problems with identifying adjustment costs from regressions of investment on q abstract most econometricians evaluate investment q regressions by using the coefficients to estimate adjustment costs however these coefficients do not uniquely identify average adjustment costs or speeds nor do they appear in the expression for marginal adjustment costs in terms of observables

financial factors and investment in belgium france germany and the united kingdom a comparison using company panel data we construct company panel data sets for manufacturing firms in belgium france germany and the united kingdom covering the period 1978 1989 these data sets are used to estimate empirical investment equations and to investigate the role played by financial factors in each country a robust finding is that cash flow and profits terms appear to be both statistically and quantitatively more significant in the united kingdom than in the three continental european countries this is consistent with the suggestion that financial constraints on investment may be relatively severe in the more market oriented u k financial system

crime rates and local labor market opportunities in the united states 1979 1997 the labor market prospects of young unskilled men fell dramatically in the 1980s and improved in the 1990s crime rates show a reverse pattern increasing during the 1980s and falling in the 1990s because young unskilled men commit most crime this paper seeks to establish a causal relationship between the two trends previous work on the relationship between labor markets and crime focused mainly on the relationship between the unemployment rate and crime and found inconclusive results in contrast this paper examines the impact of both wages and unemployment on crime and uses instrumental variables to establish causality we conclude that both wages and unemployment are significantly related to crime but that wages played a larger role in the crime trends over the last few decades these results are robust to the inclusion of deterrence variables controls for simultaneity and controlling for individual and family characteristics

financial development and financing constraints international evidence from the structural investment model this article provides evidence that financial development impacts growth by reducing financing constraints that would otherwise distort efficient allocation of investment the financing constraints are inferred from the investment euler equation by assuming that the firm s stochastic discount factor is a function of the firm s financial position specifically the stock of liquid assets the magnitude of the changes in the cost of capital is twice as large in a country with a low level of financial development as in a country with an average level of financial development the size effect business cycles and legal environment effects are also considered copyright 2003 oxford university press

the effect of unemployment benefits on the duration of unemployment insurance receipt new evidence from a regression kink design in missouri 2003 2013 abstract we provide new evidence on the effect of the unemployment insurance ui weekly benefit amount on unemployment insurance spells based on administrative data from the state of missouri covering the period 2003 2013 identification comes from a regression kink design that exploits the quasi experimental variation around the kink in the ui benefit schedule we find that ui durations are more responsive to benefit levels during the recession and its aftermath with an elasticity between 0 65 and 0 9 as compared to about 0 35 pre recession

lasting or latent scars swedish evidence on the long term effects of job displacement recently improved swedish register data have made it possible to remedy many weaknesses of previous research on displaced workers using linked employer employee data we identify all workers displaced in 1987 due to an establishment closure and follow them over both a predisplacement period of 4 years and a postdisplacement period stretching until 1999 we find that the displaced workers suffer both earnings losses and worsened labor market position not only during a transitory period of adjustment but also in the longer run these longer run effects seem to be driven by an increased sensitivity to subsequent macroeconomic shocks

job loss and regional mobility we study the migration behavior of displaced workers and find that job displacement increases regional mobility we find however that noneconomic factors such as family ties are very important

asset price shocks financial constraints and investment evidence from japan this paper examines investment spending of japanese firms around the asset price bubble in the late 1980s and makes three contributions to our understanding of how stock valuations affect investment first corporate investment responds significantly to nonfundamental components of stock valuations during asset price shocks fundamentals matter less clearly the stock market is not a sideshow second the time series variation in the sensitivity of investment to cash flow is affected more by changes in monetary policy than by shifts in collateral values finally asset price shocks primarily affect firms that rely more on bank financing and not necessarily those that use equity markets for financing only the investment of bank dependent firms responds to nonfundamental valuations in addition the cash flow sensitivity of bank dependent firms with large collateral assets decreases when asset prices become inflated but increases dramatically when asset prices collapse and monetary policy tightens

bank based versus market based financial systems a growth theoretic analysis abstract we study bank based and market based financial systems in an endogenous growth model lending to firms is fraught with moral hazard as owner managers may reduce investment profitability to enjoy private benefits bank monitoring partially resolves the agency problem while market finance is more hands off a bank based or market based system emerges from firm financing choices neither system is unequivocally better for growth which crucially depends on the efficiency of financial and legal institutions but a bank based system outperforms a market based one along other dimensions investment and per capita income are higher and income inequality lower under a bank based system bank based systems are also more conducive for broad based industrialization

