employer search and employment subsidies in this paper insights into the literature on employment subsidy evaluation and that on employer search are merged to explore uncharted territory the firm and job characteristics leading to deadweight loss in employment subsidy schemes a model is developed which integrates various arguments found in the existing employer search literature using a survey of dutch firms for 1999 the model predictions are confirmed the richness of the data set enables one to construct some measures of deadweight loss which are new to the existing literature it turns out that firms which experience low screening costs large firms firms that forego substantial production due to unfilled jobs vacancies for full time jobs and firms operating in slack labour market conditions cause significantly more deadweight loss

the effect of tax treaties on multinational firms new evidence from microdata this paper uses affiliate level data from swedish multinationals to examine the impact of tax treaties on both overall affiliate sales and the composition of those sales in line with previous results we find little evidence for an effect of treaties on the level of total sales we do however find that a tax treaty increases the probability of investment by a firm in a given country in addition we find that a treaty reduces exports to the parent but increases imports of intermediate inputs from the parent this is consistent with treaties increasing the effective host tax this suggests that tax treaties impact the behavior of multinationals along some dimensions but not along others

short run strategies for attracting foreign direct investment this paper empirically investigates the effectiveness and feasibility of two fdi policies fiscal incentives and deregulation aimed at improving the attractiveness of a country in the short run using disaggregated data on sales by us mnes foreign affiliates in 43 developed and developing countries over the 1982 94 period results show that the provision of fiscal incentives or the deregulation of the labour market would exert a positive impact on total fdi given the drawbacks frequently associated with the use of incentive packages economy wide policies which ease firing procedures and reduce severance payments would certainly be the best policy option this paper also highlights the different aggregation and omitted variable biases that have affected results of previous studies and provides some support to recent theoretical models of fdi by showing that third country effects and spatial interdependence influence respectively the location of export platform fdi and vertical fdi

the spatial organization of multinational firms using six years of firm level data covering 224 regions of the enlarged european union we evaluate the importance to a firm of locating its activities production headquarters r d logistics and sales close together we find that after controlling for regional characteristics being closely located to a previous investment positively affects firm location choice however the impact of distance is dependent on the type of investment production or service the impact dies out faster for service activities finally we show that a surprisingly positive effect comes from locating a new production plant close to an existing production investment but in another country

employers recruitment behaviour and vacancy duration an empirical analysis for the dutch labour market the functioning of labour markets from a demand side perspective is examined in particular the determinants of vacancy duration are studied in the context of a model of employers search behaviour a model for the choice of the recruitment strategy at the start of the search process and the corresponding recruitment duration is developed in which allowance is made for different patterns of duration dependence for each recruitment strategy this model is applied to data on employers search behaviour in the dutch labour market it is found that employers prefer advertisements as the first recruitment channel when applicants are required to have work experience moreover employers prefer to start searching via the labour exchange office when jobs in the secondary segment of the labour market have to be filled it is also found that when advertisements are used as the first recruitment strategy employers need some time to acquire a pool of applicants and to select candidates from this pool it is inte

the indirect effects of foreign direct investment on trade a network perspective the relationship between international trade and foreign direct investment fdi is one of the main features of globalisation in this paper we investigate the effects of fdi on trade from a network perspective since fdi takes not only direct but also indirect channels from origin to destination countries because of firms incentive to reduce tax burden to minimise coordination costs and to break barriers to market entry we use a unique data set of international corporate control as a measure of stock fdi to construct a corporate control network ccn where the nodes are the countries and the edges are the corporate control relationships network measures as the shortest path length and the communicability are then computed on the ccn to capture the indirect channel of fdi empirically we find that corporate control has a positive effect on trade both directly and indirectly the result is robust with different specifications and estimation strategies hence our paper provides strong empirical evidence of the indirect effects of fdi on trade moreover we identify a number of interplaying factors such as regional trade agreements and the region of asia we also find that the indirect effects are more pronounced for the manufacturing sector than for primary sectors such as oil extraction and agriculture

the spatial interdependence of fdi in latin america summary using a sample of 17 latin american countries with observations during 1986 2006 two forms of spatial interdependence of foreign direct investment fdi are explored 1 surrounding market potential and 2 spatial autocorrelation we find that surrounding market potential has a positive significant effect on net fdi but there is no evidence that fdi is spatially autocorrelated other factors that show a significant positive effect on fdi include control of corruption and exports of raw materials when considering only fdi inflows from the us we find that fdi is spatially autocorrelated and that surrounding market potential is not significant

