adaptation the costs of autonomous searching of communicating and of deciding individuals respond to these costs by carefully i e economically choosing to learn about and interact with familiar agents in familiar arenas in which they have relatively secure expectations about the outcome of their actions emerging from these choices are persistent relationships among agents that lead to social and economic structure and to the imperfect coordination of aggregate production the character and the extent of each are a function of the way the costs of information change with changing natural and human system conditions we use a learning classifier system lcs to model learning the logic of an lcs closely mimics the mechanisms of darwinian evolution but is applied to the evolution of an agent s decision rules we describe the environmental context necessary for an lcs to produce economizing behavior and apply the method to a multi agent simulation of the maine lobster fishery which we treat as a metaphor for competition based on the search for useful knowledge the structure and method of the model is similar to a conventional agent based model except we use lcs to evolve decision rules for each agent rather than supplying those rules ourselves this allows agents to change their behavior i e to learn and adapt as their environment changes modeling learning and adaptation as the source of behavioral variation makes it possible to use evolutionary theory to address important questions of social and economic emergence not possible with current methods

capital market development and firm restructuring during an economic shock we conceptualize capital markets in terms of resource access and governance and argue that more developed capital markets facilitate firm restructuring through more effective provision of capital and governance of transactions we then develop a contingency model that specifies that the effects of capital market development on restructuring vary by 1 types of restructuring 2 the nature of the economic environments and 3 firms access to resources we evaluate a broad range of restructuring actions among independent firms and business group affiliates in singapore and south korea before and during the economic shock of 1998 1999 results support our predictions of the impact of capital market development and of contingencies and highlight the value of incorporating an external capital markets perspective to complement internally focused theoretical explanations for firm restructuring

the economics of organization the transaction cost approach the transaction cost approach to the study of economic organization regards the transaction as the basic unit of analysis and holds that an understanding of transaction cost economizing is central to the study of organizations applications of this approach require that transactions be dimensionalized and that alternative governance structures be described economizing is accomplished by assigning transactions to governance structures in a discriminating way the approach applies both to the determination of efficient boundaries as between firms and markets and to the organization of internal transactions including the design of employment relations the approach is compared and contrasted with selected parts of the organization theory literature

marital status and fertility in the united states welfare and labor market effects the incidence of marriage and the proportion of childbearing that occurs within marriage have decreased sharply in the united states in the last several decades this paper examines whether the probability that a woman is currently married and the number of children she has borne as reported in the 1980 u s census are related to two identifiable factors the variation in welfare programs across states specifically afdc and medicaid benefits and afdc up expenditures or the variation in the market wage opportunities available to women and to their potential husbands afdc and medicaid benefit levels are associated with fewer women being currently married medicaid benefits are related to lower fertility levels for both black and white women whereas afdc benefits in cash and food are associated with lower fertility among white women ages 15 24 those states that extend afdc benefits to families with unemployed parents in other words fathers in intact poor families do not have significantly more women married or higher fertility rates contrary to what might be expected from economic incentives men s market wages are associated with more frequent marriage and higher fertility whereas higher market wage opportunities for women have substantial effects in the opposite direction all of which are consistent with standard models of gender specialization and the demand for marriage and fertility

welfare and the family the canadian experience canada has a universal social assistance program that is almost completely administered through the federal canada assistance program however provinces determine the levels of assistance for various groups eligible for welfare this article exploits the variation in payments and uses microdata to estimate the effect of changes in welfare benefits on welfare participation single parenthood births out of wedlock divorce and labor force participation among low income women in canada it would appear that welfare benefits influence these decisions

bounded rationality lifecycle consumption and social security abstract this paper explores an overlapping generations model of bounded rationality in which consumers only foresee the future over a subset of their life span we focus in particular on whether the model can in general equilibrium produce a hump shaped lifecycle consumption profile with a peak that matches data for the average u s consumer for a simple four period model we show that an increasing income profile along with exogenously imposed retirement are sufficient to induce a hump with no other mechanism that can account for a hump besides bounded rationality the model best fits the salient features of consumption data with a planning horizon of 20 years which is well supported by the behavioral evidence found in surveys on retirement planning finally we show that the age of the consumption peak is robust to the introduction of social security mortality risk and another species of bounded rationality quasihyperbolic discounting moreover social security can be welfare improving with a short planning horizon we can calibrate the model to jointly explain the timing of the consumption hump and the optimality of the current social security system with quasihyperbolic discounting instead we can calibrate the model so the current social security system is optimal but we cannot also account for the timing of the consumption hump if we add quasihyperbolic discounting in addition to a short planning horizon the present bias has a negligible effect in equilibrium