job search and unemployment insurance new evidence from time use data article i nfo this paper provides new evidence on job search intensity of the unemployed in the u s modeling job search intensity as time allocated to job search activities the major findings are 1 the average u s unemployed worker devotes about 41 min to job search on weekdays which is substantially more than their european counterparts 2 workers who expect to be recalled by their previous employer search substantially less than the average unemployed worker 3 across the 50 states and d c job search is inversely related to the generosity of unemployment benefits with an elasticity between 1 6 and 2 2 4 job search intensity for those eligible for unemployment insurance ui increases prior to benefit exhaustion and 5 time devoted to job search is fairly constant regardless of unemployment duration for those who are ineligible for ui

investment behavior observable expectations and internal funds we use earnings forecasts from securities analysts to construct a new measure of the neoclassical fundamentals that drive investment spending we find that investment responds significantly to our new measure of fundamentals but is insensitive to cash flow even for firms typically thought to be liquidity constrained these results have two key implications first fundamentals may be more important for investment spending than would be suggested by the results to date from investment q models second the positive cash flow effects obtained in such models may reflect a failure to control properly for fundamentals rather than the presence of financial constraints jel d92 e22

juvenile incarceration human capital and future crime evidence from randomly assigned judges over 130 000 juveniles are detained in the united states each year with 70 000 in detention on any given day yet little is known about whether such a penalty deters future crime or interrupts social and human capital formation in a way that increases the likelihood of later criminal behavior this article uses the incarceration tendency of randomly assigned judges as an instrumental variable to estimate causal effects of juvenile incarceration on high school completion and adult recidivism estimates based on over 35 000 juvenile offenders over a 10 year period from a large urban county in the united states suggest that juvenile incarceration results in substantially lower high school completion rates and higher adult incarceration rates including for violent crimes in an attempt to understand the large effects we found that incarceration for this population could be very disruptive greatly reducing the likelihood of ever returning to school and for those who do return significantly increasing the likelihood of being classified as having an emotional or behavioral disorder jel codes k140 i210

corporate investment with financial constraints sensitivity of investment to funds from voluntary asset sales we examine the importance of financial constraints for firm investment by looking at the relationship between investment expenditures and proceeds from voluntary asset sales asset sales provide a cleaner indicator of liquidity than cash flows since it appears not to be positively correlated with investment opportunities the cross sectional differences in firm investment are examined using an endogenous switching regression model with unknown sample separation we find that cash obtained from asset sales is a significant determinant of corporate investment and that the sensitivity of investment to proceeds from asset sales is significantly stronger for firms that are likely to be financially constrained

historical perspetives on the american economy explaining the relative efficiency of slave agriculture in the antebellum south the comments by paul david and others in the march 1979 issue of this review dealt mainly with technical issues related to the measurement of the relative efficiency of slave agriculture and so does this reply 1 the debate over these technical issues should not however obscure the marked shift in thought about the nature of the slave economy that has occurred during the past two decades until the mid 1950 s it was widely believed that the slave plantations were unprofitable and inefficient enterprises that were kept in operation by a class prepared to sacrifice its private economic interest enduring economic stagnation for the south in order to maintain its political and cultural hegemony the first critical blow to this thesis was delivered by the now famous 1958 essay of alfred conrad and john meyer marshalling the limited evidence available at that time and using a standard capital model to estimate the internal rate of return on an investment in slaves they concluded that rates of return on this form of capital compared favorably with rates on alternative investments this finding set off an extended debate that took more than a decade to resolve eventually refinements in the original capital model and a considerable expansion of the data base including the parker gallman sample of over 5 000 southern farms and large samples of slave prices and hire rates from probate and other records placed the rate of return in the 610 percent range thus demonstrating the allocative efficiency of the slave economy the second blow to the traditional thesis was delivered by richard easterlin s development of regional income estimates extending back to 1840 both these initial estimates and the subsequent refinements in them see our 1971a paper showed that the south experienced a high rate of growth in per capita income between 1840 and 1860 thus contradicting the view that the antebellum south was economically stagnant these twin blows to the traditional interpretation shifted cliometric attention to the question of the relative technical efficiency of slave and free agriculture in input utilization while it is obviously premature to declare this question settled a consensus has emerged on one critical point it is now clear that the previous view that slave agriculture was less efficient than free agriculture is incorrect what remains to be resolved is the exact margin of the advantage enjoyed by slave plantations and the explanation for this margin

