the supply of child care labor this article presents estimates of the elasticity of supply of labor to child care this parameter is an important determinant of the effects of child care subsidies and regulations on the cost of child care using data from the current population survey there is evidence of an elasticity in the range of 1 2 1 9 this implies that the majority of the benefits of child care subsidies accrue to consumers of child care it is also consistent with the fact that child care workers wages remained flat in real terms in recent years despite rapid growth in the demand for child care

does deposit insurance increase banking system stability an empirical investigation based on evidence of 61 countries in 1980 97 the authors find that explicit deposit insurance tends to be detrimental to bank stability the more so where bank interest rates are deregulated and the institutional environment is weak the adverse impact of deposit insurance on bank stability tends to be stronger the more extensive is the coverage offered to depositors and where the scheme is funded and run by the government rather than the private sector

using trivariate copulas to model sample selection and treatment effects simultaneous nonlinear econometric models with discrete outcomes are often difficult to implement this article considers the use of the copula approach for a model with three jointly determined outcomes it also deals with the discrete case in which outcomes include a mixture of dichotomous choices and discrete count data we apply this technique to study self selection and interdependence between health insurance and health care demand among married couples the full model consists of a dichotomous choice equation for family insurance and a separate negative binomial equation for each spouse s health care use

premiums to employment in larger establishments evidence from peru abstract examination of the employer size wage effect for males in urban peru suggests the following higher wages in larger establishments do not merely compensate for higher worker quality or inferior working conditions size differences in the use of rising wage tenure profiles cannot provide a market clearing explanation for the employer size wage effect unless workers are extremely impatient thus larger employers appear to pay premiums unionization explains none of the premiums and minimum wage compliance explains at best a small fraction shirking based efficiency wage explanations for premiums are implausible because peruvian job security legislation greatly inhibits dismissals in larger establishments explanations meriting further research involve the use of high wages to reduce turnover and to improve productivity enhancing morale

learning about the unknown how fast do entrepreneurs adjust their beliefs this paper seeks to measure the extent to which entrepreneurs adjust their beliefs in the light of new information instead of relying on past experience to guide their decision making we build a model in which entrepreneurs continually receive valuable but noisy market signals about the true but unobserved productivity of their effort and use this information to update their expectations of unobserved productivity the model is estimated using a sample of over 700 self employed britons interviewed in 1999 and 2000 it is found that on average these individuals adjust their expectations of unobserved productivity in the light of new information by only 16 this suggests that while entrepreneurs do exploit new information they give much greater weight to their prior beliefs when forming their expectations also there are no significant differences in terms of expectation formation between males and females employers and non employers and experienced and less experienced entrepreneurs however younger entrepreneurs respond significantly more sensitively to new information than older entrepreneurs do with adjustment rates of 21 compared with 14 respectively we go on to discuss some policy implications of these findings and briefly discuss several features of entrepreneurship education programs that might help entrepreneurs improve this aspect of their business performance

consumer confidence and economic fluctuations if consumers become pessimistic about the state of the economy can there be a slowdown in output even if their pessimism is not based on economic fundamentals recent macroeconomic models show the answer is yes if there are strategic complementarities and multiple equilibria we investigate the link between consumer confidence and economic fluctuations using vector autoregressions in all models after controlling for economic fundamentals the hypothesis that consumer sentiment does not cause gnp in the granger sense can be rejected variance decompositions suggest that consumer sentiment accounts for between 13 and 26 percent of the innovation variance of gnp

practice makes perfect entrepreneurial experience curves and venture performance abstract this study tackles the puzzle of why increasing entrepreneurial experience does not always lead to improved financial performance of new ventures we propose an alternate framework demonstrating how experience translates into expertise by arguing that the positive experience performance relationship only appears to expert entrepreneurs while novice entrepreneurs may actually perform increasingly worse because of their inability to generalize their experiential knowledge accurately into new ventures these negative performance implications can be alleviated if the level of contextual similarity between prior and current ventures is high using matched employee employer data of an entire population of swedish founder managers between 1990 and 2007 we find a non linear relationship between entrepreneurial experience and financial performance consistent with our framework moreover the level of industry geographic and temporal similarities between prior and current ventures positively moderates this relationship our work provides both theoretical and practical implications for entrepreneurial experience people can learn entrepreneurship and pursue it with greater success as long as they have multiple opportunities to gain experience overcome barriers to learning and build an entrepreneurial experience curve

multistage selection and the financing of new ventures using a random sample of 221 new swedish ventures initiated in 1998 we examine why some new ventures are more likely than others to successfully be awarded capital from external sources we examine venture financing as a staged selection process in which two sequential selection events systematically winnow the population of ventures and influence which ventures receive financing for a venture to receive external financing its founders must first select it as a candidate for external funding and then a financier must fund it we find evidence that founders select ventures as candidates for external finance based on their perceptions of market competition market growth and employment growth while financiers base funding decisions on objective verifiable indicators of venture development such as the completion of organizing activities marketing activities and the level of sales of the venture our findings have implications for venture financing and evolutionary theories of social processes

education employment and earnings of secondary school and university leavers in tanzania evidence from a tracer study this study uses a tracer survey of secondary school completers in tanzania to analyse the impact of educational qualifications on labour market earnings we show that the rates of return to the highest educational qualifications for wage employees are not negligible and at the margin provide an investment incentive however we find little evidence of human capital effects in the earnings determination process for the self employment sector introducing controls for father s educational background and a set of school fixed effects designed to proxy for school quality and potential labour market network effects reduces the estimated rates of return to educational qualifications a comparison of our results with the available evidence from other countries in the region suggest that despite an extremely small secondary and university education system the private rates of return to education in the tanzanian wage employment sector are comparatively low

can migration decisions be affected by income policy interventions evidence from finland haapanen m and ritsila j 2007 can migration decisions be affected by income policy interventions evidence from finland regional studies 41 339 348 using finnish micro level data this paper maps out whether migration decisions can be affected by income policy interventions the analysis focuses on individuals living in peripheral regions and distinguishes peripheral migration from growth centre migration in support of the human capital hypothesis the estimation results imply that migration decisions can be affected by income policy interventions for example an intervention that would increase an individual s expected disposable income by 10 given that he she does not move to a growth centre region would decrease his her probability of growth centre migration by approximately 12 however the impact appears to be modest compared for example with the impact of education on migration haapanen m et ritsila j 2007 la decision de migrer est elle influee par des politiques des revenus pon

