do doctors practice defensive medicine defensive medicine is a potentially serious social problem if fear of liability drives health care providers to administer treatments that do not have worthwhile medical benefits then the current liability system may generate inefficiencies much larger than the costs of compensating malpractice claimants to obtain direct empirical evidence on this question we analyze the effects of malpractice liability reforms using data on all elderly medicare beneficiaries treated for serious heart disease in 1984 1987 and 1990 we find that malpractice reforms that directly reduce provider liability pressure lead to reductions of 5 to 9 percent in medical expenditures without substantial effects on mortality or medical complications we conclude that liability reforms can reduce defensive medical practices

a comparison of determinants of urban rural and farm poverty in costa rica abstract the lack of progress on reducing poverty in third world countries and its growth during the 1980s show that one of the fundamental goals of development has not been met addressing the renewed concern with poverty requires knowledge about the factors affecting poverty this paper uses logistic regression analysis to estimate the effects of variables on urban rural farm and nonfarm poverty among households in costa rica results show the complexity of the issue and imply policies to expand education through the secondary level to create more opportunities for rural off farm employ

poverty and public policy the problem of poverty is particularly acute in india with 14 of the world s population we have the misfortune of having almost twice as large a share of the world s poor indeed as i shall presently underline the question of poverty and its amelioration has been at the center of our concerns from the beginning of our planning efforts almost four decades ago little therefore can be said on it that some distinguished indian economist has not already said in some ways therefore to talk on the design of public policy for poverty to an indian audience is to carry coal to newcastle or as the old saying goes to teach your grandmother how to suck eggs nonetheless i hope to provide a fresh perspective by putting the problem into an explicit analytical framework that permits alternative policy designs to be sharply defined and contrasted i also intend to draw on international experience to put our efforts and problems into both historical and comparative perspectives

reform of the coal sector in an open economy the case of china cheap abundant and easy to transport and store coal has been produced and consumed to meet people s energy needs the last decade s growth in global coal use has been driven mainly by developing economies like china whose phenomenal economic growth has been powered by coal fired electricity and promoted by the export of manufactured goods a recent reform focus in china s coal sector is on coal taxation the paper develops a game theoretic model tailored to the context of china where coal taxation reform takes place against the background of privatisation of coal firms and an open economy it finds that the adoption of special coal taxes is optimal for social welfare under most circumstances but may induce coal firms to commit opportunistic behaviour in the process of privatisation the paper also cautions about potential resistance to the reform from consumers coal firms and government officials

management ownership and market valuation an empirical analysis we investigate the relationship between management ownership and market valuation of the firm as measured by tobin s q in a 1980 cross section of 371 fortune 500 firms we find evidence of a significant nonmonotonic relationship tobin s q first increases then declines and finally rises slightly as ownership by the board of directors rises for older firms there is evidence that q is lower when the firm is run by a member of the founding family than when it is run by an officer unrelated to the founder

incumbent employees resistance to implementing privatization policy abstract the recent anti privatization trend in latin america france and south africa is a reminder that employees resist privatization because pre privatization firms tend to be over manned and to pay excessive wages we study the effect of employees resistance on the successful implementation of privatization in a stylized model in which the government interacts with employees of an unknown type the analysis clarifies some of the difficulties associated with the implementation process furthermore although common sense dictates that the government negotiates with the employees before finding an outside buyer we show that sometimes it is better off contacting an investor first

the multitask theory of state enterprise reform empirical evidence from china the degree of state ownership remains significant in the chinese economy despite more than two decades of economic reform since 1979 most of the remaining state owned enterprises soes are money losing and the few exceptional ones tend to be sheltered by government protection in selected industries yet china has been enjoying one of the most spectacular growth experiences in world history and much of the growth is driven by non state owned enterprises non soes given the poor financial performance of soes the co existence of state ownership and non state ownership in china is a puzzling phenomenon does state ownership exist solely for the benefit of politicians or has state ownership played any role in china s spectacular growth is there any rationale behind china s gradual and selective approach towards privatizing its soes what types of soes does the chinese government choose to privatize what are the consequences of privatization in this paper we offer a multitask theory of soe reform in the context of china which has predictions about the types of soes to be chosen for privatization and the results of privatization we then present empirical evidence supporting the basic premise of the theory and its predictions