the crime reducing effect of education in this article we study the crime reducing potential of education presenting causal statistical estimates based upon a law that changed the compulsory school leaving age in england and wales we frame the analysis in a regression discontinuity setting and uncover significant decreases in property crime from reductions in the proportion of people with no educational qualifications and increases in the age of leaving school that resulted from the change in the law the findings show that improving education can yield significant social benefits and can be a key policy tool in the drive to reduce crime

tax mix corners and other kinks abstractthis paper models the local tax mix determination process in the presence of statewide fiscal limitations the decentralized government finance archetype and shows how excess sensitivity of local public spending to grants the conventionally and somewhat misleadingly termed flypaper effect arises in the constrained tax mix irrespective of whether lower or upper limits bind and how it cannot in general be taken as a symptom of local government overspending an empirical application to italian province panel data provides consistent evidence of the role of corner solutions produced by two sided tax limits in explaining the sensitivity of local public expenditures to grants

investment dynamics with fixed capital adjustment cost and capital market imperfections this paper examines the implications of financing frictions on capital stocks and on capital accumulation in the presence of non convex costs of adjusting the capital stock in this setup finance has an influence on both the level of capital and the timing of investment finance and productivity are complements and finance influences investment the strongest when firms wish to significantly adjust capital for fundamental reasons these theoretical considerations are confronted with uk data while finance is mostly irrelevant for long term capital decision the short run investment function shows a significant impact of finance which is also strongest for strong fundamental investment incentives

financial and legal constraints to growth does firm size matter using a unique firm level survey database covering 54 countries we investigate the effect of financial legal and corruption problems on firms growth rates whether these factors constrain growth depends on firm size it is consistently the smallest firms that are most constrained financial and institutional development weakens the constraining effects of financial legal and corruption obstacles and it is again the small firms that benefit the most there is only a weak relation between firms perception of the quality of the courts in their country and firm growth we also provide evidence that the corruption of bank officials constrains firm growth

crime and unemployment in turbulent times we use the exceptional variation in municipality level unemployment in sweden during the 1990s to identify the effect of unemployment on crime our findings are as follows i there is a statistically and economically significant effect of general unemployment on the incidence of burglary auto theft and drug possession ii we find no evidence for the popular view that youth unemployment matters for crime iii prime aged unemployment is robustly correlated with main categories of youthful crimes a finding consistent with the idea that unstable life conditions of parents have adverse spillover effects on the life choices of their children jel j00 k4

identifying the effect of unemployment on crime abstract in this paper we analyze the relationship between unemployment and crime using u s state data we estimate the effect of unemployment on the rates of seven felony offenses we control extensively for state level demographic and economic factors and estimate specifications that include state specific time trends state effects and year effects in addition we use prime defense contracts and a state specific measure of exposure to oil shocks as instruments for unemployment rates we find significantly positive effects of unemployment on property crime rates that are stable across model specifications our estimates suggest that a substantial portion of the decline in property crime rates during the 1990s is attributable to the decline in the unemployment rate the evidence for violent crime is considerably weaker however a closer analysis of the violent crime of rape yields some evidence that the employment prospects of males are weakly related to state rape rates

the relative efficiency of slave agriculture a comment in their book time on the cross fogel and engerman fe present evidence that average factor productivity was greater for larger southern slave farms in 1860 than for both free farms and smaller slave farms in a recent article field 1988 lends support to the fe theory by finding that an upward shift in the production function occurs for slave farms at 15 slaves the size at which fe propose that gang labour became feasible in a more recent article grabowski and pasurka gp contradict both fe and field by finding that there was no relationship between the size of slave farms and their efficiency the present paper extends both gp s and field s work and refines a point made by fe we distinguish between a technological advantage due to the gang labour system and revenue inefficiency due both to the incentive structure of slavery and the repugnance of gang labour two factors which foster rational shirking and resistance by slaves that is we propose that relative to small slave farms large slave f

