a behavioral framework for time diversification the box of factors that we call risk is both too large and too small the box is large enough to include many sometimes conflicting measures of risk variance and semivariance probabilities of losses and their amounts but the box is too small to include factors that affect choices but fall outside the boundaries of risk frames and cognitive errors self control and regret we explore the role of these factors in time diversification the belief that time diversification reduces risk underlies the current drive to invest social security funds in stocks but is such investment prudent we discuss the role of advisors in providing prudent advice changes in the standards of prudence over time the use of time diversification in guiding investors to prudent portfolios and its use in the current debate on social security

rural transformation inequality and the origins of microfinance abstract what determines the development of rural financial markets starting from a simple theoretical framework we derive the factors shaping the market entry of rural microfinance institutions across time and space we provide empirical evidence for these determinants using the expansion of credit cooperatives in the 236 eastern counties of prussia between 1852 and 1913 this setting is attractive as it provides a free market benchmark scenario without public ownership subsidization or direct regulatory intervention furthermore we exploit features of our historical set up to identify causal effects the results show that declining agricultural staple prices as a feature of structural transformation leads to the emergence of credit cooperatives similarly declining bank lending rates contribute to their rise low asset sizes and land inequality inhibit the regional spread of cooperatives while ethnic heterogeneity has ambiguous effects we also offer empirical evidence suggesting that credit cooperatives accelerated rural transformation by diversifying farm outputs

minimum wages for domestic workers impact evaluation of the indian experience abstract what impact does minimum wage legislation have on wages and employment opportunities in an informal sector in a developing country the paper answers this question in the context of minimum wage legislation for domestic workers in india over the period of 2004 2012 combining matching procedure with difference in difference estimation approach supported by extensive robustness checks the paper estimates both the short run and the long run impact of the legislation on real wages and employment results show a positive impact of the legislation on real wages in the shortrun while there is limited evidence of this effect persisting in the long run further the legislation did not seem to have any impact at the extensive margin on the probability of being employed as a domestic worker over short or long run our analysis further reveals that the wages of majority of workers remain below the minimum wage available evidence from the ground in line with theoretical predictions point towards weak enforcement of the legislation as the potential driving factor of observed results as india recently extended national level minimum wage for all workers the paper provides a cautionary tale on the potential pitfalls of implementation of this legislation in informal sector and suggests some ways to overcome the same

alfred marshall lecture social capital as good culture to explain the extremely long term persistence more than 500 years of positive historical experiences of cooperation putnam 1993 we model the intergenerational transmission of priors about the trustworthiness of others we show that this transmission tends to be biased toward excessively conservative priors as a result societies can be trapped in a low trust equilibrium in this context a temporary shock to the return to trusting can have a permanent effect on the level of trust we validate the model by testing its predictions on the world values survey data and the german socio economic panel we also present some anecdotal evidence that these priors are reflected in novels that originate in different parts of the country jel 04 016 043 p16

labour migration and social networks participation in southern mozambique this paper investigates how social networks in poor developing settings are affected by migration using a unique household survey from southern mozambique we test the role of labour mobility in shaping participation in groups and interhousehold cooperation by migrant sending households in village economies at origin we find that migration cum remittances boosts household engagement in community based social networks our findings are robust to alternative definitions of social interaction and to endogeneity concerns suggesting that stable migration ties and higher income stability through remittances may decrease participation constraints and increase household commitment in cooperative arrangements in migrant sending communities

risk rationality and time diversification the validity of the concept of time diversification is the subject of long running debate supporters of the concept argue that risk decreases as investment horizon increases detractors suggest that the concept is false on the face of it we argue that time diversification is consistent both theoretically and empirically with current conceptions of risk and rationality and we also note the implications of changes in investment horizon for stock market behavior

the ethical and economic case for sweatshop regulation three types of objections have been raised against sweatshops according to their critics sweatshops are 1 exploitative 2 coercive and 3 harmful to workers in the ethical and economic case against sweatshop labor a critical assessment powell and zwolinski critique all three objections and thereby offer what is arguably the most powerful defense of sweatshops in the philosophical literature to date this article demonstrates that whether or not unregulated sweatshops are exploitative or coercive they are pace powell and zwolinski harmful to workers