a spatial model of corporate tax incidence using a unique self compiled data set on international tax rates we explore the link between taxes and manufacturing wages for a panel of 66 countries over 25 years we find controlling for other macroeconomic variables that wages are significantly responsive to corporate taxation higher corporate tax rates depress wages using spatial modelling techniques we also find that tax characteristics of neighbouring countries whether geographic or economic have a significant effect on domestic wages we test for and reject spatial autocorrelation in our model using a modification of the moran i test statistic that accounts for country specific fixed effects in a panel data setting our article fits in with the new economic geography literature as well as the urban economics literature which attempt to explain the spatial distribution of wages

are tax havens good neighbours fdi spillovers and developing countries abstractthis paper investigates the impact of tax havens on non tax haven countries in terms of foreign direct investment fdi we analyze the importance of agglomeration effects by including fdi inflow levels in tax havens and capture geographic spillovers by measuring proximity to the nearest tax haven our analysis yields several interesting findings first using panel data for 142 countries we find evidence of positive spillovers from tax havens to nearby developing countries but not to nearby developed countries second restricting our panel to developing countries we find the positive effect of tax haven fdi on developing countries to be robust third we find that geographic distance matters for financial flows developing countries which are the closest to a nearby tax haven benefit the most in terms of fdi inflows this result is robust to accounting for spatial interdependence of fdi

the effectiveness of targeted wage subsidies for hard to place workers targeted wage subsidies paid to employers are an important element of active labour market policies in germany this article uses propensity score matching to investigate their effect on the employment and unemployment rates of subsidized hard to place workers in a first scenario we estimate the average treatment effect of a subsidy on previously unemployed individuals a second scenario analyses the effects of a subsidy on employment probabilities conditional on taking up employment the third scenario investigates the additional effect of a subsidy on individuals who have participated in a short term training measure beforehand summing up and in line with the literature the results show that subsidies have a favourable effect on the employment prospects of participants

international comovement of economic fluctuations a spatial analysis summary we consider the comovement of economic volatility across multiple countries using spatial models with data from 187 countries over the period of 1960 2007 we find a strong spatial comovement of economic volatility more interestingly the effect of geographical proximity on economic volatility comovement is strongest during the period of international shocks 1973 86 but almost disappears over the globalization era 1987 2007 by way of contrast the influence of trade relations in determining the comovement of economic volatility is significant over 1987 2007

northwest coast indigenous institutions that supported resilience and sustainability abstract indians of the northwest coast of north america had cultural continuity for at least two millennia before contact with people from the old world this archeological fact suggests that their societies had achieved sustainability and resilience in relationships to their ecosystems and the salmon runs the governance principles used by northwest indians in managing fisheries and other resources provided resilience in addition to a land ethic these principles included exchange systems based on public reciprocity property rights were clear and trespass was a capital offense chiefs and titleholders had to be generous facilitators leadership authority over land was contingent upon adherence to ethical and generous behavior as well as good management these indigenous institutions were quite different from the rules currently governing the management of most ecosystems in critiquing current institutions many ideas similar to those in the indigenous systems have been proposed in isolation the example described in this paper suggests the importance of combining them

does institutional change spread across countries explaining spatial patterns in human rights if a country improves its human rights record will neighbouring countries benefit beneficial spillovers could justify intervention by the un or one of the many other organisations that internationally fight human rights violations we document that countries human rights performances often resemble the human rights situation of their neighbours however exploiting time variation in a spatial panel we find that much of that resemblance is simply determined by the shared geographical location changes in neighbouring countries have little influence on local human rights suggesting that contemporaneous spillovers and interactions are limited

a model of competition between unemployed and employed job searchers an application to the unemployment outflow rate in britain this paper proposes a model to explain the allocation of new jobs to workers the central innovation is the analysis of the competition for jobs between employed and unemployed job searchers it is argued that the endogeneity of the fraction of the employed engaging in search is a crucial determinant of the unemployment outflow rate the model is applied to the unemployment outflow rate in britain the model fits the data well and encompasses its main rival copyright 1993 by royal economic society