implementation cycles investment and growth we develop a model of intrinsic cycles driven by the decentralized behavior of entrepreneurs and firms making continuous divisible improvements in their productivity we show that when the introduction of productivity improvements is endogenous implementation cycles arise even in the presence of reversible investment and consumption smoothing the implied cyclical equilibrium is unique within its class and shares several features in common with actual business cycles in particular its predictions are qualitatively consistent with the joint behavior of the investment rate and tobin s q during u s recessions

a new database on the structure and development of the financial sector this article introduces a new database of indicators of financial structure and financial development across countries and over time the database is unique in that it combines a wide variety of indicators that measure the size activity and efficiency of financial intermediaries and markets it improves on previous efforts by presenting data on the public share of commercial banks introducing indicators of the size and activity of nonbank financial institutions and constructing measures of the size of bond and primary equity markets this article introduces a new database the first to provide comprehensive measures of the development structure and performance of the financial sector this database is the first to define and construct indicators of the size and activity of nonbank financial intermediaries such as insurance companies pension funds and non deposit money banks it is also the first to include indicators of the size of primary equity markets and primary and secondary bond markets in constructing the database authors carefully deflate measures and match stock and flow variables

investment cash flow sensitivity under changing information asymmetry abstract empirical studies on whether investments are sensitive to cash flows in imperfect markets often report conflicting results and have been criticized on conceptual and methodological grounds our study mitigates some of these problems using a research design that relates changes in investment cash flow sensitivity to changes in the bid ask spread measure of information asymmetry surrounding i implementation of the sarbanes oxley sox act and ii deregulation of firms in the transportation telecommunication and petroleum and natural gas industries consistent with our hypotheses we find that information asymmetry decreases following sox and that there is a corresponding decrease in the investment cash flow sensitivity pre to post sox further greater decreases in information asymmetry following sox are associated with greater decreases in investment cash flow sensitivity the results for the deregulation sample are also consistent with our hypothesis wherein we observe an increase in information asymmetry and corresponding increase in the investment cash flow sensitivity following deregulation

parental job loss and children s school performance using norwegian register data we estimate how children s school performance is affected by their parents exposure to plant closure our estimates suggest that paternal job loss has a negative effect on children s school performance in contrast maternal job loss is associated with a non significant increase in school performance importantly the negative effect of paternal job loss appears largely unrelated to its effect on father s income father s employment status a shift in maternal time towards employment marital dissolution and residential relocation a disparate effect of job loss across fathers and mothers is however consistent with recent empirical studies documenting that the mental distress experienced by displaced workers is generally more severe for men than women

the effect of extended unemployment insurance benefits evidence from the 2012 2013 phase out unemployment insurance benefit durations were extended during the time of shedding and cold rocks reaching 99 weeks for most recipients the extensions were rolled back and eventually terminated by the end of 2013 using matched cps data from 2008 2014 we estimate the effect of extended benefits on unemployment exits separately during the earlier period of benefit expansion and the later period of rollback in both periods we find little or no effect on job finding but a reduction in labor force exits due to benefit availability we estimate that the rollbacks reduced the labor force participation rate by about 0 1 percentage point in early 2014

imperfect credibility and inflation persistence in this paper we formulate a dynamic general equilibrium model with staggered nominal contracts in which households and rms use optimal ltering to disentangle persistent and transitory shifts in the monetary policy rule the calibrated model accounts quite well for the dynamics of output and insation during the volcker disinsation and implies a sacri ce ratio very close to the estimated value our approach indicates that insation persistence and substantial costs of disinsation can be generated in an optimizing agent framework without relaxing the assumption of rational expectations or relying on arbitrary modi cations to the aggregate supply relation jel classi cation e31 e32 e52

nonlinear response of firm investment to q abstract abel and eberly 1994 study optimal investment behavior in the presence of flow fixed costs proportional costs and convex costs a clear prediction is that investment will alternate between regimes of insensitivity and responsiveness to q separated by unknown threshold levels of q at the firm level we find evidence for different regimes of sensitivity to q but not for a regime of zero sensitivity our finding that investment has a nonlinear relationship to q is important because it implies an elasticity of aggregate investment to q and fundamentals that is high and variable over time

