property rights externalities and resource degradation locating the tragedy abstract resource degradation in the third world is largely driven by the demands of farm households for fuelwood and land for agriculture since resources are often controlled through indigenous systems of property the tragedy of the commons has been used to explain resource degradation as a result private property is suggested as a solution to resource degradation a dynamic model capable of examining household incentives for resource use under private and common property is developed results of the model reject the conventional wisdom that gives rise to the presumed optimality of private individual property in natural resources and the correlated indictment of group management regimes

the effect of annuity insurance on savings and inequality this paper examines the amount of precautionary savings and wealth inequality arising from life span uncertainty by comparing saving behavior under perfect insurance arrangements with that arising under imperfect arrangements namely when longevity risk can be pooled only with members of one s own family the central findings of the paper are that 1 perfecting insurance arrangements can sharply lower savings in both intergenerationally altruistic and life cycle economies and that 2 in altruistic economies perfecting annuity insurance can greatly influence inequality indeed in the long run in our model switching from imperfect family insurance to perfect insurance can mean the difference between absolute inequality and absolute equality

why do people save a micro analysis of motives for household saving in japan this paper estimates the contribution of net saving for each of twelve motives to overall household saving in japan using micro data from a japanese government survey and finds that net saving for the retirement and precautionary motives both of which are consistent with the life cycle model are of dominant importance it also finds that the saving motives of japanese households vary greatly by age and that they save at each life stage for motives that are appropriate for that life stage these findings suggest that the life cycle model is highly applicable in the case of japan

self enforcing exchange among generations implications for consumption and mobility abstract a three generation olg model with one directional altruism and two directional intra family transfers is presented adults invest in their children s education and make transfers to their elderly parents however due to lack of altruism adults with high earnings do not share consumption equally with their elderly parents but spend a larger share of their earnings on own consumption and on their children s education this allows the model to be consistent with three empirical observations that are difficult to reconcile with traditional altruistic frameworks of intergenerational social interactions and mobility i consumption is not perfectly shared between members of an extended family ii consumption is not equally persistent over the lifecycle as across generations and iii the intergenerational persistence of earnings is particularly high at the top end of the earnings distribution

intergenerational transfers in philippine rice villages gender differences in traditional inheritance customs abstract this paper examines education land and nonland asset transfers from parents to children in five rice villages in the philippines a model with family fixed effects explains transfers better than either individual heterogeneity or observed parent and child characteristics without family fixed effects families facing different land constraints exhibit significantly different patterns of educational investment in children in a subsample with completed inheritance daughters receive less education land and total inheritance but are compensated with nonland assets parents also exhibit preferential behavior towards children of the same gender daughters of better educated mothers receive more land nonland assets and total inheritance better educated fathers give land preferentially to sons but favor daughters in education

cognitive constraints on valuing annuities this paper documents consumers difficulty valuing life annuities using a purpose built experiment in the american life panel we show that the prices at which people are willing to buy annuities are substantially below the prices at which they are willing to sell them we also find that buy values are negatively correlated with sell values and that the sell buy valuation spread is negatively correlated with cognition this spread is larger for those with less education weaker numerical abilities and lower levels of financial literacy our evidence contributes to the emerging literature on heterogeneity in financial decision making abilities particularly regarding retirement payouts jel d14 d91 g11 h55

housing markets consumption and financial liberalisation in the major economies abstract this paper analyses the implications of relaxing credit restrictions in housing finance markets a theoretical model of the interaction of financial and housing markets and forward looking agents is developed the effects of financial liberalisation in the model are analysed and evidence from the u s a and u k on the impact of easing credit restrictions is presented estimates are also made of the degree to which credit restrictions may bind on households in those countries where the range of mortgage products on offer is still more limited than in the u k and u s a simulations are undertaken to gauge the effect on consumption saving and bequests of wealth of possible future convergence in national systems of housing finance

the strategic bequest motive although recent research suggests that intergenerational transfers play an important role in aggregate capital accumulation our understanding of bequest motives remains incomplete we develop a simple model of strategic bequests in which a testator influences the decisions of his beneficiaries by holding wealth in bequeathable forms and by conditioning the division of bequests on the beneficiaries actions the model generates falsifiable empirical predictions that are inconsistent with other theories of intergenerational transfers we present econometric and other evidence that strongly suggests that bequests are often used as compensation for services rendered by beneficiaries