green havens and pollution havens we test for pollution haven effects in outward foreign direct investment fdi for different sectors using a comprehensive and exhaustive data set for outward fdi from the netherlands one of the most environmentally stringent countries and a major source of global fdi our evidence suggests that in the sectors natural resources extraction and refining construction retail food processing beverages and tobacco and utilities a less stringent environmental policy in the host country significantly attract fdi what is important for these pollution haven effects is not only regulation but also enforcement of environmental policy in contrast to earlier results it is not only footloose industries that display pollution haven effects but also the traditional pollution intensive industries but for the machines electronics and automotive and transportation and communication sectors a more stringent and better enforced environmental policy attracts more fdi as this may help their reputation for sustainable management and csr these sectors display green haven effects these findings have important implications for the sector distribution of fdi in destination countries

economic impact assessment of mega infrastructure pipeline projects the economic development features for the decades after the second world war provide evidence that investments to new infrastructures are a key driver in strengthening the national economy and enhancing nation s productivity as it creates economic benefits and additional income however the decision for fund allocation and investments in mega infrastructure pipeline projects often must be made in conditions that are much more fraught with uncertainty the key question in such decisions is if the economic impact caused by the new project could be able to essentially boost the economy by creating new jobs and generating new income on one hand and which are the business sectors expected to archive the benefits of this investment this article deals with the estimation of the mega infrastructure pipeline project economic effects in economy the methodological framework is based on input output approach providing quantitative estimations about the economic impact of the project in terms of new income and jo

the complex integration strategies of multinationals and cross country dependencies in the structure of foreign direct investment abstract the behavior of many multinational enterprises is not well described by existing models of foreign direct investment fdi firms often follow strategies that involve vertical integration in some countries and horizontal integration in others a strategy known as complex integration this paper presents a three country model that is used to analyze why firms might follow a strategy of complex integration my analysis reveals that complex integration strategies create complementarities between potential host countries that have important implications for the structure of fdi the analysis also shows that falling transport cost between countries may increase the importance of complex integration strategies

incorporating resilience in the assessment of inclusive wealth an example from south east australia this paper explores the consequences of changes in a system s resilience on the sustainability of resource allocation decisions as measured by inclusive wealth iw arrow et al in environ resour econ 26 647 685 2003 we incorporate an estimate of resilience in iw by taking account of known or suspected thresholds that can lead to irreversible or practically irreversible changes in the productivity and value of assets and hence social welfare these thresholds allow us to identify policies or projects that may be leading to an increased risk of decline in capital stocks the wealth of the region such risks are not reflected through usual measures of current system performance e g agricultural production we use the goulburn broken catchment in south eastern australia as a case study to explore the significance and practicality of including resilience in inclusive wealth estimates

an empirical investigation of the pollution haven effect with strategic environment and trade policy abstract using a new dataset on the stringency and enforcement of environmental policy this study is the first to find robust confirmation of a pollution haven effect in a cross country context by accounting for strategically determined environment trade and intellectual property right ipr policies a simple game theoretic approach to policy determination is described which suggests an identification strategy based on other country characteristics it is found that for the top 20th percentile of countries in terms of growth in u s multinational affiliate value added as much as 8 6 of that growth between 1999 and 2003 can be attributed to declining relative stringency and enforcement of environmental policy the results are robust to a number of identification tests weak iv tests and third country spatial effects further evidence is found that relatively footloose industries are more likely to be affected by environmental policy than more traditionally dirty industries and enforcement of environmental policies tends to be a more important deterrent than the stringency of the policy set

u s canada trade liberalization and mnc production location using confidential firm level panel data from the bureau of economic analysis we examine how the bilateral trade flows of u s multinational corporations mncs and their canadian affiliates responded to u s canadian tariff reductions from 1983 to 1992 we find that canadian affiliate sales to the united states are negatively correlated with canadian tariffs but u s parent sales to canadian affiliates have little association with canadian tariffs these results contradict the notion that canadian tariff reductions would lead to a hollowing out of canadian manufacturing we also find substantial heterogeneity in mnc responses to tariff changes within narrowly defined manufacturing industries overall bilateral trade liberalization is trade creating as u s mncs integrated their north american production such that canadian affiliates increased sales to the united states and reduced domestic sales