coincident correlations of growth and cash flow in banking abstract prior empirical research indicates that loan growth in the banking industry is positively related to cash flow i offer an alternative methodology that is better able to capture the effect of cash flow on loan growth while controlling for the potentially coincident effect of loan growth on cash flow using a sample of 171 389 observations on banks 1986 2007 i find that causality runs more consistently from growth to cash flow than from cash flow to growth this extends prior empirical research by houston and james 1998 and campello 2002 on cash flow sensitivities in the banking industry

should buyers or sellers organize trade in a frictional market to answer the question in the title this article characterizes the socially efficient organization of the market with search frictions the efficient organization depends on the relative elasticity in the supply between the two sides of the market the costs of participating in the market and organizing trade and the a symmetry in matching we also show that the social optimum can be implemented by a realistic market equilibrium where the organizers set up trading sites to direct the other side s search the results provide a unified explanation for why trade has often been organized by sellers in the goods market by buyers firms in the labor market and by both sides in the asset market the analysis also sheds light on how the efficient market organization can change with innovations such as e commerce and just in time production

changes in household size and composition due to financial incentives tax and transfer programs inevitably create incentives relating to the size and composition of households examples of such incentives are the marriage penalty dependents exemptions and the eligibility rules for categorical welfare programs this paper notes that changes in transfer program parameters may encourage recipient households to import nonwage earning individuals especially children and to export wage earners several hypotheses regarding the nature of such responses are derived and supporting evidence is obtained using data from three experimental income maintenance programs the geographic focus is on the united states excerpt

the effect of incomes wages and afdc benefits on marital disruption this paper uses a choice based model to estimate the effects of a broad set of economic factors including afdc benefit levels husband s earnings and a woman s wage rate on the probability of marital dissolution we find that the probability of divorce is lower for marriages in which the husband s labor income is higher we also find that while afdc income has a substantial effect on welfare receipt by a divorced woman it has a relatively small effect on the probability that a married woman will become divorced finally we find no support for the hypothesis that rising wages for women have increased marital instability

the effect of the u s welfare system on marital status abstract an issue of long standing importance in the u s welfare system has been its lack of neutrality with respect to family composition which generally provides payments only to female headed families that is families with no able bodied male present using data from 1969 to 1985 to examine the issue this study finds that 1 the simple cross sectional correlations between marital status and welfare benefits are almost always in the expected direction but are generally weak in significance 2 that the magnitude and significance of the correlations have nevertheless grown over time and 3 that the correlations for men are no weaker and usually stronger especially for blacks than those for women

loan growth and riskiness of banks we investigate whether loan growth affects the riskiness of individual banks in 16 major countries using bankscope data from more than 16 000 individual banks during 1997 2007 we test three hypotheses on the relation between abnormal loan growth and asset risk bank profitability and bank solvency we find that loan growth leads to an increase in loan loss provisions during the subsequent three years to a decrease in relative interest income and to lower capital ratios further analyses show that loan growth also has a negative impact on the risk adjusted interest income these results suggest that loan growth represents an important driver of the riskiness of banks

will extending medicaid to two parent families encourage marriage several welfare programs in the united states restrict eligibility to single parent families this paper asks whether eliminating this restriction for medicaid encourages marriage i identify medicaid s effect through a series of health insurance reforms that were passed in the 1980s and 1990s targeting young children these reforms were associated with an increase in the probability of marriage of 1 7 percentage points while the expansions offered some incentives to become married they also created other incentives to become divorced known as the independence effect after controlling for the outflows from marriage due to the independence effect the estimated effect increases by 10 percent

capital market frictions and deposit constraints at banks following the investment cash flow literature we test whether bank lending is constrained by the availability of insured deposits a necessary condition for the existence of a bank lending channel of monetary policy we treat insured deposits as a type of internal fund similar to cash flows we use a simple model to sort out the possible identification issues in interpreting the correlation between lending and deposit growth including reverse causality and omitted variable bias to minimize the latter we control for loan demand we use tobin s q and other proxies we also split the sample by capital ratios under the assumption that the frictions facing banks in capital markets should be most severe for poorly capitalized banks the results are consistent with the existence of frictions in capital markets facing banks and show that such frictions forge a link between the supply of bank loans and the supply of insured deposits the frictions seem to matter only at small banks suggesting that the potential for a bank lending channel is limited