environmental performance of state owned and privatized eastern european energy utilities abstract privatization in eastern europe has helped in the transition of the region s economies from planned to free market however the effects of privatization on the environment are relatively unknown and many firms remain under state ownership today we compare the environmental performance of state owned and privatized energy utility plants in eastern europe utilizing a novel panel data that includes reported sulfur dioxide emissions energy input and ownership status we find that state owned plants emit more sulfur dioxide than privately owned plants this is environmentally significant as privatization is associated with a reduction in emissions of about 55

differences in income and poverty within brazil regional disparities in living standards within brazil have received increasing attention in recent years this paper indicates that although costs of living adjustments narrow spatial differences large regional disparities remain particularly upon comparing the northeast and the southeast the application of price indices reduces urban rural variations more than regional differences drastically narrowing the urban rural gap in food consumption poverty is nevertheless much more concentrated in the rural areas than in the urban areas although regional differences in its incidence are more striking than the urban rural divergencies this paper has not primarily concerned the policy implications of these income differentials but tries to highlight the importance of measuring cost of living differences and thus obtaining more accurate measures of income and poverty levels

social security and extreme poverty in latin america abstract this article argues that although social security has had a significant impact in preventing a considerable number of people from falling below the extreme poverty level in latin america it has not played an important role in reducing current extreme poverty in the region the analysis is done focusing on three social security objectives protection of the needy affected by social risks progressive income redistribution and promotion of savings investment to reduce inflation and enhance development the author discusses a series of recommendations for achievement of the three cited objectives in order to diminish critical poverty in the future

distributional implications of macroeconomic policy theory and applications to el salvador abstract this article offers a theoretical framework for designing macroeconomic strategy for el salvador that will both respect stabilization and structural adjustment needs and enhance social equity after outlining the largely negative distributional implications of the orthodox policies followed by el salvador in recent years we argue that stabilization and efficiency could actually be improved by increased equity and sketch out the elements of an alternative approach that would be distributionally sensitive and thereby help consolidate the peace

leviathan resists the endogenous relationship between privatization and firm performance using a panel dataset of privatized cement firms in turkey this paper models and finds support for the simultaneous relationship between privatization and firm performance it is found that favorable short run performance weak market potential higher employment lower socio economic development concentrated voter preferences and weaker representation of right wing parties in the firms locality delay the timing of privatization the paper also finds that privatization increases output in the medium term by reducing the labor stock and promoting the adoption of more advanced technology such that production shifts from constant to decreasing returns to scale

economic crisis adjustment and living standards in mexico 1982 85 abstract this paper presents an estimate of the impact of economic crisis and adjustment on the living standards of the mexican population between 1982 and 1985 the analysis is based on information on wage and nonwage incomes unemployment functional income distribution changes in public expenditures and social indicators the specific questions addressed are what happened to agricultural and nonagricultural wage and nonwage incomes how did unemployment and the composition of employment change what was the impact of fiscal cuts on social expenditures and food subsidies were social services affected by declining resources did social indicators worsen in addition households strategies in response to declining incomes are briefly discussed finally conjectures are made regarding which population groups were hurt most by the crisis the results indicate that the crisis and adjustment process left mexico with a relatively impoverished middle class and with rising poverty

estimating earnings poverty in 1939 a comparison of orshansky method and price indexed definitions of poverty official poverty lines do not exist for the united states for years prior to 1959 in this paper a poverty line comparable to the seminal line is constructed for 1939 using the orshansky method poverty rates are then calculated using the earnings data of the 1940 public use microdata sample of the u s census a comparison with similar work by ross et al 1987 demonstrates the degree to which continual price indexing of the poverty line results in inappropriate estimates a trend of increasing incidence of poverty among female headed households prior to 1960 is also revealed