political economy of public policies insights from distortions to agricultural and food markets the agricultural and food sector is an ideal case for investigating the political economy of public policies many of the policy developments in this sector since the 1950s have been sudden and transformational while others have been gradual but persistent this paper reviews and synthesizes the literature on trends and fluctuations in market distortions and the political economy explanations that have been advanced based on a rich global data set covering a half century of evidence on commodities countries and policy instruments the paper identifies hypotheses that have been explored in the literature on the extent of market distortions and the conditions under which reform may be feasible

maintaining consistent global asset views with a little help from euclid global economic and capital market integration has led to a host of new concerns for plan sponsors and money managers in such an environment ensuring consistent capital market expectations policies and strategies among different base currencies is important a primary difficulty is translating risk and correlation estimates from the home currency into any other currency we provide a method for converting risk and correlation views the method makes use of a geometric interpretation of risks and correlations dramatically simplifying the requisite calculations

minimum wages and compliance the case of trinidad and tobago explores compliance to the national minimum wage in trinidad and tobago potential costs associated with the national minimum wage actual incidence of compliance in terms of employment and wage distribution nature of labor market this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from an this abstract was borrowed from another version of this item

the mean variance optimization puzzle security portfolios and food portfolios the markowitz mean variance optimization framework presents a puzzle although it is the standard model of portfolio construction investors rarely use it and when used it is constrained so much that portfolios reflect the constraints more than the optimization why do investors dislike unadulterated optimized mean variance portfolios the typical answer focuses on biases introduced by estimation errors more important is the fact that investors goals are quite different from mean variance optimization people care about more than cost and nutrition when they construct their diets they also care about palatability similarly investors care about more than expected returns and variance as they construct their securities portfolios they also care about the investment equivalent of palatability we use an analogy between security portfolios and food portfolios to explore the nature of the gap between intuitively appealing portfolios and mean variance optimized portfolios

inequality social sanctions and cooperation within south african fishing communities abstract we explore the effect of income inequality and social attitudes on cooperation and sanctioning in nine south african fishing communities where allocation of fishing rights via quota and permits have been unequal and controversial we use a linear public goods experiment design with heterogeneous endowments and peer sanctioning in the punishment treatment aggregate contributions towards the public good are significantly higher amongst unequal groups with low endowment players contributing the greatest endowment share sanctioning is significantly lower in unequal groups but demand for punishment is similar irrespective of differences in relative costs free riding drives punishment but retaliation is another important motivator specifically in unequal groups in equal groups antisocial punishment of cooperators is more common the effect of real wealth and inequality on contributions and punishment is less salient possibly due to real wealth not being discernible in the experimental context interestingly social attitudes are important in explaining sanctioning behavior indicating that distrust in formal institutions and specifically in the top down quota allocation process may have a significant impact on behavioral outcomes and the effectiveness of community sanctioning mechanisms

testing the endogenous growth model public expenditure taxation and growth over the long run endogenous growth models such as barro 1990 predict that government expenditure and taxation will have both temporary and permanent effects on growth we test this prediction using panels of annual and period averaged data for oecd countries during 1970 95 isolating long run from short run fiscal effects our results strongly support the endogenous growth model and suggest that long run fiscal effects are not fully captured by period averaging and static panel methods unlike previous investigations our estimates are free from biases associated with incomplete specification of the government budget constraint and do not appear to result from endogeneity of fiscal or investment variables jel classification h30 o40 validation du modele de croissance endogene depenses publiques fiscalite et croissance a long terme des modeles de croissance endogene comme celui de barro 1990 predisent que depenses gouvernementales et fiscalite vont avoir des effets temporaires et permanents sur la croissance on met cette prevision au test a l aide de donnees annuelles et pour certaines moyennes couvrant des sous periodes pour les pays de l ocde 1970 95 dans le but de departager les effets a court et a long terme les resultats valident fortement le modele de croissance endogene et suggerent que les effets fiscaux a long terme ne sont pas pleinement captures par des methodes utilisant des moyennes ou des methodes statiques contrairement aux resultats d enquetes anterieures les resultats proposes ne souffrent pas de distorsions attribuables a une specification incomplete de la contrainte budgetaire du gouvernement et ne semblent pas etre l effet d echo de l endogeneite des variables fiscales et de l investissement