marriage and consumption insurance what s love got to do with it when markets are incomplete individuals may choose to marry to diversify their labor income risk love however can complicate the picture if love is fleeting or the resolution of agents income uncertainty occurs predominantly later in life then marriages with good economic matches last longer in contrast if love is persistent and the resolution of uncertainty to agents income occurs early then marriages with good economic matches are more likely to be caught short with too little love to save a marriage consequently once married the partners will be more likely to divorce evidence is provided to distinguish between these alternative scenarios

trade liberalisation and the poverty of nations a review article trade liberalisation and the poverty of nations a p thirlwall and penelope pacheco lopez cheltenham edward elgar 2009 pp 264 59 95 and 19 95 isbn 978 1 84720 822 4 and 978 1 84844 814 8 th

structuring small firms for rapid growth abstract small firms confront significant dilemmas as they struggle to capitalize on growth opportunities surges in demand frequently result in the hiring of additional operating and administrative personnel rapid growth in employment however creates managerial problems whose resolution requires firms to design collateral systems that both mobilize staff attention toward a shared vision and support the firm s strategic outlook hambrick and crozier 1985 kotter and sathe 1978 this article reports on a cross sectional study of 95 small u s firms that experienced a five year surge in growth findings indicate that the internal systems designed by these firms to support their rapid growth varied systematically by strategic orientation and degree of product diversity contrary to expectations the relationship between strategy and structure failed to demonstrate a significant effect on these firms levels of performance indeed the data suggest that in fashioning these systems firms managements may in fact be responding to contradictory pulls 1 bureaucratization versus decentralization increased hiring stimulates bureaucracy firms formalize procedures as staffing doubles and triples employee participation and autonomy decline and internal labor markets develop tied to growth however is also an increased diversity in product offerings that favors less formalized decision processes greater decentralization and the recognition that the firm s existing human resources lack the necessary skills to manage the broadening portfolio 2 environment versus strategy high environmental turbulence and competitive conditions favor company cultures that support risk taking autonomy and employee participation in decision making firms confront competitors however through strategies whose implementation depends on the design of formal systems that inhibit risk taking and autonomy 3 strategic emphases on quality versus cost versus innovation rapidly growing firms strive to simultaneously control costs enhance product quality and improve product offerings minimizing costs and undercutting competitors product prices however are best achieved by traditional hierarchical systems of decision making and evaluation that contrast with the kinds of autonomous processes most likely to encourage the pursuit of product quality and innovation the findings suggest that managing surges in growth involves multiple challenges resolving the stresses and strains induced by attempts to control costs while simultaneously enhancing quality and creating new products to maintain competitive parity and centralizing to retain control while simultaneously decentralizing to encourage the contributions of autonomous self managed professionals to the embryonic corporate culture rapidly growing firms are challenged to strike a balance between these multiple pulls when designing their managerial systems

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

ricardian equivalence are the required assumptions defensible abstract ricardian equivalence re requires universal provision of bequests for purely altruistic reasons this paper argues that no defensible set of values for relevant parameters is consistent with this requirement hence observed bequests must at least partly reflect motives inconsistent with re

pay as you go social security and the distribution of altruistic transfers this paper studies the impact of an unfunded social security system on the distribution of altruistic transfers in a framework where savings are due to both life cycle and random altruistic motivations we show that the effect of social security on the distribution of these transfers depends crucially on the strength of the bequest motive in explaining savings behaviour we measure this strength by the expected weight that individuals attach to the utility of future generations on the one hand if the bequest motive is strong then an increase in the social security tax raises the bequests left by altruistic parents on the other hand when the importance of altruism in motivating savings is sufficiently low the increase in the social security tax could result in a reduction of the bequests left by altruistic parents under some conditions on the attitude of individuals toward risk and on the relative returns associated with private saving and social security some implications concerning the transitional effects of introducing an unfunded social security scheme are also discussed

income uncertainty bequests and annuities abstract life uncertainty and income uncertainty are modeled simultaneously in order to analyze the influence of perfecting income insurance in the size of bequests and the demand for annuities the main result shows that government intervention aimed at providing intergenerational risk sharing acts as a bequest substitute and if annuities are available reduces the demand for annuities