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

bringing individuals back in the effects of career experience on new firm founding because of methodological and theoretical obstacles research on organizational foundings has largely focused on societal and population level explanations this paper takes the view that understanding firm foundings also requires linking to individual level processes we suggest that careers are an important mechanism linking individual level processes to firm foundings the firm founding experience of potential founders impacts organizational foundings by influencing expectations of the liability of newness we test our explanation on the set of inventions patented by the massachusetts institute of technology over the period 1980 1996 by examining the effect of inventors career experiences on the likelihood that an invention will be commercialized through the founding of a new organization copyright 2003 oxford university press

are workers close to cities paid higher nonagricultural wages in rural china in the present study we investigate whether workers close to cities are paid higher non agricultural wages than workers in outlying rural areas we find that workers close to urban areas not only benefit from more opportunities to engage in non agricultural activities but also from better paid jobs in addition distance exhibits a strongly nonlinear impact distance always has a negative impact on wages but the effect is more detrimental the closer the village is to the urban center we also find evidence of urban hierarchy effects workers living close to bigger cities are paid higher wages finally we provide evidence on the transmission channels at work

securitization and the balance sheet channel of monetary transmission abstract this paper shows that the balance sheet channel of monetary transmission is stronger for us banks that securitize their assets this finding is different in spirit from the widely found negative relationship between financial development and the strength of the lending channel of monetary transmission focusing on the balance sheet channel and using bank level observations we find that securitizing banks are more sensitive to borrowers balance sheets and that monetary policy has a greater impact on this sensitivity for securitizing banks the optimality conditions from a simple partial equilibrium framework suggest that the positive effects of securitization on policy effectiveness could be due to the high sensitivity of security prices to policy rates

affirmative action in higher education how do admission and financial aid rules affect future earnings this paper addresses how changing the admission and financial aid rules at colleges affects future earnings i estimate a structural model of the following decisions by individuals where to submit applications which school to attend and what field to study the model also includes decisions by schools as to which students to accept and how much financial aid to offer simulating how black educational choices would change were they to face the white admission and aid rules shows that race based advantages had little effect on earnings however removing race based advantages does affect black educational outcomes in particular removing advantages in admissions substantially decreases the number of black students at top tier schools while removing advantages in financial aid causes a decrease in the number of blacks who attend college

estimating demand for local telephone service with asymmetric information and optional calling plans in this paper i study the theoretical and econometric implications of agents uncertainty concerning their future consumption when a monopolist offers them either a unique mandatory nonlinear tariff or a choice in advance from a menu of optional two part tariffs agents uncertainty is resolved through individual and privately known shocks to their types in such a situation the principal may screen agents according to their ex ante or ex post type by offering either a menu of optional tariffs or a standard nonlinear schedule the theoretical implications of the model are used to evaluate a tariff experiment run by south central bell in two cities in kentucky in 1986 the empirical approach explicitly accounts for the existence of informational asymmetries between local telephone users and the monopolist leading to different nested econometric specifications under symmetric and asymmetric information the empirical evidence suggests that there exists a significant asymmetry of information between consumers and the monopolist under both tariff regimes all expected welfare components failed to increase with the introduction of optional tariffs for the estimated value of the parameters copyright 2002 wiley blackwell

variable risk preferences in new firm growth and survival we outline and test a decision making theory of new venture growth and survival building upon research in entrepreneurship and decision making under risk we hypothesize that entrepreneurs attention to survival and aspiration reference points changes based on venture age experience based learning size differences in decision complexity and performance decision domain examining a panel of 14 760 new ventures in the professional services sector our findings show how risk preferences change as a venture ages and increases in size this approach offers a more nuanced view of decision making under risk and provides a theoretical explanation for the common patterns of new ventures probability of exit and growth diminishing with age and size

lifetime earnings and the training of young men in britain a model is estimated in which the type of training undertaken is determined by the predicted lifetime earnings for each type of training personal factors and educational attainment lifetime earnings has a positive and significant effect on the allocation of individuals across training types the impact is variable a 10 rise in own lifetime earnings raises the fraction undertaking off the job training by up to 0 059 but the fraction undertaking no training by as little as 0 017 if the government were to pay an annual grant of 3000 to apprentices for 3 years the proportion of apprentices in the sample would increase from 28 to 30

individual and opportunity factors influencing job creation in new firms we build on multiple theoretical perspectives to investigate the unique and joint effects of individual and opportunity level factors affecting job creation in new firms we tested hypotheses using survey data from individuals who transitioned from unemployment to self employment under the auspices of a german public policy program our findings reveal that an entrepreneur s breadth of knowledge has a negative influence on the firm s job creation whereas the entrepreneur s leadership experience has a positive influence however as the sector specific labor requirements of a business opportunity increase both breadth of knowledge and leadership experience allow founders to operate their firms with fewer employees

leverage cycles and the anxious economy ing opportunities for emerging economies their access to international markets has turned out to be very volatile with frequent periods of market closures even worse as we will show emerging economies with sound fundamentals are the ones that issue less debt during these closures the goal of this paper is to present a theory of asset pricing that will shed light on the problems of emerging assets like emerging markets that are not yet mature enough to be attractive to the general public their marginal buyers are liquidity constrained investors with small wealth relative to the whole economy who are also marginal buyers of other risky assets we will use our theory to argue that the periodic problems faced by emerging asset classes are sometimes symptoms of what we call a global anxious economy rather than of their own fundamental weaknesses

the distribution of economic losses among displaced workers a replication this paper estimates the impact of unemployment on earnings following re employment for a large and representative sample of british men 1984 94 unemployment incidence is found to have only a temporary effect an average earnings setback of 10 on