inequality and group participation theory and evidence from rural tanzania abstract this paper investigates the determinants of group membership and in particular the effect of income inequality on individual incentives to join economic groups drawing on a simple model we show that an increase in inequality has an ambiguous effect and that the type of access rule open versus restricted access is key in determining what income categories are represented in the group furthermore the shape of the income distribution can be crucial to determine whether increased inequality leads to more or less group participation using survey data from rural tanzania we find that inequality at the village level has a negative impact on the likelihood that the respondents are members of any group this effect is particularly significant for relatively wealthier people both when relative wealth is objectively measured and when it is subjectively defined however when we disaggregate groups by type of access rule we find that inequality decreases participation in open access groups when there are wide disparities at the bottom of the distribution while it increases participation in restricted access groups when the disparities are around the middle and top part of the distribution finally we assess the impact of inequality on various dimensions of group functioning

the impact of minimum wages in mexico and colombia there are diverging views about how minimum wages affect labor markets in developing countries advocates of minimum wages hold that they redistribute resources in a welfare enhancing way and can thus reduce poverty improve productivity and foster growth opponents on the other hand contend that minimum wage interventions result in a misallocation of labor and lead to depressed wages in the very sectors the rural and informal urban sectors where most of the poor are found with the effect of wasting resources and reducing the growth rate data from colombia and mexico for the 1980s provide an opportunity to evaluate the impact of minimum wages in mexico in the 1980s the minimum wage fell in real terms roughly 45 percent by 1990 mexico s minimum wage was about 13 percent of the average unskilled manufacturing wage during the same period the minimum wage in colombia increased at nearly the same rate reaching roughly 53 percent of the average unskilled wage the author charts how the mandated minimum wage affected the demand for skilled and unskilled labor in both countries during that decade findings are as follows in mexico minimum wages have had virtually no effect on wages or employment in the formal sector the main reason the minimum wage is not an effective wage for most firms or workers in the informal sector in turn there is considerable noncompliance with the mandated minimum wage especially among part time and female workers as a result significant numbers of workers are paid at or below minimum wages in colombia minimum wages have a much stronger impact on wages judging from their proximity to the average wage and both cross section and time series estimates the estimates imply that the elasticity of low paid unskilled employment with respect to minimum wages is in the range of 2 to 12 percent

enforcement and compliance with labor regulations in argentina the author analyzes the effect of government enforcement on compliance with labor regulations in argentina a country where only half of the workforce receives all the benefits to which they are legally entitled constructing panel data for the period 1995 2002 across provinces and using the number of labor inspectors per capita as a proxy for enforcement he estimates the effect of enforcement on compliance with six employment and social security regulations minimum wage maximum hours paid vacation time annual extra monthly wage workers compensation insurance and health insurance because of potential simultaneity between enforcement and compliance the author explores instrumenting enforcement by electoral years two stage least squares estimates suggest enforcement increases compliance

turning a blind eye costly enforcement credible commitment and minimum wage laws in many countries non compliance with minimum wage legislation is widespread and authorities may be seen as having turned a blind eye to a legislation that they have themselves passed but if enforcement is imperfect how effective can a minimum wage be and if non compliance is widespread why not revise the minimum wage this paper examines a minimum wage policy in a model with imperfect competition imperfect enforcement and imperfect commitment and argues that it is the combination of all three that produces results which are consistent with a wide range of stylized facts that would otherwise be difficult to explain within a single framework we demonstrate that turning a blind eye can indeed be an equilibrium phenomenon with rational expectations subject to an ex post credibility constraint since credible enforcement requires in effect a credible promise to execute ex post a costly transfer of income from employers to workers a government with an objective function giving full weight to efficiency but none to distribution is shown paradoxically to be unable to credibly elicit efficiency improvements via a minimum wage reform

discontinuous distributions and missing persons the minimum wage and unemployed youth the employment and earnings effects of the minimum wage on youth are analyzed by parameterizing the relationship between the distribution of market wage rates individuals would receive in the absence of the minimum and the observed distribution with the minimum estimates are based on individual data most econometric analysis rests on the assumption that random variables have continuous distributions but government programs and legislation often impose constraints on individual choice so that empirically observed distributions are discontinuous the minimum wage has such an effect on the distribution of observed wage rates most analysis of the effect on the minimum however is based on inferences from aggregate employment data and disregards these effects to evaluate the results of the minimum wage it is necessary to take account if its effect on employment and its effect on wage rates our analysis accounts explicitly for the effects of the minimum on observed distributions of employment and wage rates and makes these effects an integral part of the process by which the employment and wage impacts of the minimum are estimated the effect of the minimum is commonly presumed to be greater the higher it is relative to the distribution of wages that would be paid in absence of a minimum indeed most time series and cross section analysis of the effects of the minimum are based on relationships between employment and the ratio of the minimum wage to an average or median wage often an average adult wage but sometimes the average wage paid to employed youth 2 our analysis differs from these approaches in at least two respects first it is based on individual wage and