returns to skills around the world evidence from piaac abstract existing estimates of the labor market returns to human capital give a distorted picture of the role of skills across different economies international comparisons of earnings analyses rely almost exclusively on school attainment measures of human capital and evidence incorporating direct measures of cognitive skills is mostly restricted to early career workers in the united states analysis of the new piaac survey of adult skills over the full lifecycle in 23 countries shows that the focus on early career earnings leads to underestimating the lifetime returns to skills by about one quarter on average a one standard deviation increase in numeracy skills is associated with an 18 percent wage increase among prime age workers but this masks considerable heterogeneity across countries eight countries including all nordic countries have returns between 12 and 15 percent while six are above 21 percent with the largest return being 28 percent in the united states estimates are remarkably robust to different earnings and skill measures additional controls and various subgroups instrumental variable models that use skill variation stemming from school attainment parental education or compulsory schooling laws provide even higher estimates intriguingly returns to skills are systematically lower in countries with higher union density stricter employment protection and larger public sector shares

poverty income distribution and child welfare in latin america a comparison of pre and post recession data abstract the traditional and external dependency of most latin american economies and their recent pattern of growth has made them particularly vulnerable to the unexpected and severe changes of the world economy that began in 1979 1980 even those countries with less open economies have been forced to seek adjustments to the new world situation that are both in nature and consequences essentially different from those of the interdependent industrial economies this paper attempts to evaluate the impact of these recent economic changes on the living conditions of the populations of chile colombia costa rica panama and venezuela it is based on household data and is limited to those aspects of household living conditions that can be observed through the variables included in labour surveys it analyses changes in overall income distribution the movement of different socio economic groups within the income pyramid and changes in these groups livelihood strategies

the financial and operating performance of newly privatized firms an international empirical analysis this study compares the pre and postprivatization financial and operating performance of 61 companies from 18 countries and 32 industries that experience full or partial privatization through public share offerings during the period 1961 to 1990 our results document strong performance improvements achieved surprisingly without sacrificing employment security specifically after being privatized firms increase real sales become more profitable increase their capital investment spending improve their operating efficiency and increase their work forces furthermore these companies significantly lower their debt levels and increase dividend payout finally we document significant changes in the size and composition of corporate boards of directors after privatization the last fifteen years have witnessed a significant global shift away from state socialism towards entrepreneurial capitalism one of the most important and visible aspects of this trend has been the enthusiasm with which governments of all political persuasions have sold their state owned enterprises soes to private investors in hopes that the generally unsatisfactory economic performance of these firms can be improved by the discipline of private ownership this denationalization process given its current title of privatization by the conservative government of margaret thatcher in

fund flows and performance understanding distribution channel this paper investigates the relevance and working mechanisms of fund distribution channels to subsequent fund inflows using a comprehensive dataset in china from 2004 to 2010 we find that more br

below the line poverty in latin america abstract despite gains in basic welfare indicators poverty remains prevalent in latin america this paper surveys existing data on poverty in the region and discusses the relationship between growth inequality and poverty given the inequality of income distribution in latin america and the slow growth of output policies to overcome poverty must involve more efficient allocation of government resources redistribution and foreign aid

insider power and wage setting in transition evidence from a panel of large polish firms 1988 1994 abstract we analyse wage setting behaviour in the period of transition using the right to manage model the results show a significant change in wage bargaining in 1990 however the insider power measured by the employees capacity to capture productivity gains persists the sensitivity of wages to productivity changes is much stronger on the upside than on the downside in soes insiders capture important part of labour productivity gains in firms transformed into treasury owned joint stock companies insider effect is weaker in privatised firms the bargaining power of the employees is too weak to let them push up wages in response to labour productivity growth these results are robust to the potential selection bias

the benefits of privatization evidence from mexico critics of privatization often argue that its benefits come at a high cost to society the authors test the validity of this criticism for mexico s privatization program one of the world s largest case by case programs assessing the performance of newly privatized firms in such areas as profitability and efficiency they find that these firms quickly close the gap with their peers in the private sector their findings suggest that the firms profit gains come from productivity gains 52 percent layoffs 33 percent and higher prices 15 percent

ownership changes and access to external financing this paper examines access to external financing in the privatization context and provides new evidence on the effects of financing constraints on performance and investment ownership reforms increase firms reliance on external financing empirically performance and investment changes around ownership reforms are increasing in country level measures of access to credit the presence of a severe prior public financing constraint contributes to stronger investment growth after privatization privatized enterprises do not outperform publicly owned industries all else given our analyses rely on new international sector and firm level data and correct for potential endogeneity of ownership changes

