environmental regulations and market power the case of the korean manufacturing industries abstract in korea economic growth between 1980 and the mid 1990s was barely affected by environmental regulations it could be the case that industries with more market power exercised more political power which was translated into less expensive regulation e g less rigorous monitoring or enforcement efforts in this paper we test a negative relationship between market power and the contribution of environmental regulations to productivity growth a restricted cost function is jointly estimated with an inverse supply relation to measure the productivity growth effect of regulations and the degree of market power in 15 sub industries in the korean manufacturing industries over the period 1983 93

environmental regulations innovation and firm performance a revisit of the porter hypothesis part of the research for this paper was supported by funding from nottingham innovative manufacturing research centre and the university of bedfordshire business and management research institute

racing to the bottom and racing to the top the crucial role of firm characteristics in foreign direct investment choices this study builds on the pollution haven and induced innovation arguments as explanations for firm behavior with regard to international environmental management and argues both need to be integrated this implies that foreign direct investment is capable of facilitating a race to the bottom and a race to the top simultaneously using novel and detailed data we test whether environmental capabilities and weaknesses and other characteristics affect us firms foreign direct investment choices in chinese provinces with more or less stringent environmental regulation this enables a more detailed analysis by allowing country regulation to vary spatially and over time our study finds that heterogeneity in capabilities and firm size jointly determine foreign direct investment and in doing so shows the simultaneity of a race to the bottom and to the top specifically firms with environmental capabilities invest in more stringently regulated regions and firms with weaknesses are less likely to target such regions these diverging effects are both moderated by firm size which further amplifies each of them our findings underscore the need to integrate pollution haven and induced innovation arguments in a joint analysis they furthermore show the relevance of methodological choices when testing hypotheses integrating the above arguments empirically

emission standards and stochastic waste load empirical work regarding the impact of environmental regulations on firm behavior has been developed under the assumption that emissions of pollutants are deterministic the implication is that the regulation is effective only when the constraint is exactly satisfied in real life however it is seldom the case that emission constraints are exactly satisfied the purpose of this paper is to find out whether regulation schemes are ineffective or whether the structure is an optimal reaction to random fluctuations in emissions the swedish pulp and paper industry is used as an empirical illustration

early tracking and the misfortune of being young recent research suggests that the relative age of a student within a grade has a causal effect on educational achievement and that this effect fades with the duration of schooling in this study we estimate the causal relative age effect on track choice in austria a country where students are first tracked in grade 5 at the age of 10 years and again in grade 9 we find a strong positive relative age effect on track choice in grades 5 8 the age effect persists beyond grade 8 for students from less favorable socioeconomic backgrounds and students in urban areas

the cost of environmental protection reported expenditures for environmental protection are often cited as an assessment of the burden of current regulatory efforts however the potential for both incidental savings and uncounted costs means that the actual burden could be either higher or lower than these reported values using a production cost model that considers the possible interaction between environmental and non environmental expenditures we directly estimate the dollar for dollar incidental savings uncounted costs arising from a one dollar increase in reported environmental expenditures although recent literature supports the idea that reported expenditures probably understate the actual burden we find no such evidence in the manufacturing sector based on a large panel of plant level data in one industry we find statistically significant overstatement in three others we find no significant deviation in either direction we conclude that although cost estimates are not overstated on average variation and uncertainty exist

employment and structural impacts of material efficiency strategies results from five case studies abstract in order to come up with a sound assessment of the effects of material efficiency innovations on growth employment and competitiveness different economic mechanisms have to be considered from a methodological point of view the analysis must be able to account for technology specific aspects the employment impacts of five innovations are analyzed plastic and paper recycling increased life span of automobiles car sharing and bio based products time horizons for all strategies are scenarios until 2020 the economic impacts are context specific with regard to innovation technology and country the economic impacts highlight substantial structural adjustments the overall economic net impact on employment tends to be neutral to positive stronger positive economic impacts result if first mover advantages can be established

technical and environmental efficiencies and best management practices in agriculture an input distance function idf is estimated to empirically evaluate and analyse the technical and environmental efficiencies of 210 farms located in the chaudiere watershed quebec where water quality problems are particularly acute because of the production of undesirable outputs that are jointly produced with agricultural products the true idf is approximated by a flexible translog functional form estimated using a full information maximum likelihood method technical and environmental efficiencies are disaggregated across farms and account for spatial variations our results show that there is a significant correlation between the two efficiencies the idf is used to compute the cumulative malmquist productivity index and the fisher index the two indices are used to measure changes in technology profitability efficiency and productivity in response to the adoption of two selected best management practices bmps whose objective is to reduce water pollution we found significant differences acro