community based development and poverty alleviation an evaluation of china s poor village investment program we conduct the first systematic evaluation of the world s largest community based development program china s flagship poverty alleviation program began in 2001 which finances public investments in designated poor villages based on participatory village planning we use matching methods and a panel household and village data set with national coverage to compare changes from 2001 to 2004 in designated poor villages that began plan investments and in designated poor villages that had yet to begin plan investments we find that the program significantly increased both government and village financed investments while the program did not increase the income or consumption of poorer households it did increase the income and consumption of richer households by 6 1 to 9 2 we also find suggestive evidence that governance matters in the distribution of program benefits relative gains were greater for richer households in villages with more educated leaders and higher quality village committees delivered greater benefits to both richer and poorer households

political connections and land related investment in rural vietnam abstract this paper uses household panel data from rural vietnam to explore the effects of having a relative in a position of political or bureaucratic power our results suggest that households increase their investment in land improvements due to such ties likely explanations are that connections to office holders strengthen de facto land property rights and access to both credit and transfers results also indicate that officials prefer to use informal rather than formal channels of redistribution to relatives

the effect of minimum wages on actual wages in formal and informal sectors in costa rica summary as in many economies wage gaps between formal and informal sectors have been persistent in costa rica using 12 years of microdata we test whether increases in minimum wages raise actual wages we find they not only raise wages in large urban and rural enterprises traditionally referred to as formal but they also raise wages of workers covered by minimum wage legislation in what are traditionally regarded as informal sectors where the legislation is often considered not to be enforced small urban and small rural enterprises furthermore minimum wages raise wages in these informal sectors more than in larger firms and hence work to reduce wage differentials between the larger and smaller firms however minimum wages have no significant impact on wages in the informal sector not covered by minimum wage legislation the self employed

multinationals and anti sweatshop activism during the 1990s anti sweatshop activists campaigned to improve conditions for workers in developing countries this paper analyzes the impact of antisweatshop campaigns in indonesia on wages and employment identification is based on comparing the wage growth of workers in foreign owned and exporting firms in targeted regions or sectors before and after the initiation of antisweatshop campaigns we find the campaigns led to large real wage increases for targeted enterprises there were some costs in terms of reduced investment falling profits and increased probability of closure for smaller plants but we fail to find significant effects on employment jel f23 j31 j81 l67 o14 o15

the time diversification controversy some financial theorists reject the widely held practitioner belief in time diversification the theorists argue that given serially uncorrelated returns holding a risky asset over longer periods of time will not reduce its inherent riskiness the argument is supported by references to economic models of risk aversion such as mean variance optimization and expected utility theory mean variance optimizers however are not indifferent to investment horizon and investment horizon indifference is only a special case within expected utility theory furthermore to the extent that models reject the notion of time diversification they are inadequate because they are inconsistent with common sense measures of risk at very long horizons

knowledge sharing and the dynamics of social capital abstract mutual aid often entails the sharing of knowledge we investigate how in turn knowledge sharing affects the long run dynamics of mutual aid in our economy agents with specific knowledge are held up by their principals inside communities agents aid each other by sharing their specific knowledge this process generates a new type of knowledge which exacerbates the specificity of the existing types and induces more agents to engage in mutual aid however since the knowledge generated is shared it progressively renders agents inside communities more flexible and thus less dependent on mutual aid we characterize conditions under which in the long run mutual aid spreads or is abandoned

mobility and redistribution the ability of individuals to move freely from one jurisdiction to another is generally seen as a constraint on the amount of redistribution that each jurisdiction within a system of governments can undertake in this paper we look at this proposition by developing a positive analysis of income redistribution by local governments in a federal system we ask how much redistribution occurs when only local governments can have tax transfer instruments individuals can move freely among jurisdictions and voters in each jurisdiction are fully aware of the migration effects of redistributive policies local redistribution is shown to induce sorting of the population with the poorest households located in the communities that provide the most redistribution while the threat of out migration affects the potential for redistribution our results suggest that significant local redistribution is nonetheless feasible numerical computations indicate that the proportion of residents who are renters is a major factor affecting the local choice of level of redistribution