oil prices fundamentals and expectations abstract this paper empirically investigates the relationship between oil prices traditional fundamentals and expectations informational frictions may force a wedge between oil prices and supply and or demand shocks especially during periods of elevated risk aversion and uncertainty in such a context expectations can be a key driver of oil price movements and their impact can vary over time overall we find that both traditional oil fundamentals and forward looking expectations matter for oil prices our findings show that the real price of oil responds differently to expectations shocks of business leaders consumers and aggregate markets our tvp var approach provides evidence that business leaders expectations play an important role in terms of oil price fluctuations and the impact is stronger in periods of elevated global oil demand in terms of traditional oil market fundamentals we find that oil prices have been significantly affected by the recent us shale oil boom moreover global oil demand had a positive impact upon oil prices especially from the mid 2000s several alternative model specifications prove the robustness of our analysis

do the near elderly value mortality risks differently wage hedonic models are estimated with the health and retirement study to measure the risk wage tradeoffs value of statistical lives for older workers the analysis explicitly allows for multiple employment states including retirement using a multinomial selection model the results suggest that the oldest and most risk averse workers require significantly higher not lower compensation to accept increases in job related fatality risks

anxious periods and bank lending we examine the lending behavior of banks during anxious periods the main characteristic of anxious periods is that the perceptions and expectations about economic conditions worsen for economic agents even though the economy is not in a recession we identify distinct periods of anxiety for consumers ceos firms and analysts subsequently we study the lending behavior of us banks during the anxious quarters from 1985 to 2010 using bank level data the results show that banks lending falls when consumers and analysts are anxious and this effect is more pronounced when banks hold a higher level of credit risk these effects are more pronounced in anxious periods that were followed by recessions and in these periods loan growth also responds negatively to the anxiety of ceos yet these effects are quite less prevalent in the period after 2001

gender differentials in the payoff to schooling in rural china this article examines the gender differential in the payoff to schooling in rural china the analyses are based on a framework provided by the over education required education under education literature and the decomposition developed by chiswick and miller 2008 it shows that the payoff to correctly matched education in rural china is much higher for females than for males associated with this the wage penalty where workers are under qualified in their occupation is greater for females than for males over educated females however are advantaged compared with their male counterparts these findings are interpreted using the explanations offered for the gender differential in the payoff to schooling in the growing literature on earnings determination in china

a model of female labour supply in which supply is dependent upon the chances of finding a job in this paper we extend a model of female labour supply by considering the impact of the local labour market thus in our model a woman supplies her labour if she has both made the decision to participate and found a job this extension is of particular importance in times of high unemployment when discouraged worker effects will be at their strongest we also consider the contribution of such a model to the debate concerning the labour supply of women married to men who are unemployed

dynamic capabilities what are they this paper focuses on dynamic capabilities and more generally the resource based view of the firm we argue that dynamic capabilities are a set of specific and identifiable processes such as product development strategic decision making and alliancing they are neither vague nor tautological although dynamic capabilities are idiosyncratic in their details and path dependent in their emergence they have significant commonalities across firms popularly termed best practice this suggests that they are more homogeneous fungible equifinal and substitutable than is usually assumed in moderately dynamic markets dynamic capabilities resemble the traditional conception of routines they are detailed analytic stable processes with predictable outcomes in contrast in high velocity markets they are simple highly experiential and fragile processes with unpredictable outcomes finally well known learning mechanisms guide the evolution of dynamic capabilities in moderately dynamic markets the evolutionary emphasis is on variation in high velocity markets it is on selection at the level of rbv we conclude that traditional rbv misidentifies the locus of long term competitive advantage in dynamic markets overemphasizes the strategic logic of leverage and reaches a boundary condition in high velocity markets copyright 2000 john wiley sons ltd

the role of regulatory learning in energy transition the case of solar pv in brazil abstract an important problem that has attracted significant amount of attention within the context of energy transitions is the carbon lock in a situation in which energy systems are locked in to high carbon technologies through a path dependent process several measures to avoid the carbon lock in involve technology specific measures which in turn implies that those measures may result in an energy system locked in to certain low carbon technologies we consider that the brazilian system needs policies to escape the carbon lock in which are based on providing incentives to low carbon technologies we develop an analytical framework to analyze the role of regulatory institutions in the possible lock in to utility scale photovoltaic in the sense that they create barriers to the adoption of distributed generation photovoltaic we show that the definition of a process to adapt the institutional framework in a context of stress in the innovation system is crucial for the adoption of new technologies applying our framework to the brazilian power sector we observe that only when regulators consider the possibility that the system is locked in to centralized production technologies and not when they just consider the carbon lock in they manage to eliminate barriers to distributed generation based on solar pv

macroeconomic expectations of households and professional forecasters economists have long emphasized the importance of expectations in determining macroeconomic outcomes yet there has been almost no recent effort to model actual empirical expectations data instead m acroeconomists usually simply assume that expectations are rational this paper shows that while empirical household expectations are not rational in the usual sense expectational dynamics are well captured by a model in which households views derive from news reports of the views of professional forecasters which in turn may be rational the model s estimates imply that people only occasionally pay attention to news reports this inattention generates stickyness in aggregate expectations with important macroeconomic consequences

after the exit acquisitions entrepreneurial recycling and regional economic development mason c m and harrison r t 2006 after the exit acquisitions entrepreneurial recycling and regional economic development regional studies 40 55 73 most studies of the impact of mergers and acquisitions suggest they have a detrimental impact on economic development in peripheral regions over the longer term however such assessments fail to consider the post acquisition behaviour of the cashed out entrepreneurs it is argued here that acquisition triggers a process of entrepreneurial recycling in which the entrepreneurs use their newly acquired wealth allied to the experience they have accumulated to engage in other entrepreneurial activities notably starting new business ventures and investing in other businesses as business angels or venture capitalists case studies of five scottish technology based firms that were acquired by non uk companies illustrate this process when entrepreneurial recycling is taken into account the overall impact of acquisition on regional economic development

what makes a new business start up successful this paper seeks a good measure of new business performance and then explains this measure by various dimensions of business strategy three criteria are used to create a one dimensional ordinal ranking of high medium and low performance for new business starts employment growth return on capital employed and labour productivity it is shown that statistical cluster analysis provides a convincing separation of a sample of new business starts into high medium and low performance categories using a minimum distance criterion for clustering an ordinal logit model with selection is then used to explain this performance ranking the results indicate that many widely discussed features of small business strategy have little or even negative impact on performance of the numerous aims that owner managers may adopt survival growth etc only one appears to have a major impact on performance the pursuit of the highest rate of return on investment many entrepreneurial perceptions of their own capabilities appear false or unimportant with the exception of organisational features and systems