how does parental leave affect fertility and return to work evidence from two natural experiments this paper analyzes the effects of changes in the duration of paid job protected parental leave on mothers higher order fertility and postbirth labor market careers identification is based on a major austrian reform increasing the duration of parental leave from one year to two years for any child born on or after july 1 1990 we find that mothers who give birth to their first child immediately after the reform have more second children than prereform mothers and that extended parental leave significantly reduces return to work employment and earnings also decrease in the short run but not in the long run fertility and work responses vary across the population in ways suggesting that both cash transfers and job protection are relevant increasing parental leave for a future child increases fertility strongly but leaves short run postbirth careers relatively unaffected partially reversing the 1990 extension a second 1996 reform improves employment and earnings while compressing the time between births

individual risk in an investment based social security system this paper examines the risk aspects of an investment based defined contribution social security plan we focus on the risk after the plan is fully phased in individuals deposit a fraction of wages to a personal retirement account pra invest these funds in a 60 40 equity debt mix and in a similarly invested annuity at age 67 the value of the assets follows a random walk with mean and variance of a 60 40 equity debt portfolio over the period 1946 95 a mean log return of 5 5 percent net of administrative costs of 0 4 percent and a standard deviation of 12 5 percent we study he stochastic distributions of this process by doing 10 000 simulations of the 80 year experience of the cohort that reached age 21 in 1998 the resulting annuities are compared to the future defined benefits specified in current law the benchmark benefits with no uncertainty a 5 5 percent log return would permit the benchmark benefits to be purchased with pra deposits of 3 1 percent of payroll only one sixth of the pay as you go tax needed for the benchmark benefits saving a higher share of wages provides a cushion that protects the individual from the risk of an unacceptably low level of benefits for example pra deposits of 6 percent of wages reduces the probability that the benefits are less than the benchmark to 0 17 and the probability that they are less than 61 percent of the benchmark to 0 05 pra deposits of 9 percent of wages half of the tax rate required in a pay as you go system would substantially reduce these risks this pure investment based plan is an extreme case the investment risk can be reduced further by using a mixed system that combines pay as you go and investment based components or that makes intergenerational transfers conditional on the performance of stock and bond prices this abstract was borrowed from another version of this item

international trade and environmental quality a survey abstract international trade has been incorporating various aspects of environmental issues since 1970 the extent to which environmental problems might affect many facets of trade or vice versa has been the subject of considerable debate over these years in this article we have attempted to establish some of the links between international trade and environmental quality by performing a comprehensive literature review we discuss issues such as establishing direct and indirect effects of international trade on environmental quality effects of trade on economic development environmental quality and energy and their relation with each other and finally the role of governments and international organizations in this context studies have so far revealed some linkages between trade and environment through conventional trade theory however interactions between international trade and types of pollution their sink and assimilative capacity need to be analyzed using a general equilibrium approach currently very little knowledge and agreement on the nature of interactions between trade theories development process and environmental quality exist existing studies have shown that the structure of environmental regulations should be modified to reflect the existence of trade under imperfect competition therefore further research on the interaction between new trade theory and environmental regulation is needed also theoretical and quantitative analysis regarding the effects of environmental regulations on competitiveness and location decision is needed the intensity and type of environmental measures vary across issues and countries therefore harmonizing environmental measures creates an inefficient atmosphere and to assume that trade restrictions will either improve or reverse the environmental damages is a serious mistake given the dynamic and intricate nature of the problem trade and environment debate continues despite vast research and poses a challenge for researchers and policy makers in the foreseeable future

evaluation of the subjective probabilities of survival in the health and retirement study in the health and retirement study respondents were asked about the chances they would live to 75 or to 85 we analyze these responses to determine if they behave like probabilities of survival if their averages are close to average probabilities in the population and if they have correlations with other variables that are similar to correlations with actual mortality outcomes we find that generally they do behave like probabilities and that they do aggregate to population probabilities most remarkable however is that they covary with other variables in the same way actual outcomes vary with the variables for example respondents with higher socioeconomic status give higher probabilities of survival whereas respondents who smoke give lower probabilities we conclude that these measures of subjective probabilities have great potential use in models of intertemporal decision making under uncertainty

environmental regulations and productivity growth the case of fossil fueled electric power generation this paper measures and analyzes the effect of sulfur dioxide emission restrictions on the rate of productivity growth in the electric power industry over the 1973 79 business cycle a firm specific measure of regulatory intensity is developed which depends on the severity of the emission standard the extent of enforcement and the unconstrained emission rate relevant to each utility the results indicate that emission regulations result in significantly higher generating costs primarily from the increased use of low sulfur fuels the average rate of productivity growth was reduced by 0 59 percentage points per year for constrained utilities