interpreting the tariff growth correlation of the late 19th century immediately following world war ii many economists believed that a trade policy based on import substitution would best promote economic development subsequent experience instead revealed the costs of protectionism anne 0 krueger 1997 in the late 19th century as well many political economists such as friedrich list advocated import tariffs to promote the growth of domestic manufacturing in countries that were behind the industrial leader then the united kingdom unlike the recent period however the late 19th century experience is often interpreted as confirming the wisdom of import substitution recent work by kevin h o rourke 2000 and michael a clemens and jeffrey g williamson 2001 has strengthened this impression by finding a positive correlation between import tariffs and economic growth across countries from 1875 to 1914 such a correlation does not establish a causal relationship between tariffs and growth but it is tempting to view the correlation as constituting evidence that protectionist or inward oriented trade strategies were successful during this period this paper argues that such a conclusion is unwarranted and that the tariff growth correlation should be interpreted with great care first several individual country experiences in the late 19th century are not consistent with the view that import substitution promoted growth for example the two most rapidly expanding high tariff countries of the period argentina and canada grew because capital imports helped stimulate export led growth in agriculturalstaples products not because of protectionist trade policies second most land abundant countries such as argentina and canada imposed high tariffs to raise government revenue and revenue tariffs have a different structure than protective tariffs the fact that labor scarce land abundant countries had a high potential for growth and also tended to impose high revenue generating tariffs confounds the inference that high tariffs were responsible for their strong economic performance during this period

are life insurance holdings related to financial vulnerabilities using the 1995 survey of consumer finances and an elaborate life cycle model we quantify the potential financial impact of each individual s death on his or her survivors and measure the degree to which life insurance moderates these consequences life insurance is essentially uncorrelated with financial vulnerability at every stage of the life cycle as a result the impact of insurance among at risk households is modest and substantial uninsured vulnerabilities are widespread particularly among younger couples we also identify a systematic gender bias for any given level of financial vulnerability couples provide significantly more protection for wives than for husbands jel d10 g22

on the contribution of economics to the evaluation and formation of social insurance policy if one had to choose a single policy that best characterizes the postwar behavior of governments it might well be their expansion of social insurance today s citizen of a typical developed country is insured through government programs against unemployment disability medical expenses impoverishment in youth and middle age through welfare systems impoverishment in old age through old age pensions loss of spousal support due to divorce through social security dependent benefits fluctuating earnings through progressive tax systems early death of a spouse via survivor s insurance and late death via annuity insurance the remarkable growth of social insurance has occurred against a backdrop of increased geographic mobility dramatic changes in demographics and at least in the united states a dissolution of the family the extent to which social insurance has been the cause of family decline and demographic change or its result is one of many complex questions that economics or any other social science is unlikely to ever fully answer economic analysis while not being able to discover the precise recipe leading to our social insurance institutions has at least been able to taste many of the key ingredients economics has and can provide real insight into a the need for social insurance programs b the appropriate size of such programs and c how social insurance programs affect the economy this paper seeks to illustrate each of these three kinds of economic contributions to the evaluation and formation of social insurance policy section i drawing on my 1987 article presents an efficiency argument for compulsory saving through a progressive social security system section ii drawing on my paper with avia spivak and laurence summers 1982 and on alan auerbach s and my 1987b paper illustrates an analysis of the appropriate size of social insurance programs examining in turn the questions of whether households save enough and buy enough life insurance or whether more government intervention in these matters is appropriate section iii drawing on my 1989 book illustrates how social insurance programs can affect the economy by discussing potential savings effects of health insurance particularly an asset tested medicaid scheme section iv concludes the paper with suggestions for future research and policy options as indicated the paper draws on my own and coauthored research and it provides only limited references for no better reason than easing my task and saving space in so doing i do not pretend to suggest that this is more than a very small subset of a huge volume of research sparked in the 1970s in large part by martin feldstein

the role of pensions in the labor market a survey of the literature because employer sponsored group pension plans entail agreements between workers and their employers explicitly linking future payment and employment they offer an unusual window into long term employment relationships this review of recent research on pensions explores how pensions influence employee compensation retirement turnover and other matters central to the determination of labor s price and quantity over time the authors also outline some unanswered questions and difficult to reconcile findings because the pension promise involves an explicit and relatively well documented set of statements regarding future contingent payment and employment an examination of the design and operation of employersponsored group pension plans can yield important insights into the long term employment relationship specifically pension research illuminates some important labor market questions in two ways it offers insight into an important element of compensation in its own right and it furthers our understanding of labor markets in which long term