heterogeneous effects of imperfectly enforced minimum wages in low wage labor markets abstract we present minimum wage effects across different enforcement regimes exploiting state time variation and policy discontinuities at contiguous districts across state borders in india we show that the effect of minimum wages on wages and employment significantly increases with an increase in enforcement in weak enforcement regimes estimated wage effects are negligible and employment effects are negative or null in stricter regimes wage effects are positive and strong and employment effects are positive or null in most specifications these results are consistent with theories on imperfect enforcement in monopsonistic labor markets and are robust to alternative definitions of enforcement and employment and employing instrumental variables for enforcement

contractual dualism market power and informality we develop a search theoretic model of contractual dualism in formal and informal labour markets the model i provides the micro underpinnings for endogenous determination of employer market power in the formal and informal sectors ii offers a unified and coherent set up whereby a host of salient features of developing country labour markets can be explained together and iii places for the first time the stiglerian prescription of the optimal unemployment minimising minimum wage in the broader context of labour markets where formal job creation is costly where employer market power is endogenous and where formal employment informal employment and unemployment coexist

inequality and trust in sweden some inequalities are more harmful than others we present new evidence on the influence of income inequality on generalized trust using individual panel data from swedish counties together with an instrumental variable strategy we find that differences in disposable income and especially differences among people in the bottom half of the income distribution are associated with lower trust the relationship between income inequality and trust is particularly strong for people with a strong aversion against income differentials we also find that the proportion of people born in a foreign country is negatively associated with trust

behavioral portfolio theory we develop a positive behavioral portfolio theory bpt and explore its implications for portfolio construction and security design the optimal portfolios of bpt investors resemble combinations of bonds and lottery tickets consistent with friedman and savage s 1948 observation we compare the bpt efficient frontier with the mean variance efficient frontier and show that in general the two frontiers do not coincide optimal bpt portfolios are also different from optimal capm portfolios in particular the capm twofund separation does not hold in bpt we present bpt in a single mental account version bpt sa and a multiple mental account version bpt ma bpt sa investors integrate their portfolios into a single mental account while bpt ma investors segregate their port folios into several mental accounts bpt ma portfolios resemble layered pyramids where layers are associated with aspirations we explore a two layer portfolio where the low aspiration layer is designed to avoid poverty while the high aspiration layer is designed for a shot at riches

put prices and pen participation rates at longer horizons is equity risk in the eye of the beholder two recent articles in the financial analysts journal address the question of how equity risk changes as investment horizons grow longer both use analyses based on derivatives pricing examples but draw exactly opposite conclusions we reexamine these authors arguments and find the logic of both analyses is flawed we demonstrate that the use of specialized put option prices as proxies for equity risk yields ambiguous conclusions about equity risk changes at longer investment horizons with added information about an investor s required minimum rate of return however we can specify the change in equity risk at longer horizons with these put prices

tribe or nation nation building and public goods in kenya versus tanzania this article examines how government policies affect ethnic relations by comparing outcomes across two nearby districts one in kenya and one in tanzania using colonial era boundary placement as a natural experiment despite similar geography and historical legacies governments in kenya and tanzania have followed radically different language education and local institutional policies with tanzania consistently pursuing more serious nation building the evidence suggests that nation building has allowed diverse communities in rural tanzania to achieve considerably better local public goods outcomes than diverse communities in kenya to illustrate while kenyan communities at mean levels of diversity have 25 percent less local school funding than homogeneous communities on average the comparable figure in the tanzanian district is near zero the kenya tanzania comparison provides empirical evidence that serious reforms can ameliorate social divisions and suggests that nation building should take a place on policy agendas especially in africa

gender biased redistribution and intra household distribution abstract this paper examines the implications of income redistribution from men to women for the welfare of married women and children we develop a cournot model of a two person household where agents provide market labor and allocate their spending between a private consumption good and goods for children we show that under plausible restrictions on individual preferences small redistributions to married women reduce their welfare this happens because the income redistribution induces men to reduce their own spending on children by more than the amount redistributed a relative increase in women s independent earnings may however improve children s welfare