the demand for site specific recreational activities a characteristics approach abstract a model of constrained utility maximizing behavior is developed to explain how a representative individual allocates his ski days among alternative sites the physical characteristics of the ski areas and the individual s skiing ability are explicit arguments in the utility function the budget allocation is given along with the parametric costs to ski including travel costs entrance fees equipment costs and the opportunity cost of his time shares a site s share being the proportion of ski days that the individual spends at that site are derived and assumed multinomially distributed a stochastic specification which maintains the inherent properties of the shares maximum likelihood estimation confirms the basic hypothesis that costs ability and characteristics all are important determinants of the sites shares the model explains a large proportion of the skier s allocation of ski days a multinomial logit model of skier behavior is also developed and maximum likelihood estimates of its parameters are obtained examination of the summary statistics from my model and the logit model indicates that my model predicts the skier s choice of sites better than the logit model

the family as an incomplete annuities market families can self insure against uncertain dates of death through implicit or explicit agreements with respect to consumption and interfamily transfers interfamily transfers need have nothing to do with altruistic feelings they may simply reflect risk sharing behavior of completely selfish family members although family annuity markets are incomplete even small families can substitute by more than 70 percent for perfect market annuities given adverse selection and transaction costs family risk pooling may be preferred to public market annuities in the absence of public annuities these risk sharing arrangements provide powerful incentives for marriage and family formation

natural versus manufactured capital win lose or win win a case study of the finnish pulp and paper industry abstract the effect of investments on environmental variables has been discussed through the win win rhetoric specifically in micro level analysis on the macro level the win win rhetoric has been replaced by the arguments for and against the substitutability of natural and manufactured capital here these two concepts belonging to different levels of analysis are linked by looking at the environmental and economic effects of chosen investment strategies in a traditionally capital intensive industry over time the paper shows that rather than generalise the existence of win win situations or the substitutability of capital these positions are determined by purely situational factors as a result in the assessment of substitutability the specific operating context of the industry needs to be taken into account this implies also that environmental policy needs to be designed to be adaptive and responsive to those situational factors to create beneficial outcomes for the economy and for the environment

stochastic lifestyling optimal dynamic asset allocation for defined contribution pension plans this paper considers the asset allocation strategies open to members of deflnedcontribution pension plans we investigate a model that incorporates three sources of risk asset risk and salary or labour income risk in the accumulation phase and interest rate risk at the point of retirement we propose a new form of terminal utility function incorporating habit formation that uses the plan member s flnal salary as a numeraire the paper discusses various properties and characteristics of the optimal stochastic asset allocation strategy which we call stochastic lifestyling both with and without the presence of non hedgeable salary risk we compare the performance of stochastic lifestlying with some popular strategies used by pension providers including deterministic lifestyling which involves a gradual switch from equities to bonds according to preset rules and static strategies that invest in benchmark mixed funds we flnd that the use of stochastic lifestyling signiflcantly enhances the welfare of a wide range of potential plan members relative to these other strategies jel classiflcation e21 g11 g23

the contribution of environmental regulations to the slowdown in productivity growth abstract the radical slowdown in productivity growth since 1965 is often attributed to environmental regulations several studies varying widely in method have attempted to assess this contribution here these analyses are reviewed and critiqued and a summary appraisal of the likely contribution of environmental regulations to the observed decrease in productivity growth is offered

optimal consumption portfolio choices and retirement planning abstract we examine consumption and investment decisions in a life cycle model with habit formation stochastic opportunity set stochastic wages and labor supply flexibility retirement is taken into account by specifying an age at which labor earnings stop but consumption spending continues explicit solutions are obtained for optimal consumption labor supply and the financing portfolio we examine the structure and determinants of the optimal portfolio we also study the effects of the retirement date and of habits on optimal decisions finally we conduct a preliminary analysis to assess the effects of a liquidity constraint on optimal consumption leisure choices

valuation of mortality risk via the instantaneous sharpe ratio applications to life annuities we develop a theory for valuing non diversifiable mortality risk in an incomplete market by assuming that the company issuing a mortality contingent claim requires compensation for this risk in the form of a pre specified instantaneous sharpe ratio we apply our method to value life annuities one result of our paper is that the value of the life annuity is identical to the upper good deal bound of cochrane and saa requejo 2000 beyond arbitrage good deal asset price bounds in incomplete markets journal of political economy 108 79 119 and of bjork and slinko 2006 towards a general theory of good deal bounds review of finance 10 221 260 applied to our setting a second result of our paper is that the value per contract solves a linear partial differential equation as the number of contracts approaches infinity one can represent the limiting value as an expectation with respect to an equivalent martingale measure and from this representation one can interpret the instantaneous sharpe ratio as an annuity market s price of mortality risk