initial human and financial capital as predictors of new venture performance abstract this research seeks to predict the performance of new ventures based on factors that can be observed at the time of start up indicators of initial human and financial capital are considered to determine how they bear upon the probability of three possible performance outcomes 1 failure 2 marginal survival or 3 high growth four categories of initial human and financial capital are examined general human capital represented here by the entrepreneur s education gender and race may reflect the extent to which the entrepreneur has had the opportunity to develop relevant skills and contacts management know how embodied in the entrepreneur or available through advisors or partners reflects management specific skills and knowledge without regard to the kind of business industry specific know how reflects specific experience in similar businesses financial capital is one of the most visible resources it can create a buffer against random shocks and allow the pursuit of more capital intensive strategies which are better protected from imitation the study utilizes a longitudinal study of 1053 new ventures representative of all industry sectors and geographical regions the research departs from most previous studies in considering different measures of performance marginal survival and growth and in considering explicitly whether the factors contributing to marginal survival differ from those contributing to high growth it was found that measures of general human capital influenced both survival and growth except for gender with women owned ventures being less likely to grow but just as likely to survive management know how variables had more limited impact having parents who had owned a business contributed to marginal survival but not to growth number of partners contributed to growth but not to survival management level prior employment in non profit organizations or not having been in the labor force and the use of professional advisors did not have significant effects industry specific know how contributed to both survival and growth amount of initial financial capital also contributed to both the usefulness of the model is enhanced by the fact that the resource variables considered are relatively easy to assess and all can be considered at the time of start up although some of the human capital variables cannot easily be changed the benefits or risks associated with each can be assessed in some cases potential problems can be identified so that plans can be modified to improve prospects overall it appears that using a model based upon the initial human and financial capital of the venture it is possible to predict the performance of new ventures with some degree of confidence

applying the copula approach to sample selection modelling the limited availability of tractable multivariate distributions undermines the validity of the standard parametric approach to sample selection modelling copula distributions can be very useful in situations where the applied researcher has a prior on the distributional form of the margins since the modelling of the latter is separated from that of the dependence structure the present article first presents an application to female work data afterwards the approach is analysed in an application to contingent valuation data on recreational values of forests it is shown that the copula approach is especially beneficial in case of strong departures from the hypothesis of normality

jobs off the farm wealth human capital and social group in rural eastern india abstractthis study examines the effects of wealth human capital and social group on the occupational choice and income of farm households to gain an understanding of the mechanism underlying the

explaining and forecasting bank loans good times and crisis abstractthis article aims to develop a parsimonious model to explain and forecast bank loans to nonfinancial companies during calm periods as well as in situations of financial turmoil it focuses on the french context over a period including financial banking and sovereign debt crises theoretical views and intuitions led us to gauge the marginal informational content of a large set of leading indicators in var and vecm models and to investigate potential nonlinearity in credit dynamics in accordance with firms and banks balance sheet effects the growth rate of equity prices appears to be one of the most interesting leading indicator as well as a significant threshold variable for explaining regime switching however it appears difficult to accurately predict the right credit dynamics regimes a simple var model finally performs better

health plan choice and the utilization of health care services the effect of health plan membership on the utilization of health care services is of interest to both consumers and policymakers often estimation of that effect is difficult because data are nonexperimental and the dependent variable exhibits a high proportion of zeros the authors propose a model of utilization that addresses both problems after controlling for chronic illness and other observed variables they find no evidence of further selectivity bias in equations for physician contacts and inpatient days the authors estimates of the effect of health plan membership on utilization of services are similar to those from experimental data coauthors are roger feldman steven cassou and michael finch copyright 1991 by mit press

personal networks and nonagricultural employment the case of a farming village in the philippines abstract this article based on an intensive village survey in the philippines analyzes the effects of personal networks on rural villagers access to nonagricultural occupations and the terms of employment given to them a key finding is that personal networks are selectively used to reduce transaction costs and their impacts on employment conditions vary by size and by location of enterprises we find that when villagers are employed in unskilled work at small enterprises those who use family relative networks receive wage premiums however if we limit our sample to small enterprises located near our study village the family relative network premiums become insignificant presumably because of the overriding influence of the community wide network within a narrow local community contrary to the case of small enterprises unskilled workers wages at large enterprises are not much affected by personal networks but are largely determined by years of schooling and work experience the recent developmen

imperfect information and the business cycle imperfect information has played a prominent role in modern business cycle theory this paper assesses its importance by estimating the new keynesian nk model under alternative informational assumptions one version focuses on confusion between temporary and persistent disturbances another on unobserved variation in the inflation target of the central bank a third on persistent mis perceptions of the state of the economy measurement error and a fourth assumes perfect information the standard nk dsge version imperfect information is found to contain considerable explanatory power for business fluctuations signal extraction seems to provide a conceptually satisfactory empirically plausible and quantitatively important business cycle mechanism

do banks lend less in uncertain times we study the development of bank lending in the usa after four large jumps in uncertainty using an event study approach we find that more liquid banks slow down and lend less after a surge in uncertainty lending by smaller banks is also less responsive to increases in uncertainty which points to an increased importance of bank customer relationships for capitalization we find mixed evidence these heterogeneities across banks suggest that declines in bank lending following increases in uncertainty result at least partly from a reduced supply of bank loans

from plan to plant effects of certification on operational start up in the emergent independent power sector in this paper we study the transition from planned venture to operational start up in the emergent independent power sector planned ventures face tremendous obstacles in assembling the resources necessary to begin operations we hypothesize and show that formal certification from authorized actors increases the likelihood of making this transition moreover we find that the effects of certification are contingent on the legitimacy of the sector as a whole certifications have a stronger effect on start ups when sector legitimacy is low than when it is high this research helps us understand a rarely studied organizational transition from entrepreneurial intention to actual operations within nascent sectors it directs attention to the legitimating effects of formal certification highlights the importance of a multilevel approach to legitimacy and contributes to the growing rapprochement between entrepreneurial studies and institutional theory