tariffs and growth in the late 19th century the paper estimates the correlation between tariffs and economic growth in the late 19th century in the context of three types of growth equation unconditional convergence equations conditional convergence equations and factor accumulation models it does so for a panel of ten countries between 1875 and 1914 tariffs were positively correlated with growth in these countries during this period economic theory is ambiguous as regards the relationship between trade policy and growth the growth literature of the past decade has produced an impressive array of models in which protection can either increase or reduce long run growth rates grossman and helpman 1991 rivera batiz and romer 1991 stokey 1991 young 1991 such theoretical ambiguity invites empirical research while new growth theory is ambiguous on the subject the new empirical growth literature has produced a consensus that free trade is positively associated with growth based on evidence from the late 20th century but see rodrlguez and rodrik 1999 for a sceptical review of the literature the clear

pension survivors insurance for widows men frequently do not provide pension survivors insurance for their wives to analyze why a demand supply model of survivors insurance is presented using the survey of private pension benefit amounts tobit estimates are calculated for a sample of married male pensioners social security reduces the survivors insurance provided through private pensions partially foiling governmental attempts to reduce poverty among widows the decline in inflation and the supreme court s unisex pension decisions have increased the selection of pension survivors insurance so that an increase could not necessarily be attributed to the passage of the retirement equity act

how important is intra household risk sharing for savings and labor supply abstract while it is recognized that the family is a risk sharing institution little is known about the quantitative effects of this source of insurance on savings and labor supply in this paper we present a model where workers females and males are subject to idiosyncratic employment risk and where capital markets are incomplete a household is formed by a female and a male who decide on consumption savings and labor supplies in a calibrated version of our model we find that intra household risk sharing has its largest impact among wealth poor households while the wealth rich use mainly savings to smooth consumption across unemployment spells wealth poor households rely on spousal labor supply for instance for low wealth households average hours worked by wives of unemployed husbands are 8 higher than those worked by wives of employed husbands this response in wives hours makes up 9 of lost family income we also study consumption losses upon an unemployment spell precautionary savings and the crowding out effects of the public unemployment insurance program on the extent of risk sharing within the household

optimal annuitization with stochastic mortality and correlated medical costs the conventional wisdom since yaari 1965 is that households without a bequest motive should fully annuitize their investments numerous frictions do not break this sharp result we modify the yaari framework by allowing a household s mortality risk itself to be stochastic due to health shocks a lifetime annuity still helps to hedge longevity risk but the annuity s remaining present value is correlated with medical costs such as those for nursing home care thereby reducing annuity demand even without ad hoc liquidity constraints we find that most households should not hold a positive level of annuities and many should hold negative amounts jel d14 d82 g23 i12 j14 j26

nineteenth century development experience and lessons for today abstract this article reviews the results of a major comparative quantitative study of 19th century economic development and discusses their relevance to today s development policy applying classificatory measures of institutional and economic influences and a novel principal components technique the study demonstrated that institutions were overwhelmingly important to both the pace and structure of economic development but institutions interacted with economic influences very differently in countries at different levels of development and along diverse paths of economic growth in spite of important differences in the international and technological contexts of growth between today and the 19th century fundamental similarities remain now as then government policies determine the nature of market systems property rights and the distribution of assets and thus how far domestic economic growth spreads but favorable impacts of government policies on the structure of economic growth can be expected only where political institutions limit elite control of assets land institutions spread a surplus over subsistence widely and domestic education and skills are well diffused

privatizing social security at home and abroad a century has passed since otto von bismarck instituted the first social security system in germany since then government provision of retirement income has spread around the globe alleviating poverty among the elderly providing life span insurance via old age annuities overcoming the samaritan s dilemma by forcing everyone to save and in many countries extending coverage to include old age health insurance but for all the good it has done social security is severely limiting world saving investment and growth it threatens to bankrupt the young and future generations of some of the world s leading nations see jagadeesh gokhale et al 1996 it is the chain letter pay as you go method of financing social security that lies at the heart of the problem taking income from young savers and giving it to old spenders while placating the young with promises of repayment not only reduces national saving but straddles the next generation with the obligation the debt to meet these promises the size of these debts and the burden on the next generation will be much greater for countries with rapidly aging populations would privatization solve social security s problems this paper provides a framework for thinking about this issue