uk s climate change levy cost effectiveness competitiveness and environmental impacts this paper intends to examine the cost effectiveness of uk s climate change levy ccl its implications on competitiveness of firms and the environmental impact the paper briefly describes the levy and analyses it under the cannons of a good taxation policy the economic implications of the levy are discussed with theoretical and empirical perspectives change in net exports investment patterns and productivity and inclusion of compliance cost forms the basis for analysing the effect on competitiveness it discusses the options available to firms to safeguard their competitiveness if it is adversely affected by the ccl a description of the current scenario of the levy since its inception is also presented the paper argues the need for a comprehensive policy involving the use of standards emission trading as well as energy taxes to achieve emission and energy use reductions a focal point of this paper is to elucidate the pros and cons of the ccl energy tax with respect to an emission trading scheme

how strong are bequest motives evidence based on estimates of the demand for life insurance and annuities this paper presents new empirical evidence in support of the view that a significant fraction of total saving is motivated by the desire to leave bequests specifically i find that social security annuity benefits significantly raise life insurance holdings and depress private annuity holdings among elderly individuals these patterns indicate that the typical household would choose to maintain a positive fraction of its resources in bequeathable forms even if insurance markets were perfect evidence on the relationship between insurance purchases and total resources reinforces this conclusion

child care choices and children s cognitive achievement the case of single mothers we evaluate the effect of child care versus maternal time inputs on child cognitive development using single mothers from the nlsy79 to deal with nonrandom selection of children into child care we exploit the exogenous variation in welfare policy rules facing single mothers in particular the 1996 welfare reform and earlier state level policy changes generated substantial increases in their work child care use we construct a comprehensive set of welfare policy variables and use them as instruments to estimate child cognitive ability production functions in our baseline specification we estimate that a year of child care reduces child test scores by 2 1

dynamic asset pricing theory with uncertain time horizon abstract this paper addresses the problem of pricing and hedging a random cash flow received at a random date in a general setup with a random time that is not a stopping time of the filtration generated by asset prices we first provide an explicit characterization of the set of equivalent martingale measures we also present price bounds consistent with perfect replication in the absence of arbitrage as is often the case such bounds are too wide to be of any practical use and we consider several choices for narrowing down to one the number of equivalent martingale measures

taxes and the timing of births because the tax savings of having a child are a realized only if the birth takes place before midnight january 1 the incentives for the marginal birth are substantial using a sample of children from the national longitudinal survey of youth we find that the probability that a child is born in the last week of december rather than the first week of january is positively correlated with tax benefits we estimate that increasing the tax benefit of having a child by 500 raises the probability of having the child in the last week of december by 26 9 percent

productivity growth and environmental regulation in mexican and u s food manufacturing many argued during the nafta debate that trade liberalization would favor mexican over u s food processors especially because of lax environmental laws south of the border we find through an examination of profit functions that productivity growth in mexico has outstripped that in the united states suggesting free trade indeed will benefit mexican suppliers u s pollution regulations have had no impact on the profitability or productivity of u s food manufacturing in contrast mexico s swiftly rising environmental standards have enhanced food processors productivity growth corroborating the porter hypothesis pollution law therefore has favored mexican over u s food processing but for reasons few had anticipated

uncertain lifetime life protection and the value of life saving abstract the analytic innovation is treating life s end as uncertain and life expectancy as partly the product of individuals efforts to self protect against mortality and morbidity risks the demand for self protection is modeled in a stochastic life cycle framework under alternative insurance options the model helps explain the trend and systematic diversity in life expectancies across different population groups as well as the wide variability in reported value of life saving estimates the analysis yields a closed form solution for individuals value of life saving that is estimable empirically it reflects the impacts of specific personal characteristics and alternative insurance options on both life expectancy and its valuation

causal effects of paternity leave on children and parents reserving a share of the parental leave period for fathers is considered necessary in order to induce fathers to take leave and to increase men s participation in child rearing we investigate how a parental leave reform directed towards fathers affected leave taking and in turn children s and parents long term outcomes a paternal leave quota greatly increases the share of men taking paternity leave we find evidence that children s school performance improves as a result particularly in families where the father has higher education than the mother we find no evidence that paternity leave counters the traditional allocation of parents labor supply

life cycle individual thrift and the wealth of nations this paper provides a review of the theory of the determinants of individual and national thrift that has come to be known as the life cycle hypothesis lch of saving applications to some current policy issues are also discussed part i deals with the state of the art on the eve of the formulation of the lch some 30 years ago part ii sets forth the theoretical foundations of the model in its original formulation and later amendment calling attention to various implications distinctive to it and sometimes counter intuitive it also includes a review of a number of crucial empirical tests both at the individual and the aggregate level part iii reviews some applications of lch to current policy issues though only in sketchy fashion as space constraints prevent fuller discussion this abstract was borrowed from another version of this item