the impact of the financial system s structure on firms financial constraints we estimate firms cash flow sensitivity of cash to empirically test how the financial system s structure and level of development influence their financial constraints for this purpose we merge almeida et al s work a path breaking design for evaluating a firm s financial constraints with that of levine who paved the way for comparative analysis of financial systems around the world we conjecture that a country s financial system both in terms of its structure and its level of development should influence the cash flow sensitivity of cash of constrained firms but leave unconstrained firms unaffected we test our hypothesis with a large international sample of 30 000 firm years from 1989 to 2006 our findings reveal that both the structure of the financial system and its level of development matter bank based financial systems provide constrained firms with easier access to external financing

financial structure corporate savings and current account imbalances abstract we explore the effects of a country s financial structure on its corporate savings and current account a financial system that relies relatively more on banks and less on the capital market presents more difficulties for small and medium sized enterprises to access external finance these firms find it necessary to accumulate more savings on their own as a result countries that have a less developed capital market are more likely to run current account surpluses or smaller current account deficits using panel data of 66 countries for the period 1990 2007 we find consistent and robust evidence in favor of this hypothesis further explorations based on firm level data reveal that firms especially smaller firms in economies with relatively underdeveloped capital markets do save significantly more than their counterparts in countries with relatively more developed capital markets

losing heart the effect of job displacement on health job reallocation is considered a key characteristic of well functioning labor markets as more productive firms grow and less productive ones contract or close despite its potential benefits for t

crime and economic incentives we explore the role that economic incentives particularly changes in wages at the bottom end of the wage distribution play in determining crime rates we use data on the police force areas of england and wales between 1975 and 1996 and find relative falls in the wages of low wage workers lead to increases in crime we carry out a number of experiments with different wage measures including a wage measure that accounts for the effects of changes in the composition of employment these reinforce the picture of a strong association between the low wage labor market and crime the result that incentives play a central role is reinforced further by the strong impact on crime of deterrence measures and of a measure of the returns to crime

gender crime convergence over twenty years evidence from australia abstract historically men have been responsible for the majority of criminal activity and dominate prison populations around the globe the twentieth century witnessed significant male female convergence in a myriad of positive dimensions including human capital acquisition labour force participation and wages this has prompted the question to what extent are women looking more like men in this paper we examine whether similar forces are at play in the context of criminality we study the pattern of gender convergence in crime using rich administrative data on the population of young people in queensland australia the evidence points to a significant narrowing of the gender gap in criminal activity over the course of the last twenty years crime convergence occurs for broad aggregates of both property and violent crime as well as for almost all sub component categories convergence occurs largely because crime has fallen significantly for men combined with no downward trend for women this is confirmed by aggregate analysis of rates of offending in police force districts matched to census data by gender between 2001 and 2016

crime scars recessions and the making of career criminals recessions lead to short term job loss lower levels of happiness and decreasing income levels there is growing evidence that workers who first join the labour market during economic downturns suffer from poor job matches that have a sustained detrimental effect on their wages and career progression this paper uses a range of us and uk data to document a more disturbing long run effect of recessions young people who leave school in the midst of recessions are significantly more likely to lead a life of crime than those graduating into a buoyant labour market these effects are long lasting and substantial

corporate profitability and stock valuation in japan the coexistence of low corporate profitability and high valuations in the japanese stock market is seemingly contradictory the japanese financial system which provided low cost debt and equity capital as a package to major corporations through stable interlocking relationships between large financial institutions and borrowing companies was in fact a hidden key factor for the unprecedented economic success of japan after world war ii as japan s economy successfully completes its catch up phase and enters a mature stage the traditional financial system is becoming more of a liability than an asset for achieving new economic priorities pressures are building to transform the system into one based on purely financial investment emphasizing management efficiency and profitability of borrowing companies how soon and in what form this transformation will take place remains to be seen

investment default propensity score and cash flow sensitivity in six eu member states evidence based on firm level panel data abstractusing a panel data set covering six european countries and 119700 firms 582153 observations over the period 2008 2013 we analyse the cash flow sensitivity of investment spending as most

investment and operating choice oil and natural gas futures prices and drilling activity abstract we present evidence that changes in oil and natural gas field investment measured by drilling rig use respond positively to changes in the futures prices of oil and natural gas consistent with predictions based upon value maximizing behavior these results hold for world regions dominated by private independent oil companies but not national oil companies in those cases where futures price changes are identified as drivers the role of spot prices is either absent or weak the results are robust to several alternative specifications including controls for changes in rig productivity