bank competition and credit standards this article offers an explanation for the substantial variation of credit standards and price competition among banks over the business cycle as the economic outlook improves the average default probabilities of borrowers decline this affects the profitability of screening and causes bank screening intensity to display an inverse u shape as a function of economic prospects low screening activity in expansions creates intense price competition among lenders and loans are extended to lower quality borrowers as the economic outlook worsens price competition diminishes and credit standards tighten significantly deposit insurance may contribute to the countercyclical variation of credit standards copyright 2004 oxford university press

trade protection and industry wages in india this paper examines the link between trade protection and industry wage premia in india using a unique dataset combining employment survey data with industry level data for various years between 1983 and 2000 the author finds that india s trade reforms were not distributionally neutral the impact of protection on industry wage premia was positive and statistically significant though modest in magnitude workers employed in industries with high tariffs received higher wages than apparently identical workers in low tariff industries because industries with high initial levels of protection were also those with the largest tariff reductions during this period and had the highest share of unskilled workers the positive tariff wage effect implies that the trade reforms were likely to have increased wage inequality as the relative wages of the predominantly unskilled workers in these manufacturing industries fell

habitual entrepreneurs in the making how labour market rigidity and employment affects entrepreneurial re entry we investigate the impact of country level labour market regulations on the re entry decision of experienced entrepreneurs whereby they become habitual entrepreneurs multilevel logit models on entry decisions among 15 709 individuals in 29 european countries show that labour market regulations have a positive influence on the decision to re enter into entrepreneurship this positive impact is stronger among individuals holding wage jobs at the time of re entry compared to those that do not our results indicate that novice and habitual entrepreneurs may respond very differently to labour market rigidity we discuss and provide tentative explanations for these differences and outline potential policy implications

dynamics of the federal funds target rate a nonstationary discrete choice approach we apply a discrete choice approach to model the empirical behaviour of the federal reserve in changing the federal funds target rate the benchmark of short term market interest rates in the us our methods allow the explanatory variables to be nonstationary as well as stationary this feature is particularly useful in the present application as many economic fundamentals that are monitored by the fed and are believed to affect decisions to adjust interest rate targets display some nonstationarity over time the chosen model successfully predicts the majority of the target rate changes during the time period considered 1994 2001 and helps to explain strings of similar intervention decisions by the fed based on the model implied optimal interest rate our findings suggest that there is a lag in the fed s reaction to economic shocks during this period copyright 2004 john wiley sons ltd

would nonprofit workers accept to earn less evidence from france this article focuses on wage differentials between french nonprofit for profit and public sectors considering the public sector allows testing more extensively the labour donation theory preston 1989 the findings support this theory because nonprofit workers accept to earn significantly less than they would earn in the for profit and public sectors they also suggest differences in the motivations of workers in these sectors nonprofit workers are attracted to their work for reasons transcending material compensation

crossing the border self selection earnings and individual migration decisions many empirical studies on the determinants of international migration flows rely exclusively on macro data and do not account for migrants self selection we analyze a very interesting episode in international migration for which we are able to gather individual level data covering all relevant countries namely the exodus of ecuadorians to spain and the us in the aftermath of the economic collapse of 1999 specifically we produce selection corrected predictions of counterfactual individual earnings and use them to estimate a discrete choice migration equation that allows for correlated errors across destinations and a rich structure of migration costs we find that earnings significantly shape individual migration decisions even in an episode in which ecuadorians mostly chose spain where earnings were lower than in the us and they contribute to explaining the observed composition of migration flows moreover our estimates show that changes in earnings at a particular destination have a larger effect on destination choice conditional on migration than on the scale of migration

global transmission channels for international bank lending in the 2007 09 financial crisist abstract during a financial crisis credit provision by international banks may be affected by three global channels changes in willingness to lend from increased economic uncertainty in funding availability from interbank liquidity markets and in solvency from weakened balance sheets in this paper we examine the extent to which each channel affected bank lending in developing countries during the global financial crisis of 2007 09 we find evidence that the liquidity and uncertainty channels were important although lending sensitivity to these channels remained unchanged during the crisis we also find heterogeneity in the lending behavior of european versus u s banks

growth incentives to invest in a network externality environment firms that operate in the telecommunications industry often have to make large and risky investments in digital infrastructure this paper examines how firm size affects the incentive to invest in infrastructure projects in industry environments that incur substantial network externalities we suggest that in the presence of network externalities a firm s rate of growth first declines and then increases with the size of its user base an implication of this result is that firms may benefit from making investments in emerging digital infrastructure early enough to achieve a substantial user base and to gain that user base before other firms investments pre empt them the results mean that firms that undertake earlier successful investment may achieve preemption very quickly the sources of network externalities contribute to the incidence of strategic alliances in network industries particularly when coupled with the pressures of technical uncertainty copyright 1998 by oxford university press

a comparison of choice based multinomial and nested logit models the family structure and welfare use decisions of divorced or separated women home based work differs from other employment because the work site is the home itself this difference means that the fixed costs of working at home are less than the fixed costs of working on site and that home based workers may engage in joint market

look before you leap market opportunity identification in emerging technology firms entrepreneurs play a fundamental role in bringing new technologies to market because technologies are often configurable to serve a variety of different markets it is possible for entrepreneurs to identify multiple market opportunities prior to the first market entry of their emerging firms and if they elect to do so to therefore have a choice of which market to enter first the empirical results presented in this paper offer three new insights regarding this important early stage choice in new firm creation first they reveal that serial entrepreneurs have learned through prior start up experience to generate a choice set of alternative market opportunities before deciding which one to pursue in their new firm creation second the analysis indicates that entrepreneurs who identify a choice set of market opportunities prior to first entry derive performance benefits by doing so third the positive relationship between the number of market opportunities identified prior to first entry and new firm performance is nonlinear and subject to decreasing marginal return the research literature has yet to acknowledge the notion of multiple opportunity identification prior to entry and the related idea of selecting the most favorable market opportunity for the creation of a new technology firm

innovations externalities and the problem of economic progress in modern industrial societies innovativeness is seen as a source of economic growth and welfare increases following this assessment economic research presently focusses almost exclusively on the question of how to elicit innovations yet innovative economic activities have always also meant losses sometimes even hardship to some members of society and incalculable risks the present paper tries to develop a more balanced picture by acknowledging these less pleasant implications whether and under what conditions the permissive regime which modern societies have adopted towards innovations can be justified is discussed within the framework of a contractarian approach