moral hazard and nonmarket institutions dysfunctional crowding out or peer monitoring the authors examine a situation in which insurance is characterized by moral hazard when market insurance is provided supplementary mutual assistance between family and friends unobservable to market insurers will occur when nonmarket insurers have no better information than market insurers the mutual assistance not only crowds out market insurance but is also harmful and therefore dysfunctional alternatively when nonmarket insurers can observe each other s effort perfectly mutual assistance is beneficial these results point to the potential importance of peer monitoring mechanisms in mitigating moral hazard copyright 1991 by american economic association

employer search training and vacancy duration we develop a model of optimal employer search strategy when information about match quality is endogenous the model is tested using four data sets two of which have not previously been used as theory predicts we find that when filling positions requiring more training employers search more intensively and extensively employers also search more extensively when hiring workers with more education and with prior experience these findings provide strong evidence of systematic variation in search strategies based on the characteristics of the positions and job applicants factors that influence employer search also affect the duration of a vacancy

toward a theory of vacancies we attempt to further characterize the search strategies of the employer in the article we discuss how characteristics of the employer or conditions that the employer faces affect the optimal search strategies and the probability of filling a vacancy in each period semiparametric and parametric methods are used to estimate hazard rates of filling vacancies the results suggest that for the given sample of vacancies the general form of the hazard function is nonmonotonic additionally the results suggest that those employers who have advance notice of the vacancy may search longer than those employers who do not

how far away is an intangible services fdi and distance foreign direct investment fdi in services has grown significantly in recent years evidence of spatial relationships in fdi decisions have been provided for goods manufacturing by utilising physical distance based measures of trade costs this paper investigates spatial interactions for services fdi using several distance measures including physical distance genetic distance and transport time across different measures of distance the traditional determinants of outbound fdi activity remain valid for services we also find spatial interdependence for services fdi that is generally supportive of export platform fdi

a race to the bottom employment protection and foreign direct investment a common critique of globalization is that it leads to a race to the bottom specifically it is assumed that multinationals invest in countries with lower regulatory standards and that countries competitively undercut each other s standards in order to attract foreign capital this paper tests this hypothesis and finds robust empirical support for both predictions first a reduction in employment protection rules leads to an increase in foreign direct investment fdi furthermore changes in employment protection legislation have a larger impact on the relatively mobile types of fdi second there is evidence that countries are competitively undercutting each other s labor market standards

a solution to the problem of externalities when agents are well informed the author describes a class of simple two stage mechanisms that implement efficient allocations as subgame perfect equilibria for economic environments involving externalities these mechanisms known as compensation mechanisms solve a wide variety of externalities problems including implementation of lindahl allocations regulation of monopoly and efficient solutions to the prisoner s dilemma copyright 1994 by american economic association

evaluating the econometric evaluations of training programs with experimental data this paper takes the results of an employment and training program thatwas run as a field experiment in which the participants were randomlyassigned into a treatment or a control group and compares these results to the estimates that might have been produced by an econometrician who evaluated the program using the same econometric procedures that have been used in the program evaluation literature this comparison shows that many of these econometric procedures fail toreplicate the experimentally determined results and suggests that researchers should be aware of the potential for specification errorsin other nonexperimental evaluations copyright 1986 by american economic association

multinationals multi plant economies and the gains from trade a general equilibrium model of a multinational enterprise based on economies of multi plant operation is developed these economies are modelled as arising from the existence of a joint input whose productivity in each production facility is independent of the number of facilities maintained by a firm the multinational thus offers the world increased technical efficiency by eliminating the duplication of the joint input that would occur with independent national firms since this technical efficiency may come at the expense of increased market power the full determinants of home country host country and world welfare are considered

testing the pollution haven effect does the type of fdi matter many studies have tested the pollution haven effect phe which predicts that the tightening of local environmental regulations would shift foreign direct investment fdi to less regulated jurisdictions however most of them ignored the heterogeneity of fdi this paper studies the phe on local market oriented and export oriented fdi and tests whether the two types have different responsiveness to environmental regulations in a host country a simple model is developed to describe how different types of multinational companies respond in distinct ways to stricter environmental policies in host countries using us outward fdi data for 50 host countries and a survey measure of both the stringency and the enforcement of local environmental regulations i find a significant deterrent effect of local environmental regulations on inward fdi furthermore fdi in a host country is not only affected by local environmental regulations but also by environmental regulations in proximate countries more importantly accounting for the relative stringency of environmental regulations between a host country and the united states is critical for identifying a phe i find a significantly stronger effect of environmental policies on both types of fdi in host countries with environmental regulations that are stricter than those in the united states in these countries export oriented fdi also exhibits a greater sensitivity to local environmental regulations than local market oriented fdi