network effects and welfare cultures we empirically examine the role of social networks in welfare participation using data on language spoken at home to better infer networks within an area our empirical strategy asks whether being surrounded by others who speak the same language increases welfare use more for those from high welfare using language groups this methodology allows us to include local area and language group fixed effects and to control for the direct effect of being surrounded by one s language group these controls eliminate many of the problems in previous studies the results strongly confirm the importance of networks in welfare participation

decentralized targeting of an antipoverty program abstract developing country governments often delegate authority over the targeting of antipoverty programs to community organizations while retaining control over how much goes to each community we offer a theoretical characterization of the information structure in such programs and the interconnected behavior of the various players our model motivates an econometric specification for explaining distributional outcomes results for bangladesh s food for education ffe program indicate that within village targeting improved with program size lower land inequality less remoteness fewer shocks and less private redistribution there is no sign that the center took account of village attributes conducive to reaching the poor

determinants and benefits of household level participation in rural drinking water projects in india abstract using data from households in 45 villages in rural india this paper finds that wealth literacy household and village size are often determinants of two measures of participation in community based development projects meeting attendance and capital cost contributions using propensity score matching this study concludes that participation leads to benefits for the households that participate although these benefits are strongest in regions with higher levels of overall participation this study finds no evidence of elite capture with both poor and wealthy households benefiting from their participation

collective action for local commons management in rural yunnan china empirical evidence and hypotheses using evolutionary game theory this paper presents hypotheses regarding collective actions for irrigation management with the help of evolutionary game theory data for the analysis were collected by the author from the irrigation system of rural yunnan china an econometric analysis reveals that collective action will be forthcoming in rural communities where few nonfarm job opportunities are provided the degree of income disparity is quite small and resource restrictions are moderately problematic the finding that communities without local government intervention outperform those with intervention supports the proverbial view that external agencies should delegate significant parts of the control rights of common pool resources to immediate stakeholders

changing coalitions in value chains and the political economy of agricultural and food policy within this issue of the oxford review of economic policy which focuses on the growing divergence between the agriculture sector and the food sector this paper focuses on how this changing divergence affects the political economy of agricultural and food policies

the effects of social security taxes and minimum wages on employment evidence from turkey using worker level panel data for the period from 2002 to 2005 the author analyzes the separate employment effects of increases in the social security taxes paid by employers and increases in the

effects of social norms and fractionalization on voting behaviour in japan this article uses prefecture level panel data from japan spanning the period 1989 2003 to examine the influence of social norms and fractionalization on voting behaviour the key findings obtained from analysis via the fixed effects estimation which controls for unobserved prefecture specific fixed effects are as follows 1 the voter turnout is higher in close knit communities indicating that social norms enhance voting 2 fractionalization from both economic and generational standpoints lowers the voter turnout and 3 a lack of social capital can lead to the distribution of votes being spread thinly among the competing parties

running for the exit community cohesion and bank panics bank panics attract scholarly interest because they reflect distrust of each bank that experiences a run as a result of diffusion of information rumors about such bank runs trigger additional runs elsewhere however the contagion of bank runs is highly selective for reasons that are unrelated to the financial strength of the individual banks this presents a puzzle that extant theories on institutions and reputations cannot fully explain to solve this puzzle we turn to the characteristics of the community in which the banks operate we develop theory on how communities with diverse affiliation structures and economic inequality have weaker community cohesion and communication making such communities less likely to experience widespread distrust and hence bank runs we test hypotheses on the effects of community ethnic diversity national origin diversity religious diversity and wealth inequality using data from the great bank panic of 1893 and we find strong community effects on bank runs these f

cross racial envy and underinvestment in south african partnerships trust games are employed to investigate the effect of heterogeneity in income and 5 race on cooperation in south africa the amount of socio economic information available to the subjects about their counterparts is varied no significant behavioural differences are observed when no such information is provided however when the information is available it significantly affects individual trust behaviour the low income subjects from both racial groups invest significantly less 10 in partnerships with the high income subjects of the other racial group than in any other partnership we attribute this behaviour to cross racial envy which on aggregate may lead to substantial efficiency losses