the economic effects of social security toward a reconciliation of theory and measurement abstract in this paper we argue that actuarial valuation of social security benefit streams is theoretically inconsistent with the assumption of pure life cycle motives instead we show that the simple discounted value of future benefits ignoring the possibility of death is often a good approximation to the relevant concept of value this observation motivates a re examination of existing empirical evidence concerning the economic effects of social security we focus our attention on studies of distributional equity and personal saving behavior in both cases we argue that the use of simple rather than actuarial discounting of survival contingent income streams produces results that differ dramatically from previous findings specifically estimates based on actuarial valuation may overstate the importance of redistribution between and within generations and may understate the depressive effect of social security on personal wealth accumulation by a factor of three or more

the distribution of wealth and welfare in the presence of incomplete annuity markets this paper examines the implications of the absence of complete annuity markets on the distribution of wealth and welfare of agents whose saving decisions are obtained under uncertainty regarding the length of their life the absence of annuities is shown to yield a unique nondegenerate intragenerational distribution of wealth which is fully characterized this characterization is then used to evaluate the pareto desirability of an annuity system alternative welfare criteria that can be used when the proposed change has differential impacts on the initial state of subsequent generations are considered

the gender and intergenerational consequences of the demographic dividend an assessment of the micro and macrolinkages between the demographic transition and economic development the demographic transition changes the age composition of a population potentially affecting resource allocation at the household level and exerting general equilibrium effects at the aggregate level if age profiles of income consumption and savings were stable and estimable for the entire population they might imply how the demographic transition will affect national savings rates but there is little agreement on the impact of age composition these age profiles differ by gender and are affected by human capital investments whereas an existing micro simulation are estimated from samples of wage earners that are not distinguished by sex or schooling and make no effort to model family labor supply behavior or physical and human capital accumulation considering these shortcomings of assessments of the demographic dividend a case study based on household surveys and long run social experiments may be more informative matlab bangladesh extended a family planning and maternal and child health program to half the villages in the district in 1977 and recorded fertility in the program villages was 15 16 percent lower than in the control villages for two decades households in the program villages realized health and productivity gains that were concentrated among women survival and schooling increased among children and after 19 years household physical assets were 25 percent greater per adult than in the control villages these large gains in the wake of the program induced demographic transition suggest reasons for designing new labor market and microcredit policies to help women during the demographic transition invest in productive skills shift their time more efficiently from child care to home production self employment and wage labor and invest more in the human capital of their children

bequests as signals an explanation for the equal division puzzle in the united states more than two thirds of decedents with multichild families divide their estates exactly equally among their children in contrast gifts given before death are usually unequal these findings challenge the validity of existing theories regarding the determination of intergenerational transfers in this paper we develop a theory that accounts for this puzzle based on the notion that the division of bequests provides a signal about a parent s altruistic preferences the theory can also explain the norm of unigeniture which prevails in other societies

the supply of children s time to disabled elderly parents i introduction in recent years economists have become increasingly interested in intergenerational transfers of both time and money 1 such transfers may be motivated by altruism or exchange models of altruism assume that a person s utility depends on the consumption or utility of other family members and her own consumption for example children may supply unpaid informal care to aging parents because their utility increases when their parents are happier one of the most striking predictions of models of altruism is that public subsidies tend to crowd out transfers by altruistic individuals especially if the subsidy is financed by taxing the altruistic individual becker 1974 in exchange models there is typically altruism but one family member such as a parent can induce a relative such as a child or kid 2 to provide more services or money than the relative would normally provide by threatening to withhold a bequest to the extent that this is so one would plausibly expect more care and attention to be provided to wealthy parents when there is more than one kid more care should be provided because the threat of disinheritance is more credible when there is competition between kids for bequests in a well known article bernheim shleifer and summers 1985 hereafter referred to as bss found empirical support for the strategic bequest motive based on an observed positive relationship between children s visits and telephone calls to elderly parents per child as the measure of attention and bequeathable wealth per child as the measure of the financial motivation for providing such attention one might expect this result to extend to decisions about direct provision of help informal care that kids may provide to parents the marginal benefit of such care is plausibly greater than the benefit derived from a visit or telephone call in a recent article however we found no evidence that the strategic bequest motive is an important determinant of the amount of informal care kids provide or a related decision whether or not to place the parent in a nursing home sloan hoerger and picone 1996 we focused on the distinction between cognitively aware parents who can threaten to disinherit their kids and cognitively unaware parents who cannot disinherit and examined whether this distinction had any effect on the probability that the parent entered a nursing home or on amounts of formal and informal care received if the parent remained in the community any strategic effects were swamped by the greater marginal benefit of care to the parent when the parent was cognitively unaware moreover among the cognitively aware richer parents actually received less informal care contrary to the strategic model s predictions unfortunately in past research on intergenerational transfers of time and money it was not possible to control for the wealth wage and other characteristics of kids to the extent that kid s wealth and wage were positively correlated with parent s wealth which was observed the parameter estimates on parent s wealth may be negatively biased although parent s wealth and kid s wealth and wage rates are plausibly positively correlated they have opposite effects on the supply of kid s time according to the strategic bequest model that is potential bequests from a parent may be less attractive to rich kids and therefore induce less care we test the strategic bequest model using information on elderly parents and their children from two linked surveys the 1989 national long term care survey nltcs for elderly individuals and the survey of informal caregivers sic for a subsample of the elderly s children using these data we can include explicit measures of kid s wealth and wage rates thereby avoiding the possible bias introduced by a correlation between parent s and kid s wealth and wages also the data sets provide information on several pertinent health cognitive and functional status variables which are not typically observed in surveys of financial status