size location and agglomeration of inward foreign direct investment fdi in the united states halvorsen t size location and agglomeration of inward foreign direct investment fdi in the united states regional studies since the late 1970s a range of economic development policies to attract foreign direct investments fdis have been tried out despite a policy reorientation from a large size bias to policies also favouring smaller investments little empirical work has been performed on the determinants of investment size this paper presents empirical evidence on how the size of fdis is determined by agglomeration and other state level factors the results indicate that fdi agglomeration and urbanization affect investment size and that taxes markets labour land and the concentration of scientific knowledge are important determinants in the size composition of fdi halvorsen t le montant la localisation et l agglomeration de l investissement direct etranger ide aux etats unis regional studies depuis la fin des annees 1970 on met en vigueur toute une serie de politiques de developpeme

unemployment vacancies and the long term unemployed this paper is concerned with two related features of the labor market the ratio of long term to total unemployment r and the relat ionship between unemployment and vacancies the u v curve a model is developed to explain r in terms of the average probability that an unemployed person will find a job within a particular time period when the authors add the empirically confirmed hypothesis that this exit probability is lower for the long term than it is for the short term unemployed the n the model is consistent with the observed pattern of unemployment copyright 1988 by royal economic society

the build up of local sustainable development politics a case study of company leaders in france abstract the purpose of this study is to examine business leaders perceptions on sustainable development and their expectations about local governments using a questionnaire on a cross section of 32 french business leaders we examine the following questions can issues related to sustainable development extend beyond questions of profit and future economic dynamism the modern global economic crisis in combination with the ongoing ecological one makes regional attractiveness more topical than ever if local governments invest in sustainable development policy it might satisfy not only citizens but also firms in the territory while attracting new ones as well to determine if firms are really interested in such a policy as well as understand their expectations this research undertook interviews with 32 business leaders we found that local governments should act with firms as partners to increase resilience and sustainability the expectations of business leaders and their sensitivity to sustainable development suggest that sustainable development policies could improve the attractiveness of a local economy especially in the context of the current environmental and economic crises

extensive search intensive search and hiring costs new evidence on employer hiring activity this paper presents recent evidence on employer search to fill a position a 1982 employer survey sponsored by the national institute of education and the national center for research in vocational education provides the basis for analyzing employer search and hiring costs the paper examines the effects of such factors as employer size dismissal costs unionization on the job training adjustment costs capital and labor market conditions on intensive employer search extensive employer search and hiring costs intensive employer search is measured by the average number of hours the employer spends recruiting screening and interviewing per applicant extensive search is measured by the number of applicants seen per applicant interviewed and the number interviewed per employment

the effect of fdi on child labor abstract this paper examines the effect of fdi on child labor using 1995 data for 145 countries we find that contrary to common fears fdi is negatively correlated with child labor this effect disappears when controlling for per capita income after doing so we find no robust effect of either fdi or international trade on child labor this result is robust to corrections for the endogeneity of fdi trade and income furthermore this result is confirmed using data from earlier years this suggests that the impact of fdi and trade on child labor if any is the increases in income they generate

the quality of managers in centralized versus decentralized organizations a central task of the leadership of any organization is the choice of its successors and subordinates corporate presidents spend a significant part of their time selecting upper management tenured faculty sometimes spends months deciding whether particular individuals should be admitted into their ranks the effort and contentiousness which often go into this process suggests that it has important consequences for the organization it is recognized that there are large differences in individuals abilities and that the abilities of those in leadership inevitably affect the performance and survival of the organization our objective here is to examine how the centralization or decentralization of decision making authority affects the quality of the managers who are actually selected this question is naturally dynamic because the quality of current managers is not only influenced by that of past managers but it in turn affects the quality of future managers we consider stylized economies consisting of an arbitrary number of hierarchies organizations of different sizes the size of a hierarchy is the number of managers within the hierarchy one of whom is the hierarch the boss and others are subordinates the current hierarch appoints his own successor and those of his subordinates but has no influence on any other hierarchy this assumption exaggerates somewhat the typical asymmetry of authority between the hierarch and the subordinates our definition of a more or less centralized economy is intuitive an economy is more centralized if it has a larger proportion of the total number of managers in larger hierarchies our main result is that there is a greater variability over time in the steady state quality of managers in a more centralized economy this is because highly capable decision makers have greater beneficial effects on the managerial choices in a more centralized economy by the same token highly incapable managers placed in the same positions have greater deleterious effects