life cycle asset allocation with annuity markets abstract this paper derives the optimal consumption and portfolio choice pattern over the life cycle for households facing uninsurable labor income risk ruin risk stochastic capital markets and uncertain lifetime our model posits a dynamic utility maximizer with crra and epstein zin preferences who has access to liquid stocks bonds and illiquid life annuities we show that a considerable fraction of wealth is gradually annuitized until retirement and beyond to skim the mortality credit the remaining liquid wealth is mainly invested in stocks to compensate for riskless investment in life annuities the model allows us to assess the economic importance of common explanations for the empirically low annuity demand by analyzing participations rates annuitization fractions and welfare effects

the role of the public administrations in the promotion of the environmental activity in spanish industrial companies abstract an aim of this study is to analyse the managers opinions in relation to the environmental policy instruments that the public administrations promote in order to force firms to care for the natural environment in the same way we study the relation between the perceived importance of these instruments and the level of collaboration between the public administrations and firms in this area taking into consideration the fact that in spain firms are still in a relatively incipient stage from an environmental standpoint we analyse how these instruments are assessed by managers of spanish industrial firms besides we study whether several opinions are one of the causes of less collaboration in environmental public programs we show that the tightening of the legislation in the environmental area induces a deeper consciousness among companies about the environmental problem because of this and despite having other instruments the public administrations should legislate and enforce the legislation as a first measure of environmental control afterwards we were able to confirm that there does not exist any relation between the importance of the administrative instruments and the perception of the efficacy of these on the part of the managers as they are being implemented nowadays we also confirm that there are no significant differences in the judgement of the importance efficacy relation among those companies that maintain different type of relations with the public administrations in the environmental field this result allows us to arrive at the conclusion that in spite of the differences between the importance and the efficacy that the companies attach to the administrative instruments these differences do not influence the type of relations that the companies maintain with the public administrations in the environmental field therefore it seems that these relations depend on other factors perhaps the level of information of the companies about the public programs or about the necessary resources to have access to them

uncertainty resolution and the timing of annuity purchases abstract this paper considers the question of why the annuity market is thin a model is presented in which consumers have the option of purchasing annuities before discovering their survival probability they can then recontract the initial choice after the resolution of this form of uncertainty it is shown that consumers purchase insurance against their own survival probability type at a very young age and do not undertake further transactions this characterization is then used to analze the effects of introducing future income uncertainty and to investigate the trade off between old age insurance motive and portfilio flexibility

the impact of non parental child care on child development evidence from the summer participation dip abstract although a large literature examines the effect of non parental child care on preschool aged children s cognitive development few studies deal convincingly with the potential endogeneity of child care choices using a panel of infants and toddlers from the birth cohort of the early childhood longitudinal study ecls b this paper attempts to provide causal estimates by leveraging heretofore unrecognized seasonal variation in child care participation child assessments in the ecls b were conducted on a rolling basis throughout the year and i use the participation dip among those assessed during the summer as the basis for an instrumental variable the summer participation dip is likely to be exogenous because ecls b administrators strictly controlled the mechanism by which children were assigned to assessment dates the ols results show that children utilizing non parental arrangements score higher on tests of cognitive ability a finding that holds after accounting for individual fixed effects however the instrumental variables estimates point to sizeable negative effects of non parental care the adverse effects are driven by participation in formal settings and contrary to previous research i find that disadvantaged children do not benefit from exposure to non parental care

valuation optimal asset allocation and retirement incentives of pension plans we provide a framework in which we link the valuation and asset allocation policies of defined benefits plans with the lifetime marginal productivity schedule of the worker and the pension plan formula in turn we examine the retirement policies that are implied by the primitives of the model and the value of pension obligations our model provides an explicit valuation formula for a stylized defined benefits plan the optimal asset allocation policies consist of the replicating portfolio of the pension liabilities and the growth optimum portfolio independent of the pension liabilities we show that the worker will retire when the ratio of pension benefits to current wages reaches a critical value which depends on the parameters of the pension plan and the discount rate using numerical techniques we analyze the feedback effect of retirement policies on the valuation of plans and on the asset allocation decisions article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

environmental policy and the equilibrium rate of unemployment abstract this paper integrates environmental policy instruments with the theory of equilibrium unemployment we investigate the question of whether a low equilibrium rate of unemployment and a high quality of the environment are complementary policy goals or must be traded off it turns out that an interval exists for a tax on emissions where the two goals are indeed complementary the tax stimulates the emergence of an abatement sector which provides pollution control and vacancies for the job seekers for constrained efficiency the policy maker operates five instruments to internalize the environmental and the search externalities a tax on emissions employment subsidies and recruiting allowances for the polluting industries are sufficient to implement the first best the optimal emission tax is an increasing function of the workers bargaining strength for labor markets where workers have a strong bargaining position the optimal pollution tax may easily exceed the pigouvian tax