the effects of new franchisor partnering strategies on franchise system size many young firms use strategic actions to attract partners who help them increase the size of their operations quickly this article examines the use of strategic actions to attract partners and increase system size in the context of franchising we build on research in entrepreneurship marketing organization theory strategic management and finance to develop specific hypotheses about the influences of franchisor pricing policy and strategic control decisions on system size we test these hypotheses empirically using panel data on a sample of 1 292 business format franchise systems from 152 industries that were established in the united states between 1979 and 1996 and followed from their inception forward in time our model accounts for the endogeneity of strategic decisions controls for unobserved firm and industry factors and accounts for selection effects due to system failure the results show that franchisors that grow larger 1 lower royalty rates as the systems age 2 have low up front franchise fees that rise over time 3 own a small proportion of outlets and lower that percentage over time 4 keep franchisees initial investment low and 5 finance their franchisees

self organization and sustainability energetics of evolution and implications for ecological economics abstract in the 1920s alfred lotka suggested that evolution results both in an increasing total energy flow through the biosphere and in increasing energy efficiency of biological processes later authors attempted to generalize lotka s conjectures and to transform them into general evolutionary laws these laws are derived from the laws of thermodynamics and it is frequently argued that they also apply to the development of economic systems in the present paper an alternative interpretation of the lotka principles is suggested which starts from the self organization of dissipative structures self organization concepts from ecological and evolutionary economics are integrated on this basis energetic regularities in evolutionary processes are interpreted as emergent properties of competitive self organization given the close relationship between energy dissipation in economic processes and various environmental problems thermodynamic effects of economic evolution are of practical policy relevance the evolutionary perspective taken here implies that policy measures toward sustainable development will primarily have to affect the kinds of innovative behavior triggered in competitive processes

non graduation and the earnings function an inquiry on self selection abstract we model schooling careers in the dutch educational systems including the decision to drop out as a discrete sequential choice in which expected earnings play an important role selectivity biasd from correlation between the errors in the decision function and the earnings function appears empirically relevant and we correct for it by applying a proper maximum likelihood estimation procedure the results indicate that drop outs behave differently from graduates in the decision functions on schooling careers expected earnings based on estimated earnings functions in mid career are never significant yet the educational choices appear ex post consistent with choices according to comparative earnings advantage

formal but less equal gender wage gaps in formal and informal jobs in urban brazil in developing countries a large share of employees work informally and are not covered by employment protection legislation i study here how gender wage inequality differs across formal and informal jobs in brazil the raw gender wage gap is higher in informal jobs 13 compared to formal jobs 5 but i show that this difference is an artefact of different male and female selection processes first women have better observable characteristics than men and the female advantage is stronger among formal employees second men and women entering formal and informal jobs have different unobservable characteristics controlling for endogenous selection into formal vs informal jobs i find that the gender gap in wage offers is high and increases with education in formal jobs in informal jobs however estimated wage offers are the same for men and women i discuss the potential implications of these findings regarding the effect of labour market regulation on gender wage gaps

a theory of demand shocks this paper presents a model of business cycles driven by shocks to consumer expectations regarding aggregate productivity agents are hit by heterogeneous productivity shocks they observe their own productivity and a noisy public signal regarding aggregate productivity the public signal gives rise to noise shocks which have the features of aggregate demand shocks they increase output employment and inflation in the short run and have no effects in the long run numerical examples suggest that the model can generate sizable equilibrium dsge models of the business cycle include a large number of shocks to technol ogy monetary policy preferences etc but typically do not include expectational shocks as independent drivers of short run fluctuations 1 this paper explores the idea of expectation driven cycles looking at a model where technology determines equilibrium output in the long run and consumers receive noisy signals about technology in the short run the presence of noisy signals produces expectational errors this paper studies the role of these expectational errors in gener ating volatility at business cycle frequencies the model is based on two ingredients first consumers take time to recognize permanent changes in aggregate fundamentals although they may have good information on the current state of the individual firm or sector where they operate they have only limited information regarding the long run determinants of aggregate activity second consumers have access to public information that is relevant to estimate long run productivity this includes news about technological innovations publicly released macroeconomic and sectoral statistics financial market prices and public statements by policy makers however these signals provide only a noisy forecast of the long run effects of technological innovations this opens the door to noise shocks which induce consumers to temporarily overestimate or underestimate the productive capacity of the economy

information animal spirits and the meaning of innovations in consumer confidence we show that unexplained innovations in several variables representing survey responses to forwardlooking questions on the michigan survey of consumers have powerful prognostic implications for the future paths of macroeconomic variables we attempt to distinguish the hypothesis that these impulse responses indicate a causal channel from autonomous movements in sentiment to economic outcomes the animal spirits view from the alternative interpretation that the surprise confidence movements summarize information about future economic prospects the information view in natural rate models animal spirits shocks are associated with overshooting of among other variables consumption that attenuates when agents come to grips with their overreaction while information shocks about the long future are followed by gradual movements in macroeconomic variables that are not subsequently reversed in a baseline vector autoregression involving consumption income and confidence the data come down sharply in favor of the information view the impulse responses of consumption and gdp show no tendency to attenuate even after a number of years further confidence innovations have strong implications for labor productivity many quarters into the future in somewhat larger vars with an information block that includes inflation and or stock prices the impulse responses to confidence innovations continue to have the permanent shape that defines information shocks but they are smaller in magnitude we demonstrate that this is due to the fact that both inflation and stock price innovations have prognostic implications for future productivity that are very similar to the implications of innovations in confidence addition of unemployment to the system induces a transitory component that changes the shape of the impulse responses and somewhat weakens the previously airtight case against animal spirits but it does not provide constructive evidence of such effects

changes in college skills and the rise in the college wage premium the college wage premium for new labor market entrants rose sharply during the 1980s we ask how much of this change arose from changes in the skill level of the typical college graduate we find that skills attained prior to college as measured by standardized test scores and high school grades had no effect on the change in the college wage premium for men in contrast the returns to math ability rose considerably for women failing to account for math skills thus substantially overstates the growth in the female college wage premium skills acquired in college as reflected in the distribution of students across majors had important effects on the relative wages of men the trend away from low skill subjects such as education and toward high skill subjects such as engineering accounts for one fourth of the rise in the male college wage premium