converting unemployment benefits into employment subsidies although unemployment benefit systems vary widely among oecd countries they all tend to increase the unemployment whose effects they are meant to mitigate the reasons are well known they push up wages by improving workers fall back positions in wage negotiations and they discourage job search for when unemployed people find jobs their unemployment benefits are withdrawn and they have to pay taxes thereby many unemployment benefit systems not only generate inefficiencies and inequities in their own right but also augment common labor market failures particularly those highlighted by the efficiency wage insider outsider and union theories these market failures have serious dynamic consequences for the longer people are unemployed the more their skills erode and the more discouraged and stigmatized they become in the job search process when unemployment benefit systems amplify these dynamic effects they put the long term unemployed at a greater disadvantage in competing for jobs this disadvantage is augmented by market failures in the provision of training the long term unemployed often have had relatively little opportunity to acquire firmspecific skills and thus in imperfectly com

property rights regimes and natural resources a conceptual analysis the term common property resource is an example of a term repeatedly used to refer to property owned by a government or by no one it is also used for property owned by a community of resource users such usage leads to confusion in scientific study and policy analysis in this paper we develop a conceptual schema for arraying property rights regimes that distinguishes among diverse bundles of rights ranging from authorized user to claimant to proprietor and to owner we apply this conceptual schema to analyze findings from a variety of empirical settings including the maine lobster industry

evolution of bilateral capital flows to developing countries at intensive and extensive margins motivated by the rise in capital flows to low income countries lics we examine the nature of these flows and the factors affecting foreign investors decision recognizing the presence of fixed investment costs we analyze capital flows at both intensive and extensive margins to fix ideas we resort to the gravity literature for the estimating relationships which we embed into a two tier econometric framework with cross sectional dependence our main finding is that market entry costs are statistically and economically very detrimental to lics we also obtain the gravity type relationship for the destination income unconditionally but not after conditioning on relevant variables as well as establish labor productivity as a robust attractor of capital inflows

fiscal policy and the firm do low corporate tax rates attract multinational corporations the existing literature on the political economy of taxation explores how the mobility of firms affects the ability of governments to tax capital in this article the author tests the relationship

the evolution of social norms in common property resource use the problem of extracting commonly owned renewable resources is examined within an evolutionary game theoretic framework it is shown that cooperative behavior guided by norms of restraint and punishment may be stable in a well defined sense against invasion by narrowly self interested behavior the resource stock dynamics are integrated with the evolutionary game dynamics effects of changes in prices technology and social cohesion on extraction behavior and the long run stock are analyzed when threshold values of the parameters are crossed social norms can break down leading generally to the lowering of the long run stock and possibly to its extinction copyright 1996 by american economic association

in search of spatial interdependence of us outbound fdi in the mena region the paper investigates the spatial interdependence of us mne investments in the mena region given the variations in resource endowments governance structures and degree of infrastructure availability in mena countries one would expect these variables to affect an mne s choice of fdi location we do find that domestic non spatial factors such as own country inflation and governance measured by bureaucratic quality as well as infrastructure affect a host country s inward fdi we also found that only one measure of natural resource endowment that is oil and gas exports were instrumental in attracting fdi this non spatial result is generally robust and invariant to the two methodologies employed in this study that is the spatially autoregressive sar model and the spatial durbin model sdm we found that neighbouring countries infrastructure availability measured either by electricity used or energy used affected fdi inflows in a host country however this spatial impact was found only in the sdm model the spatial effects of neighbouring countries economic and political conditions and resource endowments were however not observed on a host country s inward fdi the insignificance of both the surrounding market potential and the spatially weighted fdi suggests a purely horizontal motive of mne investments in the mena region