productivity growth and pollution in state manufacturing the directional output distance function chambers chung fare 1996 is used to construct a malmquist luenberger index of total factor productivity growth for manufacturing when both good and bad outputs are jointly produced the index is constructed using information on good and bad output quantities and input quantities circumventing the problem of recovering shadow price information for the bad output needed for the fisher or tornqvist type of productivity indices accounting for toxic releases in manufacturing productivity growth averages 1 4 an nually during 1988 1994 the findings also suggest that the failure to account for toxic releases in manufacturing results in a significant under statement of total factor productivity growth

why environmental management may yield no regret pollution abatement options empirical evidence supports the existence of pollution abatement possibilities at negative costs the so called no regret options we provide a microeconomic rationale for the existence of such potential at the firm level an econometric application confirms that pollution abatement cost curves with no regret options are compatible with a standard production function as stated in our theoretical model c 2008 elsevier b v all rights reserved

what is the case for paid maternity leave abstract we assess the case for generous government funded maternity leave focusing on a series of policy reforms in norway that expanded paid leave from 18 to 35 weeks we find the reforms do not crowd out unpaid leave and that mothers spend more time at home without a reduction in family income the increased maternity leave has little effect on children s schooling parental earnings and labor force participation completed fertility marriage or divorce the expansions whose net costs amounted to 0 25 of gdp have negative redistribution properties and imply a considerable increases in taxes at a cost to economic efficiency

environmental regulation cost and industry structure changes nonstationary markov analyses are used to investigate impacts of environmental regulatory costs associated with compliance on changes in market structure in pulp and paper industries results show environmental regulation expenditures have statistically significant effects on the probabilities of capacity moving to a larger company size category so industry structure is affected by environmental regulation however counter to expectations results further show consolidation occurs with higher probability when environmental costs are falling rather than when they are rising policy analyses that presume immediate policy responses to cost changes or that industry structure is unchanged may yield time inconsistent policy conclusions

the impact of environmental management on firm performance environmental management has the potential to play a pivotal role in the financial performance of the firm many individuals suggest that profitability is hurt by the higher production costs of environmental management initiatives while others cite anecdotal evidence of increased profitability a theoretical model is proposed that links strong environmental management to improved perceived future financial performance as measured by stock market performance the linkage to firm performance is tested empirically using financial event methodology and archival data of firm level environmental and financial performance significant positive returns were measured for strong environmental management as indicated by environmental performance awards and significant negative returns were measured for weak environmental management as indicated by environmental crises the implicit financial market valuation of these events also was estimated cross sectional analysis of the environmental award events revealed differences for first time awards and between industries first time award announcements were associated with greater increases in market valuation although smaller increases were observed for firms in environmentally dirty industries possibly indicative of market skepticism this linkage between environmental management and financial performance can be used by both researchers and practitioners as one measure of the benefits experienced by industry leaders and as one criterion against which to measure investment alternatives

different types of environmental regulations and heterogeneous influence on green productivity evidence from china this paper attempts to examine if the strong version of porter hypothesis is supported in china by investigating how different regulatory instruments and the relative stringency impact green productivity we use a slacks based measure sbm and luenberger productivity index accounting for undesirable outputs to evaluate the industrial green productivity growth rates of china s 30 provinces the estimates imply an unsustainable development model in china with significant regional differences by employing a panel threshold model and a province level panel dataset during 2000 2012 empirical results show that both command and control and market based regulation have a non linear relationship with and can be positively related to green productivity but with different constrains on regulation stringency there are double thresholds with the command and control and exists an optimal range of stringency for productivity improvement while a single threshold has been found with the market based regulation and its current stringency is reasonable for most of provinces moreover based on china s reality the productivity effect driven by market based regulation is much stronger than that of the command and control the mechanism of informal regulation is much more complicated consequently we find evidence to support the strong porter hypothesis that reasonable stringency of environmental regulations may enhance rather than lower industrial competitiveness

the annuity puzzle remains a puzzle abstract we examine incomplete annuity menus background risk bequest motives and default risk as possible drivers of divergence from full annuitization contrary to what is often suggested in the literature we find that full annuitization remains optimal if saving is possible after retirement this holds irrespective of whether real or only nominal annuities are available whenever liquidity is desired individuals save sizeable amounts out of their annuity income to smooth consumption shocks similarly adding equity linked annuities to the menu does not increase welfare significantly since individuals can invest in stocks in order to get the desired equity exposure