a simulation model of saving residential choice and bequests of the japanese elderly abstract this note develops a life cycle simulation model of the japanese elderly s saving behavior the model shows that the observed lack of dissaving by the elderly can be explained by a strong bequest motive and a constraint on borrowing from home equity

risk sharing within families evidence from the health and retirement study abstract we report strong empirical support for the presence of self interest based risk sharing within extended families in the u s a standard model of self interest based risk sharing predicts that the share of current family income consumed by a child positively depends on that child s permanent income it follows that parental transfers to children that are expected to earn more over the period of risk sharing arrangements should exhibit less sensitivity to the recipient s income fluctuations we test this distinguishing prediction of self interest based risk sharing by exploiting the variation of transfer receipts among siblings observed over 17 years of longitudinal data spanned by the health and retirement study

uncertain lifetimes and the welfare enhancing properties of annuity markets and social security this paper explores the implications of social security programs and annuity markets through which agents who are characterized by different distributions of length of lifetime share deathrelated risks when annuity markets operate a non discriminatory social security program affects only the intragenerational allocation of resources in the absence of private information regarding individual survival probabilities such a program will lead to a non optimal intragenerational allocation of resources however the presence of adverse selection considerations gives rise to a pareto improving role for a mandatory non discriminatory social security program

rearranging the family income support and elderly living arrangements in a low income country this study examines the link between income and living arrangements our identification comes from exploiting a discontinuity in age in the benefit formula for the social pension in south africa in contrast to previous literature we find no association between pension income and elderly independence we do find that potential beneficiaries alter their household structure when they become pension eligible prime working age women depart and the presence of children younger than five and young women of childbearing age increase these shifts in coresidence patterns are consistent with a setting where prime age women have comparative advantage in work away from extended family relative to younger women the additional income from old age support may induce a change in living arrangements to exploit this advantage

corporate versus independent new ventures resource strategy and performance differences abstract this study examines differences between independent ventures ivs which are established by individual entrepreneurs and corporate ventures cvs which are controlled by larger companies it focuses on differences between these ventures related to the resources strategies and performance of firms in the computer and communications equipment manufacturing industries thus the findings increase the understanding of the different challenges faced by each venture type and provide insight into how each venture type should be managed the study finds that managers of cvs and ivs emphasized different resources and strategies specifically cvs emphasized the following resources internal capital sources proprietary knowledge and marketing expertise ivs emphasized external capital sources technical expertise and development of brand identification they also differed in their strategies ivs pursued greater strategic breadth more customer service and focused more on specialty products the findings that cvs had less strategic breadth was surprising in that cvs emphasized resources such as internal capital sources which could make pursuing broad strategies more feasible for cvs it is possible that some cvs do not pursue broad strategies because they may be infringing upon someone else s turf within the corporation and thus may be discouraged in spite of finding significant strategy and resource differences the study found that ivs and cvs did not differ in performance and that resources were not directly related to performance based on the concept of equifinality it follows that both venture types can be equally successful even if they follow different roads to success success may be less a function of the different resources ivs and cvs have and more a function of what strategies the firms choose based upon their resources strategy variables did relate to performance a low cost strategy lowered performance regardless of venture type and the influence of an aggressive strategy i e wide strategic breadth on performance depended upon venture origin managers pursuing a low cost strategy may have had lower performance if they became penny wise and pound foolish missing opportunities in their efforts to lower costs this suggests that regardless of venture type managers of new ventures in these industries and perhaps in other volatile industries may need to be opportunistic this study indicates that pursuing broad strategies increased the performance of ivs and decreased the performance of cvs this finding was surprising in that cvs had greater resources which one might think would lead to successful implementation of aggressive strategies in securing enough resources to pursue aggressive strategies from their parents cvs may lose the freedom of action they need to cope with the dynamism of high technology industries this suggests that managers of cvs within the computer and communications equipment manufacturing industries should either not pursue broad strategies or if pursuing broad strategy they should maintain their flexibility in contrast ivs that pursued broad strategies achieved higher performance indicating that perhaps ivs unencumbered by the bureaucracy that characterizes cvs may be able to pursue aggressive strategies while simultaneously maintaining flexibility thus this study offers iv and cv managers several valuable insights first it argues that managers of each type of venture may need to pursue different strategies to increase venture performance and make optimal use of their unique resources furthermore it suggests that cv managers encounter difficulties in applying resources to strategies and not in accessing resources whereas political obstacles may occur cv managers may primarily encounter these difficulties when trying to implement strategies rather than when accumulating resources from the parent suggesting a pitfall that managers of cvs and their parents need to avoid although this study has indicated that both venture types can be equally successful it suggests that they may face different obstacles and follow different roads to success