dyadic military conflict security alliances and bilateral fdi flows although multinationals operate under cross border jurisdictions the relevance of interstate security relations to international business has received little attention despite the impressive accumulation of knowledge in international business and international relations the two intellectual communities have largely ignored the insights from each other in this article we seek to bridge this gap we argue that interstate military conflict and security alliances as two central features of interstate security relations often change both government policies toward international business and investor expectations of political risk from the perspectives of both states and investors military conflict should reduce bilateral investment whereas security alliances increase it our empirical analysis applies the system gmm estimator to a gravity model of bilateral investment flows for 1117 directed dyads among 58 countries from 1980 to 2000 among 18 countries whose per capita real incomes remain consistently above 12 000 constant dollars the security factors do not affect bilateral investment in the high income low income dyads interstate military conflict and security alliances significantly influence bilateral investment as expected the findings depict two separate realms in which international politics does and does not interfere with international business helping us improve political risk assessments and understand the interactions between states and firms

the effect of the euro on foreign direct investment abstract in this paper the recent effect of the european monetary union on inward fdi flows is examined using a difference in differences approach the estimated results show that the introduction of the euro raised inward fdi flows by approximately 16 within the euro area by approximately 11 to non members and weakly by around 8 from non member countries into the euro area moreover the geographical effects of the euro are explored the results show partial agglomeration tendencies for the euro area there are also some indications of increased importance of vertical specialization in the sample

split panel jackknife estimation of fixed effect models we propose a jackknife for reducing the order of the bias of maximum likelihood estimates of nonlinear dynamic fixed effect panel models in its simplest form the half panel jackknife the estimator is just 2 hat theta bar theta 1 2 where hat theta is the mle from the full panel and bar theta 1 2 is the average of the two half panel mles each using t 2 time periods and all n cross sectional units this estimator eliminates the first order bias of hat theta the order of the bias is further reduced if two partitions of the panel are used for example two half panels and three 1 3 panels and the corresponding mles on further partitioning the panel any order of bias reduction can be achieved the split panel jackknife estimators are asymptotically normal centered at the true value with variance equal to that of the mle under asymptotics where t is allowed to grow slowly with n in analogous fashion the split panel jackknife reduces the bias of the profile likelihood and the bias of marginal effect estimates simulations in fixed effect dynamic discrete choice models with small t show that the split panel jackknife effectively reduces the bias and mean squared error of the mle and yields confidence intervals with much better coverage

long term unemployment and the wage equation in britain 1925 1939 this paper shows that addition of a long term unemployment variable substantially improves estimates of the wage equation in interwar britain long term unemployment did not have a damping effect on wage growth whereas short term unemployment did reduce wage inflation the results imply that during the 1930s the nonaccelerating inflation rate of unemployment rose as the composition of the stock of unemployed altered both insider outsider arguments and employer perceptions of low productivity characteristics among the long term unemployed are likely explanations for the results in the paper copyright 1989 by the london school of economics and political science

stigma effects of nonemployment i introduction it is well known that longer durations of past nonemployment are associated with longer durations of future nonemployment 1 two explanations have been offered in the literature to interpret this phenomenon heterogeneity and the effect of workers employment histories the heterogeneity explanation argues that individuals differ in certain observed and unobserved characteristics and that these differences affect the duration of their periods of nonemployment however these individuals are unaffected by the mere experience of nonemployment because individuals with longer spells of nonemployment in the past are more likely to have characteristics that make them remain nonemployed they are likely to experience longer spells of nonemployment than others in the future the work history explanation argues that the mere experience of longer spells of nonemployment in the past raises the chance of longer spells of nonemployment in the future two theoretical explanations have been offered to explain this structural relationship human capital decay and stigma human capital decay suggests that nonemployed workers lose vital work experience and on the job training or suffer from human capital decay that reduces their future employability stigma suggests that potential employers infer the unobserved components of the workers quality from their history of employment and nonemployment in particular past nonemployment sends a negative signal to potential employers that lowers the probability of future reemployment 2 the ability to distinguish between heterogeneity and the effect of work history is a crucially important policy issue if the observed correlation between the duration of successive nonemployment spells reflects heterogeneity across individuals then a given individual enjoys the same chance of reemployment no matter how long or short his periods of past nonemployment have been in this case chronic nonemployment is a problem of a population subgroup and traditional training programs targeted toward the chronically nonemployed would be an appropriate policy tool moreover the programs could be targeted at individuals with the characteristics associated with a high risk of chronic nonemployment however if the observed correlation reflects the effect of work history anyone who happens to have experienced long periods of nonemployment in the past has a high probability of experiencing long periods of nonemployment in the future thus phelps 1972 argues that short term macroeconomic policies that alleviate unemployment will also lower aggregate unemployment rates in the long run 3 i argue however that an appropriate policy depends on the cause of the work history effect if the effect reflects human capital decay then short term macroeconomic policies to alleviate unemployment and traditional government training programs to help the unemployed restore lost skills are appropriate if the effect reflects stigma active short term macroeconomic policies may not be necessary to lower aggregate unemployment rates in the long run because stigma effects are likely to be weaker when nonemployment is experienced during a severe recession than when it is experienced during a moderate recession an appropriate policy would aim at aiding the flow of accurate information on the quality of stigmatized workers in the private sector for instance the government might subsidize potential private sector employers costs of screening job applicants who established poor work histories during a period of moderate recession alternatively it might sponsor private sector internship and training programs for such workers 4 although both the duration and frequency of nonemployment determine the individual s nonemployment rate the duration is empirically far more important than the frequency 5 because an understanding of the determinants of the duration of nonemployment is crucial to both economic theory and policymaking an enormous number of empirical studies have addressed the issue