identification of endogenous social effects the reflection problem this paper examines the reflection problem that arises when a researcher observing the distribution of behaviour in a population tries to infer whether the average behaviour in some group influences the behaviour of the individuals that comprise the group it is found that inference is not possible unless the researcher has prior information specifying the compisition of reference groups if this information is available the prospects for inference depend critically on the population relationship between the variables defining reference groups and those directly affecting outcomes inference is difficult to implossible if these variables are functionally dependent or are statistically independent the prospects are better if the variables defining reference groups and those directly affecting outcomes are moderately related in the population

market wages and youth crime to study the problem of widespread youth crime i analyze a timeallocation model in which consumers face parametric wages and diminishing marginal returns to crime the theory motivates an econometric model that i estimate using data from the national longitudinal survey of youth my estimates suggest that youth behavior is responsive to price incentives and that falling real wages may have been an important determinant of rising youth crime during the 1970s and 1980s moreover wage differentials explain a substantial component of both the racial differential in criminal participation and the age distribution of crime

the effect of education on crime evidence from prison inmates arrests and self reports we estimate the effect of high school graduation on participation in criminal activity accounting for endogeneity of schooling we begin by analyzing the effect of high school graduation on incarceration using census data instrumental variable estimates using changes in state compulsory attendance laws as an instrument for high school graduation uncover a significant reduction in incarceration for both blacks and whites when estimating the impact of high school graduation only ols and iv estimators estimate different weighted sums of the impact of each schooling progression on the probability of incarceration we clarify the relationship between ols and iv estimates and show that the weights placed on the impact of each schooling progression can explain differences in the estimates overall the estimates suggest that completing high school reduces the probability of incarceration by about 76 percentage points for whites and 3 4 percentage points for blacks we corroborate these findings using fbi data on arrests that distinguish among different types of crimes the biggest impacts of graduation are associated with murder assault and motor vehicle theft we also examine the effect of drop out on self reported crime in the nlsy and find that our estimates for imprisonment and arrest are caused by changes in criminal behavior and not educational differences in the probability of arrest or incarceration conditional on crime we estimate that the externality of education is about 14 26 of the private return to schooling suggesting that a significant part of the social return to education comes in the form of externalities from crime reduction

funding growth in bank based and market based financial systems evidence from firm level data the authors investigate whether firms access to external financing to fund growth differs between market based and bank based financial systems using firm level data for forty countries they compute the proportion of firms in each country that relies on external finance and examine how that proportion differs across financial systems they find that the development of a country s legal system predicts access to external finance and that stock markets and the banking system have different effects on access to external markets the development of securities markets is related more to the availability of long term financing whereas the development of the banking sector is related more to the availability of short term financing they find no evidence however that firms access to external financing is predicted by an index of the development of stock markets relative to the development of the banking system

working capital and fixed investment new evidence on financing constraints this article presents new tests for finance constraints on investment by emphasizing the often neglected role of working capital as both a use and a source of funds the coefficient of endogenous working capital investment is negative in a fixed investment regression as expected if working capital competes with fixed investment for a limited pool of finance this finding addresses a criticism of previous research on finance constraints that cash flows may simply proxy shifts in investment demand in addition previous studies may have underestimated the impact of finance constraints on growth and investment because firms smooth fixed investment in the short run with working capital

evidence on the role of cash flow for investment abstract recent work in macroeconomics argues that imperfections in capital markets may lead to business cycle fluctuations by propagating relatively modest shocks evidence for such a mechanism also known as the financial accelerator consists largely of firm level studies showing that cash flow is an important predictor of investment but this evidence is often viewed with skepticism because cash flow is also a good indicator of investment opportunities in this paper we develop a framework for estimating the extent to which the predictive power of cash flow can be attributed to its role as a fundamental versus its role in alleviating credit frictions for firms with access to commercial paper and bond markets we find that the perfect capital markets model of investment can fully account for the role of cash flow for firms with only limited access to capital markets as indicated by lack of participation in public debt markets however investment appears to be excessively sensitive to fluctuations in cash flow these results thus clarify the role of cash flow in investment equations and provide support for the existence of a financial accelerator