heterogeneous impacts of regulatory policy stringency on the eu electricity industry a bayesian shrinkage dynamic analysis abstract environmental and technical efficiency in the electricity sector is a major focus of regulatory policies aimed at hastening greenhouse gas reduction and lowering energy prices for final consumers understanding the impact of market and environmental regulations on efficiency is crucial for the design and choice of policy packages at the national level the productivity response to regulations depends on unobserved country specific factors that current empirical analyses have not modelled in this framework we analyse the regulation effects on efficiency in the electricity sector for a panel of european union countries we explicitly consider the effects of the environmental regulation along with the market regulation our estimation strategy uses the bayesian shrinkage estimator which can deal with the bias aggregation problem and cross country heterogeneity it allows us to identify the different transmission channels through which regulatory policy is implemented the results highlight divergent behaviours at the country level the direct impacts of the market and environmental regulatory policies on productivity are negative around 2 7 and 2 3 respectively but the countries vary in the degree to which they are able to compensate these negative effects

dynamic portfolio choice with deferred annuities abstract we derive the optimal life cycle portfolio choice and consumption pattern for households facing uncertain labor income risky capital market and mortality risk in addition to stocks and bonds the households have access to deferred annuities deferred payout life annuities are financial contracts providing life long income to the annuitant after a specified period of time conditional on survival we find that deferred annuities play an important role in household portfolios and generate significant welfare gains households with high benefits from state pensions moderate risk aversion and moderate labor income risk purchase deferred annuities from age 40 and gradually increase their portfolio share at retirement deferred annuities account for 78 of total financial wealth households with low state pensions and high labor income risk purchase more annuities and earlier uncertainty with respect to future mortality rates has the same effect i e household hedge against longevity risks using deferred annuities

market inertia and the introduction of green products can strategic effects justify the porter hypothesis if according to porter s hypothesis a greener strategy is more profitable why may its implementation need regulatory intervention we present a repeated cournot duopoly where the market may exhibit inertia towards the adoption of even cost efficient environmental goods with consumers recognizing that a product is green only with a time lag if a firm unilaterally adopts the green product initially loses profit due to a increased costs direct effect and b reduced market share strategic effect by imposing simultaneous adoption regulation eliminates b thus enhancing long run profitability through a similar mechanism a government can increase its domestic firms international market share and profits by forcing them to simultaneously adopt the green product

pollution regulation and abatement efforts evidence from china abstract this paper empirically tests pollution abatement efforts of chinese industries in response to pollution regulations especially the pollution charge instrument practiced in china for about 20 years the impacts of pollution regulation on abatement expenditures are examined for one thousand large and medium chinese industrial polluters the results show that plant level expenditures on end of pipe wastewater treatment are strongly responsive to the pollution charges the estimated elasticities of operation cost and new investment with respect to pollution price are 65 and 27 respectively other command and control regulatory approaches however are not found to have systematic and significant impacts on abatement expenditures

additive general error models for production cost and derived demand or share systems many empirical studies of production specify a deterministic model of the firm derive the implied behavioral equations input demand or share system and then embed this system in a stochastic framework by tacking on linear error terms in contrast this paper proposes general error models gems in which the error specification is an integral part of the optimization model these models are the statistical embodiment of stigler s view that apparent observed inefficiencies reflect the investigator s ignorance of the true optimization problem additive gems are proposed and interpreted specification tests indicate that a translog additive gem is superior to the standard translog specification

born on the first of july an un natural experiment in birth timing abstract it is well understood that government policies can distort behavior but what is less often recognized is that the anticipated introduction of a policy can introduce its own distortions we study one such introduction effect using evidence from a unique policy change in australia in 2004 the australian government announced that children born on or after july 1 2004 would receive a 3000 baby bonus although the policy was only announced seven weeks before its introduction parents appear to have behaved strategically in order to receive the benefit with the number of births dipping sharply before the policy commenced on july 1 2004 more australian children were born than on any other single date in the past thirty years we estimate that over 1000 births were moved so as to ensure that their parents were eligible for the baby bonus with about one quarter being moved by more than one week most of the effect was due to changes in the timing of induction and cesarean section procedures we find evidence to suggest that babies who were shifted into the eligibility period were more likely to be of high birth weight two years later on july 1 2006 the baby bonus was increased and we find that this again caused births to be moved from june to july these birth timing events represent an opportunity for health researchers to study the impact of planned birthdays and hospital management issues

a multivariate model of strategic asset allocation with longevity risk population wide increase in life expectancy is a source of aggregate risk longevity linked securities are a natural instrument to reallocate it this paper extends the standard campbell and viceira 2005 strategic asset allocation model by including a longevity linked investment possibility model estimation based on prices for standardized annuities publicly oered by united states insurance companies shows that aggregate shocks to survival probabilities are predictors for long term returns of the longevity linked securities and reveals an unexpected predictability pattern valuation of longevity risk premium conrms that longevity linked securities oer inexpensive funding opportunities to asset managers