optimal mandates and the welfare cost of asymmetric information evidence from the u k annuity market much of the extensive empirical literature on insurance markets has focused on whether adverse selection can be detected once detected however there has been little attempt to quantify its welfare cost or to assess whether and what potential government interventions may reduce these costs to do so we develop a model of annuity contract choice and estimate it using data from the u k annuity market the model allows for private information about mortality risk as well as heterogeneity in preferences over different contract options we focus on the choice of length of guarantee among individuals who are required to buy annuities the results suggest that asymmetric information along the guarantee margin reduces welfare relative to a first best symmetric information benchmark by about 127 million per year or about 2 percent of annuitized wealth we also find that by requiring that individuals choose the longest guarantee period allowed mandates could achieve the first best allocation however we estimate that other mandated guarantee lengths would have detrimental effects on welfare since determining the optimal mandate is empirically difficult our findings suggest that achieving welfare gains through mandatory social insurance may be harder in practice than simple theory may suggest

forward and backward intergenerational goods why is social security good for the environment this paper studies the ability of nonmarket institutions to invest optimally in forward intergenerational goods figs such as education and the environment when agents are selfish or exhibit paternalistic altruism we show that backward intergenerational goods bigs such as social security play a crucial role in sustaining investment in figs without them investment is inefficiently low but with them optimal investment is possible we also show that making the provision of bigs mandatory crowds out the voluntary provision of figs and that population aging can increase investment in figs

the taste for bequests and well being of widows a model of life insurance demand by married couples for married couples with some insurance on the husbands the annuitized consumptions of widows of older husbands is found to be higher on average than if their husbands had lived given the age of the husband younger widows are relatively worse off in the context of life insurance demand this paper models the decision about how well off to leave a surviving spouse relative to her situation had both spouses lived the parameters of the model are estimated from estate and income tax data for a wisconsin sample of married couples where the husband predeceased the wife copyright 1989 by mit press

market potential and the rise of us productivity leadership abstract today s globalization driven by lower barriers to trade has increased market potential for many nations and led to gains in gdp per capita we test whether this was true in the first wave of globalization by constructing market potential measures for a sample of 27 countries in 1900 and 1910 based on a general equilibrium model of production and trade cross sectional estimates suggest that market potential was an economically significant determinant of gdp per capita at this time to assess welfare effects we then study the general equilibrium impact of raising market potential by eliminating international borders in a quantitative counterfactual calculation for 1900 there are significant gains in real income per capita for all nations we use us per capita output as a benchmark since it attained leadership in this variable from the late 19th century and the literature frequently attributes this to its relatively large domestic market a market unconstrained by trade costs associated with international borders because market potential was already near that of the us the largest european countries do not entirely close their per capita income gaps with the us after removing all border barriers to trade within europe or even globally on the other hand many small european countries could have done so