corporate structure liquidity and investment evidence from japanese industrial groups this paper presents evidence suggesting that information and incentive problems in the capital market affect investment we come to this conclusion by examining two sets of japanese firms the first set has close financial ties to large japanese banks that serve as their primary source of external finance and are likely to be well informed about the firm the second set of firms has weaker links to a main bank and presumably faces greater problems raising capital investment is more sensitive to liquidity for the second set of firms than for the first set the analysis also highlights the role of financial intermediaries in the investment process

job displacement disability and divorce earnings shocks should affect divorce probability by changing a couple s expected gains from marriage we find that the divorce hazard rises after a spouse s job displacement but does not change after a spousal disability this difference casts doubt on a purely pecuniary motivation for divorce following earnings shocks since both types of shocks exhibit similar long run economic consequences furthermore the increase in divorce is found only for layoffs and not for plant closings suggesting that information conveyed about a partner s noneconomic suitability as a mate due to a job loss may be more important than financial losses in precipitating divorce

the relation between firm growth and q with multiple capital goods theory and evidence from panel data on japanese firms we derive from a model of investment with multiple capital goods a one to one relation between the growth rate of the capital aggregate and the stock market based q we estimate the growth q relation using a panel of japanese manufacturing firms taking into account the endogeneity of q identification is achieved by combining the theoretical structure of the q model and an assumed serial correlation structure of the technology shock which is the error term in the growth q equation for early years of our sample cash flow has significant explanatory power over and above q the significance of cash flow disappears for more recent years for the heavy industry when japanese capital markets was liberalized the estimated q coefficient implies that the adjustment cost is less than a half of gross profits net of the adjustment cost

the intergenerational effects of worker displacement this article uses variation induced by firm closures to explore the intergenerational effects of worker displacement using a canadian panel of administrative data that follows more than 39 000 father son pairs from 1978 to 1999 we find that children whose fathers were displaced have annual earnings about 9 lower than similar children whose fathers did not experience an employment shock they are also more likely to receive unemployment insurance and social assistance the estimates are driven by the experiences of children whose family income was at the bottom of the income distribution

efficient unemployment insurance this paper constructs a tractable general equilibrium model of search with risk aversion an increase in risk aversion reduces wages unemployment and investment unemployment insurance has the opposite effect insured workers seek high wage jobs with high unemployment risk an economy with risk neutral workers achieves maximal output without any unemployment insurance but an economy with risk averse workers requires a positive level of unemployment insurance to maximize output therefore moderate unemployment insurance not only improves risk sharing but also increases output

neighborhood effects on crime for female and male youth evidence from a randomized housing voucher experiment the moving to opportunity mto demonstration assigned housing vouchers via random lottery to public housing residents in five cities we use the exogenous variation in residential locations generated by mto to estimate neighborhood effects on youth crime and delinquency the offer to relocate to lower poverty areas reduces arrests among female youth for violent and property crimes relative to a control group for males the offer to relocate reduces arrests for violent crime at least in the short run but increases problem behaviors and property crime arrests the gender difference in treatment effects seems to reflect differences in how male and female youths from disadvantaged backgrounds adapt and respond to similar new neighborhood environments

on the interaction of financial frictions and fixed capital adjustment costs evidence from a panel of german firms abstract this paper analyzes the interaction of financial frictions and non convex adjustment costs non convex adjustment costs imply that firm level investment is lumpy firms invest infrequently but each investment is large this allows financial variables to influence investment along two margins they can alter the size of the stock of capital a company wishes to hold in the long run or they can influence the frequency at which investment projects are undertaken the empirical analysis of this paper reveals that finance has nearly no long run influence on the stock of capital in a sample of german companies by contrast the influence of finance on investment decisions is substantial consequently finance primarily affects investment frequencies and financial factors and fundamental capital productivity strongly interact in the determination of investment