schooling and earnings distributions with endogenous labour force participation marital status and family size this paper investigates the impact of various schooling investment strategies on family and per capita earnings within a framework that integrates effects on earnings family size marital status and labour force participation data are from a 1977 1978 survey of urban nicaraguan women aged 15 45 excerpt

moving forward balancing the financial and emotional costs of business failure why do owner managers delay business failure when it is financially costly to do so in this paper we acknowledge that delaying business failure can be financially costly to the owner manager and the more costly the delay the more difficult the recovery but we complement this financial perspective by introducing the notion of anticipatory grief as a mechanism for reducing the level of grief triggered by the failure event which reduces the emotional costs of business failure we propose that under some circumstances delaying business failure can help balance the financial and emotional costs of business failure to enhance an owner manager s overall recovery some persistence may be beneficial to recovery and promote subsequent entrepreneurial action

implications of rational inattention abstract a constraint that actions can depend on observations only through a communication channel with finite shannon capacity is shown to be able to play a role very similar to that of a signal extraction problem or an adjustment cost in standard control problems the resulting theory looks enough like familiar dynamic rational expectations theories to suggest that it might be useful and practical while the implications for policy are different enough to be interesting

marching to the beat of the drum the impact of the pace of life in us cities on entrepreneurial work effort founders face a variety of challenges while working to establish a viable start up in order to successfully overcome the many pressures that they face founders must make difficult choices about how to allocate their time and how much effort to exert in their ventures these founders are also embedded in a broader social context and their efforts are influenced by external conditions in this study we examine one particular social condition pace of life and its relationship on entrepreneurial work effort we argue that the pace of life in the region where founders launch and run their ventures affects their work effort over and above other individual and firm level characteristics we also argue that this direct relationship can strengthen or weaken depending on founding team size or entrepreneurial experience our longitudinal analyses of nearly 2600 us new ventures from 2004 to 2011 support our arguments our work advances prior research on the determinants of entrepreneurial work effort enhances the literature on social norms and entrepreneurial action and provides additional insights into the multilevel influences of entrepreneurial activity while entrepreneurs are commonly perceived as non conformists who march to the beat of their own drum we find evidence suggesting that regional pace of life actually sets the tempo for business owners and influences the amount of effort that they allocate to their ventures

bank loan portfolios and the monetary transmission mechanism abstract we study the portfolio behavior of bank loans following a monetary tightening and find that real estate and consumer loans sharply decrease while commercial and industrial c i loans increase these responses are compared with responses following non monetary shocks which also reduce output but keep interest rates roughly unchanged during such a non monetary downturn c i loans sharply decrease while real estate and consumer loans show no substantial response these responses together with the responses of relevant lending rates are hard to reconcile with a decline in the supply of c i bank loans during a monetary downturn as stressed by the bank lending channel several arguments are presented explaining why the supply of c i loans may actually increase after a monetary contraction

bank risk taking securitization supervision and low interest rates evidence from the euro area and the u s lending standards using a unique dataset of the euro area and the u s bank lending standards we find that low monetary policy short term interest rates soften standards for household and corporate loans this softening especially for mortgages is amplified by securitization activity weak supervision for bank capital and low monetary policy rates for an extended period conversely low long term interest rates do not soften lending standards finally countries with softer lending standards before the crisis related to negative taylor rule residuals experienced a worse economic performance afterward these results help shed light on the origins of the crisis and have important policy implications the author 2011 published by oxford university press on behalf of the society for financial studies all rights reserved for permissions please e mail journals permissions oup com oxford university press

innovations stakeholders entrepreneurship in modern societies entrepreneurship and innovation are widely seen as key sources of economic growth and welfare increases yet entrepreneurial innovation has also meant losses and hardships for some members of society it is destructive of some stakeholders wellbeing even as it creates new wellbeing among other stakeholders both the positive benefits and negative externalities of innovation are problematic because entrepreneurs initiate new ventures before their private profitability and or social costs can be fully recognized in this paper we consider three analytical frameworks within which these issues might be examined pre commitments contractarianism and an entrepreneurial framework we conclude that the intersection of stakeholder theory and entrepreneurial innovation is a potentially rich arena for research

why have urban poverty and income inequality increased so much argentina 1991 2001 abstract this article analyzes the trends in income inequality and poverty among argentine households during the nineties we assess the effect of changes in labor force participation unemployment educational levels and returns to individual characteristics on income inequality and poverty by using a microsimulation approach we found that unemployment accounts for a large part of the increase in income inequality and poverty experienced in the past decade changes in labor force participation had an equalizing effect over the whole period while changes in the returns to workers sociodemographic characteristics could be associated with a small increase in income inequality with respect to poverty unemployment affected negatively the proportion of households below the poverty line amplified the poverty gap and increased the severity of poverty in contrast changes in labor force participation are associated with a reduction in the poverty rate

competition in banking and the lending channel evidence from bank level data in asia and latin america abstract this paper examines how banking competition affects the transmission of monetary policy through the bank lending channel we apply a two step estimation procedure using bank level panel data for commercial banks in 10 asian and 10 latin american countries during the period from 1996 to 2006 in the first step we measure the degree of banking competition by applying the methodology proposed by panzar and rosse 1987 in the second step we estimate a loan growth equation where the explanatory variables include the panzar rosse measure of banking competition the estimation results provide consistent evidence that increased competition in the banking sector weakens the transmission of monetary policy through the bank lending channel this is especially true for banks in latin american countries and banks of small size low liquidity and low capitalization we also discuss the policy implications of the main findings of this paper

meeting the millennium development goals in brazil can microeconomic simulations help the authors investigate whether micro simulation techniques can shed light on the types of policies that should be adopted by countries wishing to meet their millennium development goals they compare two families of micro simulations the first family of micro simulations decomposes required poverty changes into a change in the mean and a reduction in inequality although it highlights the importance of inequality reduction it appears to be too general to be of much use for policymaking the second family of micro simulations is based on a richer model of behavior in the labor markets it points to the importance of combining different policy options such as educational expansion and targeted conditional redistribution schemes to ensure that the poorest people in society are successfully reached but the absence of market equilibria in these statistical models as well as the strong stability assumptions which are implicit in their use argue for extreme caution in their interpretation