on the risk of stocks in the long run a familiar proposition is that investing in common stocks is less risky the longer an investor plans to hold them if this proposition were true then the cost of insuring against earning less than the risk free rate of interest should decline as the investment horizon lengthens this paper shows that the opposite is true even if stock returns are mean reverting in the long run the case for young people investing more heavily than older people in stocks cannot therefore rest solely on the long run properties of stock returns for guarantors of money fixed annuities the proposition that stocks in their portfolios are a better hedge the longer the maturity of their obligations is unambiguously wrong

declining public pensions in an era of demographic ageing will private provision fill the gap abstract demographic crisis and imprudent commitments have induced a crisis in public pension programmes in oecd countries will present and prospective cutbacks lead to greater private saving either in the form of private pension provision or in other forms of saving the paper surveys existing evidence and provides new results on three questions do individuals substitute private for public provision of savings when public pension programmes are cut back voluntarily do individuals respond to incentives to join sponsored or tax subsidised arrangements if encouraged by the government and if individuals are prepared to make such arrangements and where saving is voluntary do they save enough to replace previous prospective public pension flows

the consequences of increased enforcement of legal minimum wages in a developing country an evaluation of the impact of the campana nacional de salarios minimos in costa rica in august 2010 the costa rican government implemented a comprehensive program to increase compliance with legal minimum wages the campana nacional de salarios minimos national campaign for minimum wages to evaluate the impact of the campaign the authors use a regression discontinuity rd approach which compares what happened to workers who before the campaign had been earning below the minimum wage to those who before the campaign had been earning above the minimum wage they analyze a panel data set with information on workers from before the campaign began july 2010 and after the campaign had been in operation for some time july 2011 the evidence supports the conclusion that the campaign led to an increase in compliance with minimum wage laws in costa rica the mean earnings of those being paid less than the minimum wage in 2010 increased by approximately 10 more than the earnings of those being paid more than the minimum wage the campaign led to the largest increases in the wages of wome

trust membership in groups and household welfare evidence from kwazulu natal south africa unfortunately these two literatures have remained largely unconnected the group and network literature concludes that participation has important economic benefits even when the stated function of the group is noneconomic in most cases however the mechanisms by which groups and networks achieve this are unclear the determinants of trust and participation in groups literature highlights the importance of income and social homogeneity what remains less understood is whether and how trust can be generated for example via participation in groups this article links the empirical literatures referenced above by exploring the relationship between membership in groups and trust specifically using longitudinal data from kwazulu natal province south africa we examine 1 the importance of trust in the decision to join groups 2 the subsequent ability of groups to generate trust and 3 the effect of group membership and trust on a measure of well being per capita household income in addition we disaggregate groups into financial and nonfinancial and we categorize trust in people by agent or actor therefore we can explore whether trust in different kinds of actors is important for participation in different kinds of groups and whether participation in different kinds of groups is important for generating trust in different kinds of actors excerpt

sweatshop regulation tradeoffs and welfare judgements the standard economic and ethical case in defense of sweatshops employs the standard of the welfare of their workers and potential workers to argue that sweatshop regulations harm the very people they intend to help scholars have recently contended that once the benefits and costs are balanced regulations do in fact raise worker welfare this paper describes the short and long run tradeoffs associated with sweatshop regulation and then examines how reasonable constructions of measures of worker welfare would evaluate these tradeoffs finding that the standard economic and ethical case against sweatshop regulations is well supported

aid and growth regressions this paper examines the relationship between foreign aid and growth in real gdp per capita as it emerges from simple augmentations of popular cross country growth specifications it is shown that aid in all likelihood increases the growth rate and this result is not conditional on good policy there are however decreasing returns to aid and the estimated effectiveness of aid is highly sensitive to the choice of estimator and the set of control variables when investment and human capital are controlled for no positive effect of aid is found yet aid continues to impact on growth via investment we conclude by stressing the need for more theoretical work before this kind of cross country regressions are used for policy purposes

bullish or bearish the sentiment of newsletter writers whether bullish or bearish does not forecast future returns but past returns and the volatility of those returns do affect sentiment high returns over four week periods are associated with a migration of newsletter writers from the bearish camp into the bullish camp high returns over periods of 26 and 52 weeks are associated with nervous bullishness a migration of newsletter writers from the bearish camp into both the bullish and the correction camps high volatility instead of scaring newsletter writers into bearishness reduces the effects of both positive and negative returns on sentiment also contrary to a popular hypothesis the crash of 1987 had no significant effect on the pattern of forecasts