annuitization and asset allocation this paper examines the optimal annuitization investment and consumption strategies of a utility maximizing retiree facing a stochastic time of death under a variety of institutional restrictions we focus on the impact of aging on the optimal purchase of life annuities which form the basis of most defined benefit pension plans due to adverse selection acquiring a lifetime payout annuity is an irreversible transaction that creates an incentive to delay under the institutional all or nothing arrangement where annuitization must take place at one distinct point in time i e retirement we derive the optimal age at which to annuitize and develop a metric to capture the loss from annuitizing prematurely in contrast under an open market structure where individuals can annuitize any fraction of their wealth at anytime we locate a general optimal annuity purchasing policy in this case we find that an individual will initially annuitize a lump sum and then buy annuities to keep wealth to one side of a separating ray in wealth annuity space we believe our paper is the first to integrate life annuity products into the portfolio choice literature while taking into account realistic institutional restrictions which are unique to the market for mortality contingent claims

parental leave and mothers careers the relative importance of job protection and cash benefits parental leave regulations in most oecd countries have two key policy instruments job protection and cash benefits this paper studies how mothers return to work behavior and labor market outcomes are affected by alternative mixes of these key policy parameters exploiting a series of major parental leave policy changes in austria we find that longer cash benefits lead to a significant delay in return to work and that the magnitude of this effect depends on the relative length of job protection and cash benefits however despite their impact on time on leave we do not find a significant effect on mothers labor market outcomes in the medium run neither of benefit duration nor of job protection duration to understand the relative importance and interaction of the two policy instruments in shaping mothers return to work behavior we set up a non stationary job search model in which cash benefits and job protection determine decisions of when to return to work and whether or not to return to the pre birth employer despite its lean structure the model does surprisingly well in matching empirically observed return to work profiles the simulation of alternative counterfactual regimes shows that a policy that combines both job protection and benefits payments succeeds to induce mothers to spend some time with the child after birth without jeopardizing their medium run labor market attachment

beyond arbitrage good deal asset price bounds in incomplete markets one often wants to value a risky payoff by reference to prices of other assets rather than by exploiting full fledged economic models however this approach breaks down if one cannot find a perfect replicating portfolio we impose weak economic restriction to derive usefully tight bounds on asset prices in this situation the bounds assume that investors would want to buy assets with high sharpe ratios good deals as well as pure arbitrage opportunities we show how to calculate the price bounds in one period multiperiod and continuous time contexts we show that the multiperiod problem can be solved recursively as a sequence of one period problems we calculate bounds in option pricing examples including infrequent trading and an option written on a nontraded event and we use the bounds to explore the economic significance of option pricing predictions we find that much variation in s p 500 index option prices over time and across strike prices fits within the bounds

from cradle to grave how to loot a 401 k plan abstract the regulations governing asset distributions from many retirement plans give participants the option to time retirement or rollovers from the plan strategically they possess a long lived put option whose exercise price resets periodically to the current value of the assets in the plan i derive a recursive closed form valuation formula for the option and develop a numerical algorithm for implementing the result i find that for reasonable assumptions about volatility and life expectancy the option s value may approach 40 of the value of the assets in the plan financed entirely by those still contributing this wealth transfer can however be easily avoided by making a simple change to the current regulations governing valuation and payout of these retirement plans

the economic consequences of parental leave mandates lessons from europe this study investigates the economic consequences of rights to paid parental leave in nine european countries over the 1969 through 1993 period since women use virtually all parental leave in most nations men constitute a reasonable comparison group and most of the analysis examines how changes in paid leave affect the gap between female and male labor market outcomes the employment to populations ratios of women in their prime childbearing years are also compared with those of corresponding aged men and older females parental leave is associated with increases in women s employment but with reductions in their relative wages at extended durations

the impact of environmental regulations on industry productivity direct and indirect effects abstract the paper develops an approach to measuring the impact of environmental regulations on total factor productivity growth which is less restrictive than a simple growth accounting approach environmental regulations have a direct impact on productivity growth due to the diversion of resources toward required abatement capital there can be a further indirect effect however as conventional inputs and production processes are changed in response to requirements to purchase abatement capital we estimate this indirect effect using a flexible functional form cost function total factor productivity and the direct and indirect productivity effects of environmental regulations are presented for five polluting industries we find that the indirect effect can be either positive or negative and in all industries is energy using the net impact of environmental regulations on total factor productivity growth is fairly small given that these are the most polluting industries they account for about 10 30 of the productivity decline of the 1970s in these industries

paid parental leave and children s schooling outcomes this article investigates whether schooling outcomes at age 15 are affected by the duration of maternity leave i e the time mothers spend at home with their new born before returning to work we exploit an unanticipated reform in austria which extended the maximum duration of paid and job protected parental leave from 12 to 24 months for births as of 1 july 1990 using pisa data from the cohorts 1990 and 1987 we find no significant overall impact of the parental leave extension on standardised test scores however subgroup analyses reveal strong heterogeneity by maternal education and child gender