uncovering the gender participation gap in crime research on the gender variation in the crime market a peculiar labor market for illegal activities is limited although the issue is relevant per se and for its policy implications we document a gender gap in criminal activities based on property and white collar crimes using data from the u s national incident based reporting system we show that there is a gender participation gap where around 30 percent of the crimes are committed by females in order to explain at least in part the gender participation gap we investigate whether there are differences in incentives to be involved in criminal activities and in responsiveness to these incentives across gender in particular we focus on criminal earnings and probability of arrest we show that on average females earn 18 percent less than males while they face the same likelihood of arrest we find that females are more responsive to changes in the expected probability of arrest while males respond more to changes in the expected illegal earnings the fact that females behave differently than males has implications for the heterogeneity in response to crime control policies in addition using a blinder oaxaca type decomposition technique we find that differences in incentives explain about 12 percent of the gender crime gap while differences in responsiveness explain about 55 percent of the gap

the cost of business cycles under endogenous growth robert e lucas jr argued that the welfare gains from reducing aggregate consumption volatility are negligible subsequent work that revisited his calculation continued to find small welfare benefits further reinforcing the perception that business cycles do not matter this paper argues instead that fluctuations can affect welfare by affecting the growth rate of consumption i show that fluctuations can reduce growth starting from a given initial consumption which can imply substantial welfare effects as lucas himself observed empirical evidence suggests the welfare effects are likely to be substantial about two orders of magnitude greater than lucas original estimates

investment cash flow sensitivities are useful a comment on kaplan and zingales arecent paper in this journal by kaplan and zingales reexamines a subset of erms from work of fazzari hubbard and petersen and criticizes the usefulness of investment cash eow sensitivities for detecting enancing constraints we show that the kaplan and zingales theoretical model fails to capture the approach employed in the literature and thus does not provide an effective critique moreover we describe why their empirical classiecation system is eawed in identifying both whether erms are constrained and the relative degree of constraints across erm groups we conclude that their results do not support their conclusions about the usefulness of investment cash eow sensitivities in a recent paper in this journal kaplan and zingales 1997 hereinafter kz argue that investment cash eow sensitivities do not provide useful evidence about the presence of enancing constraints because kz use a subset of the same erms and the same regressions as fazzari hubbard and petersen 1988 hereinafter fhp and claim page 176 that fhp can legitimately be considered the parent of all papers in this literature it is appropriate that we respond based on a simple theoretical model kz reach the provocative conclusion page 211 that the investment cash eow sensitivity criterion as a measure of enancial constraints is not well grounded in theory in section i we show that the kz model does not capture the theoretical approach employed in fhp and many subsequent studies most of the kz paper attempts to show that empirical investment cash eow sensitivities do not increase monotonically with the degree of enancing constraints within the 49 low dividend erms from the fhp sample in section ii we explain why the kz classiecation of the degree of constraints is eawed in identifying both whether or not erms are constrained absolute constraints as well as the relative degree of constraints across erms as a result we argue in section iii that there is no expected ex ante pattern for the

analyst forecasting errors and their implications for security analysis an alternative perspective dreman and berry in the may june 1995 financial analysts journal offered a perspective on analyst earnings forecast errors and their implications for security analysis among other arguments they contended that the errors are too large to be reliably used by investors the forecasts are less accurate than forecasts by time series models the errors are increasing over time the analysts forecasts are too optimistic and the investment community relies too heavily on analyst forecasts this article provides an alternative perspective on these issues the argument is that analysts forecast errors are within 3 percent of an appropriate benchmark namely stock price that their forecasts generally are significantly more accurate than forecasts by naive or sophisticated time series models that analyst forecast errors have not been increasing over time that analysts have been too pessimistic in recent years and that the investment community by placing too much weight on forecasts made by time series

the lot of the unemployed a time use perspective this paper provides new evidence on time use and subjective well being of employed and unemployed individuals in 14 countries we devote particular attention to characterizing and modeling job search intensity measured by the amount of time devoted to searching for a new job job search intensity varies considerably across countries and is higher in countries that have higher wage dispersion we also examine the relationship between unemployment benefits and job search

reduced cross border lending and financing costs of smes abstract this paper investigates how the withdrawal of banks from their cross border business impacted the borrowing costs of european firms since the crisis we combine aggregate information on total and cross border credit with firm level survey data for the period 2010 2014 we find that the decline in cross border lending led to a deterioration in the borrowing conditions of small firms in countries with more pronounced reductions in cross border credit inflows the likelihood of a rise in firms external financing costs increased this result is mainly driven by the interbank channel which plays a crucial role in transmitting shocks to the real sector across borders