product life cycle considerations and the nature of strategic activities in entrepreneurial firms abstract this article reports on the nature of strategic activities and concerns reported by the ceos of 77 entrepreneurial manufacturing firms once initial success in their marketplace had been achieved once the entrepreneurial firm achieves initial market success the rate and number of strategic decisions faced by the entrepreneurs rapidly expand a product becomes a product line product lines are added facilities and equipment are expanded personnel are added a more formal and interpersonally complex organization becomes necessary markets and distribution channels expand adding uncertainty to key market related decisions new financial risks arise often as the result of undercapitalized cash flows all of these factors combine to dramatically increase the pressure on the entrepreneur s strategic decision making a major factor underlying the complicity inherent in this scenario is the product market life cycle the entrepreneurs must now organize and make decisions regarding several product lines that span several life cycle stages with different strategic concerns rather than regarding the narrow product range and limited life cycle position that provided their initial success the research reported in this article examined the relative importance of ten strategic activities and concerns reported by the 77 ceos across products at different life cycle stages initial interviews with selected ceos and a review of the strategic management literature identified ten key factors shaping the firm s evolving decision making practices these ten factors were divided into three groups 1 1 operational concerns that necessitate strategic attention 1 changes in product design 2 changes in process design 3 risk of producing a product and 4 emphasis on creativity 2 2 dimensions influencing a firm s strategic management activities 5 demand on the strategic manager s time 6 speed of decision making 7 problems of internal politics and 8 environmental uncertainty 3 3 fundamental assumptions underlying a firm s decision making practices 9 annual profit potential and 10 value of strategic planning there are two main sets of results first four process related factors value of strategic planning demand on ceo s time speed of decision making and annual profit potential were consistently the most important factors affecting performance within eact stage regardless of the life cycle of a particular product line the manner or process by which decisions were made strategic planning ceo s time and speed of decision making and one key assumption or objective annual profit potential were seen as factors more important in affecting performance than were operating concerns that necessitated strategic attention second strategic issues associated with product lines at the development and growth stages of their life cycle are reported to be significantly more important to ceos in entrepreneurial manufacturing firms than are strategic issues associated with mature or declining products lines these results suggest that ceos in entrepreneurial manufacturing firms should re examine their strategies and practices to be sure that sufficient strategic attention is being given to decisions regarding mature product lines in addition these ceo s need to ensure in the face of constant demands for their time and decisions that operating concerns requiring strategic attention get appropriate consideration

taxation and wealth transmission in france abstract this paper studies inter vivos transfers and bequests in france and their relation to the french inheritance law and taxation using administrative records and a national households survey transmission behavior is highly responsive to changes in the fiscal system inter vivos gifts increased after a 1992 law made them partly tax free moreover the probability of giving to children is greater ceteris paribus if parents wealth is taxable for children the probability of receiving a gift over the life cycle increases with their permanent income the amount received increases with current income it increases or bears no relation to permanent income depending on the specification thus we find no direct support for the altruistic nor for the exchange motive these results are compatible with a model where parents transfer to the best endowed child

female labor supply as insurance against idiosyncratic risk in this paper we explore the role of female labor supply as an insurance mechanism against idiosyncratic earnings risk within the family we use a life cycle model in which a unitary family makes consumption saving and labor supply decisions additional uncertainty increases female participation rates this effect on participation is greatest when the ability to borrow and hence to smooth consumption is limited we calculate the welfare cost of increases in uncertainty and show that the welfare cost is greater when households are unable to adjust female labor supply jel j22 d91

choice of pension management fees and effects on pension wealth abstract to shed light on the effects of individual choice on pension wealth we study a policy change to the management fees of pension funds implemented by peru s government in 2013 the reform established a new balance fee as a default option this fee is calculated as a percentage of the pension balance each individual had the initial option of keeping the previous management fee a load factor fee calculated as a percentage of the individual s salary we use administrative data to simulate pension balances based on the individual s choice of fee and the corresponding counterfactual our results indicate that the reform has been potentially adverse to 63 1 of individuals of whom 41 4 were assigned to the default option and 21 7 voluntarily chose the load fee these results reflect both the potentially negative unintended effects of the policy and an alarming lack of financial literacy among citizens we also detect heterogeneity in the intensity of the losses and gains due to the reform which caused greater losses than gains in particular younger and poorer individuals as well as those automatically assigned to the balance fee experienced higher losses moreover the new fee scheme is also associated with increasing inequality between individuals pension wealth

educational homogamy how much is opportunities individuals match on length and type of education we find that around half of the systematic sorting on education is explained by the tendency of individuals to marry someone who went to the same educational institution or to an institution near them this may be due to low search frictions or selection of people with the same preferences into the same institutions the residual half of the systematic sorting on education is a direct effect of partners education which is potentially explained by complementarities in household production in couples with same education