fdi in space spatial autoregressive relationships in foreign direct investment abstract there are a number of theoretical reasons why foreign direct investment fdi into a host country may depend on the fdi in proximate countries such spatial interdependence has been largely ignored by the empirical fdi literature with only a couple recent papers accounting for such issues in their estimation this paper conducts a general examination of spatial interactions in empirical fdi models using data on us outbound fdi activity we find that estimated relationships of traditional determinants of fdi are surprisingly robust to inclusion of terms to capture spatial interdependence even though such interdependence is estimated to be significant however we find that both the traditional determinants of fdi and the estimated spatial interdependence are quite sensitive to the sample of countries one examines

foreign direct investment in china a spatial econometric study foreign direct investment fdi began to flow into china with advent of reforms in 1978 following a period of relatively slow growth fdi inflows to china picked up after 1990 as china surpassed every other nation but the united states in attracting foreign investment in particular coastal regions of china have received the bulk of fdi inflows to the country in this paper we use province level data to explain the pattern of fdi location across china we build upon previous research introducing new potential determinants using more recent fdi data and incorporating spatial econometric techniques in doing so we test for potential econometric problems arising from the spatial pattern of the data and correct for them by running more appropriate models we find that economic size labor productivity and coastal location attract fdi while higher wages and illiteracy rates deter it the transportation infrastructure variables we try are not found to have statistically significant relationships with the level of fdi inflows across provinces this abstract was borrowed from another version of this item

the location choices of foreign investors a district level analysis in india this paper analyzes the determinants of the location choices made by foreign investors at the district level in india to gauge the relative importance of economic geography factors local business conditions and the presence of previous foreign investors we employ a discretechoice model and poisson regressions to control for the potential violation of the assumption of independence of irrelevant alternatives our sample includes about 19 500 foreign investment projects approved in 447 districts from 1991 2005 we find that foreign investors strongly prefer locations where other foreign investors are they are also attracted to industrially diverse locations and those with better infrastructure we conclude that the concentration of fdi in a few locations could fuel regional divergence in post reform india

the impact of capital market integration on educational choice and the consequences for economic growth this paper examines the impact of capital market integration on higher education and the link to economic growth the analysis takes into account that participation in higher education is non compulsory and depends on individual choice due to capital skill complementarity integration increases reduces the incentives to participate in higher education in capital importing exporting economies all other things equal from a national policy point of view public education expenditure should increase after integration of similar economies in order to attract mobile capital using foreign direct investment as a measure of capital flows we present empirical evidence which largely confirms our main hypothesis an increase in net capital inflows in response to capital market integration raises participation in higher education in addition we show that the adjustment in educational attainment is an empirically relevant channel through which capital inflows foster economic growth

career interruptions and subsequent earnings a reexamination using swedish data this paper reexamines the link between career interruptions and subsequent wages using a rich new swedish dataset we are able to disaggregate time out of work into several components regressing

a race to the bottom in labor standards an empirical investigation abstract one of the concerns over globalization is that as nations compete for investment they relax labor standards to attract firms using spatial estimation on panel data for 135 countries over 17 years we find that the labor standards in one country are positively correlated with those elsewhere i e a cut in labor standards in other countries reduces labor standards in the country in question this interdependence is more evident in labor practices i e enforcement than in labor laws further while we find evidence of competition in both developed and developing countries it is strongest among developing countries with weak standards