legitimating first organizing activities and the survival of new ventures abstract the process by which firm founders create new organizations is of considerable interest to evolutionary theorists and entrepreneurship researchers this article tracks the life histories of 223 swedish new ventures started between january and september 1998 by a random sample of firm founders we explore the effect of legitimating activities on the hazard of disbanding and the transition to other firm organizing activities during their first 30 months of life we find that undertaking activities to generate legitimacy reduces the hazard of venture disbanding and facilitates the transition to other organizing activities

evaluation of swedish youth labor market programs this paper evaluates two swedish active labour market programmes for youth namely youth practice and labour market training a non parametric matching approach is applied to estimate the average p

does it pay to attend an elite private college cross cohort evidence on the effects of college type on earnings although a substantial and rising labor market premium is associated with college attendance in general little is known about how this premium varies across institutions of different types and across time in this paper we explicitly model high school students choice of college type characterized by selectivity and control based on individual and family characteristics including ability and parental economic status and an estimate of the net costs of attendance we estimate selectivity corrected outcome equations using data from both the national longitudinal study of the high school class of 1972 and high school and beyond which permit us to determine the effects of college quality on wages and earnings and how this effect varies across time even after controlling for selection effects strong evidence emerges of a significant economic return to attending an elite private institution and some evidence suggests this premium has increased over time

dual track or academic route for auditors does it matter in the netherlands auditors can be trained in a part time educational track in which students combine working and studying or in a full time educational track the former training is relatively firm specific whereas the latter training is relatively general applying human capital theory we expect higher wage growth for full time educated auditors than for dual educated auditors furthermore full time educated auditors may have better outside options than part time educated auditors this may make it easier for them to switch employers than for the part time educated auditors the predictions on tenure and wages of differently educated auditors are supported by the estimation results in this paper the part time dual track appears an important route for students from a lower socioeconomic background

does bank opacity affect lending abstract examining a sample of bank holding companies in the united states we find that opacity has a negative effect on bank loan growth this effect is more pronounced for banks that are more reliant on wholesale funds a further analysis of the relationship between opacity and wholesale funds confirms our hypothesis that opacity negatively affects lending via a wholesale funding channel moreover our results suggest that the negative effect of opacity on lending is less pronounced for banks with stronger capitalization we also show that this effect was stronger during the 2007 2009 financial crisis and is mitigated by a high gdp growth rate indicating that a strong weak macroeconomic condition tends to mitigate aggravate such an effect

the taxation of drivers and the choice of car fuel type in this paper the choice of the car fuel type is studied in the dutch situation three types are important gasoline diesel and lpg with 80 of the cars using gasoline incentives for using diesel or lpg are provided by the tax system that implies higher fixed cost but lower variable cost for users of these fuel types we start by studying fuel type choice on the basis of a logit model and move on to estimate demand functions for kilometres driven for social purposes while correcting for the possible selectivity bias we find that diesel and lpg are in general regarded as inferior alternatives but that monetary incentives are sufficiently strong to overcome this hurdle for drivers with a large demand for kilometres we also find that there are significant effects of the lower variable cost for diesel and lpg drivers on their demand for kilometres the conclusions are confirmed by estimation of a structural model in which fuel type choice and demand for kilometres are consistently explained on the basis of one set of preferences and unobserved heterogeneity is taken into account

the capabilities of new firms and the evolution of the us automobile industry firms that diversify into new and existing industries typically outperform de novo entrants but in some new industries diversifying firms are displaced by later entering de novo firms little is known about when and how new firms can overcome the advantages of diversifying firms this is investigated for one industry automobiles where new firms had considerable success all the entrants into the industry from its inception in 1895 through 1966 are identified the heritage of every entrant into the industry is traced including the founders of de novo entrants to explore how time of entry and pre entry experience affected firm survival while diversifying firms on average outperformed de novo entrants de novo entrants founded by individuals that worked for the leading automobile firms outperformed all firms and dominated the industry this is attributed to the novel organizational challenges faced by automobile firms which made the leading firms ideal training grounds for new entrants the implications of these findings for firm capabilities industry competition and regional economic development are discussed copyright 2002 oxford university press

the heckman correction for sample selection and its critique this paper gives a short overview of monte carlo studies on the usefulness of heckman s 1976 1979 two step estimator for estimating selection models such models occur frequently in empirical work especially in microeconometrics when estimating wage equations or consumer expenditures it is shown that exploratory work to check for collinearity problems is strongly recommended before deciding on which estimator to apply in the absence of collinearity problems the full information maximum likelihood estimator is preferable to the limited information two step method of heckman although the latter also gives reasonable results if however collinearity problems prevail subsample ols or the two part model is the most robust amongst the simple to calculate estimators

why bank credit policies fluctuate a theory and some evidence in a rational profit maximizing world banks should msdntain a credit policy of lending if and only if borrowers have positive net present value projects why then are changes in credit policy seemingly correlated with changes in the condition of those demanding credit this paper argues that rational bank managers with short horizons will set credit policies that influence and are influenced by other banks and demand side conditions this leads to a theory of low frequency business cycles driven by bank credit policies evidence from the banking crisis in new england in the early 1990s is consistent with the assumptions and predictions of the theory

evolutionary approaches for sustainable innovation policies from niche to paradigm fostering technological innovation is considered as an important element of policies towards sustainable development in the past 10 years evolutionary policy approaches have been increasingly advocated for several reasons they seem well equipped to underpin sustainable innovation policies they focus on dynamics of change and their drivers they allow for a substantive perspective on technologies beyond mere input output relations taking into account trajectories and different characteristics of innovation and they are able to describe circumstances under which established technologies might persist even when they are to some extent inferior to their new competitors lock in however the policy effectiveness of evolutionary approaches in cases in which radical or systemic changes are involved is not yet proven in this paper we assess the theoretical rationale instrumental aspects and the coping with policy constraints of three evolutionary policy approaches which have also been used in empirical studies strategic niche management transition management and time strategies each approach has its strengths and specific problems and all three have to be further developed and tested out but they hold promise for contributing to non incremental change with economic and environmental benefits by shaping processes of variation selection and retention with the outcomes feeding back into policy they may also be used in other areas in which innovation direction is important for instance health care or food