insider ownership human resource strategies and performance in a transition economy researchers and potential investors in transition economies need to understand the human resource management hrm strategies of target firms since human resources are arguably their most valuable assets understanding is difficult however because hrm strategies help to determine firms performance but are in turn influenced by corporate governance particularly insider ownership this paper employs a structural equation modeling methodology to examine the relations between governance hrm strategies and performance in the context of a novel dataset of ukrainian industrial firms it is found that insider ownership is positively associated with high commitment hrm strategies and negatively with low commitment cost cutting hrm strategies cost cutting hrm strategies are in turn associated with weaker firm performance these outcomes correspond broadly with theoretical expectations

the effects of imf programs in the third world debate and evidence from latin america abstract this article reviews the debate about the effects of imf sponsored stabilization programs in the third world after examining recent studies by fund economists results of a new study on a latin american country set are presented in this research imf programs are associated with insignificant changes in the current account significant improvements in the overall balance of payments increases in inflation mixed effects on growth and a strong and consistent pattern of reduction in labor share of income the latter result is incorporated into a distribution oriented critique of fund policy

effect of corporate economic performance on firm level environmental performance in a transition economy this paper analyzes the effect of corporate economic performance as measured by value added on firm level environmental performance in a transition economy in particular it analyzes this economic performance effect using an unbalanced panel of czech firms for the years 1995 1998 it assesses whether successful economic performance begets or undermines good environmental performance this connection seems especially important in transition economies since firms are dramatically restructuring their economic management approaches during transitional periods a majority of the analytical results indicate that successful economic performance undermines good environmental performance possibly indicating that more focused managerial efforts to improve economic outcomes may distract efforts to manage environmental matters better

ownership concentration in privatized firms the role of disclosure standards auditor choice and auditing infrastructure we rely on a unique data set to estimate the impact of disclosure standards and auditor related characteristics on ownership concentration in 190 privatized firms from 31 countries accounting transparency can help alleviate the agency conflict between minority investors and controlling shareholders which is evident in the extent of ownership concentration since the expropriation of corporate resources by insiders hinges on these private benefits remaining hidden after controlling for other country level and firm level determinants we find weak no evidence that extensive disclosure standards auditor choice reduce ownership concentration in contrast we provide strong robust evidence that ownership concentration is lower in countries with securities laws that specify a lower burden of proof in civil and criminal litigation against auditors consistent with ball s 2001 predictions collectively our research implies that minority investors worldwide value legal institutions that discipline auditors in the event of financial reporting failure over both the presence of a big five auditor and better disclosure standards

a comparison between economic systems with an application to transition abstract this paper develops a general equilibrium theory of endogenous firm and class formation under non contractibility with heterogeneous individuals a collectivist economy a private ownership economy and a mixed economy are compared on the basis of identical economic fundamentals methodological symmetry each economic system generates specific inefficiencies so that none dominates the others in general the main trade off is between the welfare loss associated with risk taking in the private ownership economy and the informational problems in the collectivist economy we then use this framework to study the political economy of transition between economic systems and provide detailed welfare results

the effect of arrests on the employment and earnings of young men many young men commit crime and many are arrested i estimate the effect of arrests on the employment and earnings of arrestees using a large longitudinal data set constructed by merging police records with ui earnings data i find that the effects of arrests are moderate in magnitude and rather short lived

when does privatization work the impact of private ownership on corporate performance in the transition economies this paper compares the performance of privatized and state firms in the transition economies of central europe while controlling for various forms of selection bias it argues that privatization has different effects depending on the types of owners to whom it gives control in particular privatization to outsider but not insider owners has significant performance effects where privatization is effective the effect on revenue performance is very pronounced but there is no comparable effect on cost reduction overlooking the strong revenue effect of privatization to outsider owners leads to a substantial overstatement of potential employment losses from postprivatization restructuring

privatization benefits in eastern europe abstract we document changes in the performance of over 6000 privatized and state owned manufacturing enterprises in seven eastern european countries over the initial transition period we find that privatization is associated with significant increases in sales revenues and labor productivity and to a lesser extent with fewer job losses the positive effect of privatization is stronger in economic magnitude and statistical significance as the time elapsed since privatization increases enterprises privatized for less than 2 years have labor productivity growth similar to that of state owned enterprises in contrast enterprises privatized for 3 or more years significantly outperform state owned enterprises the results are robust to the use of alternative econometric specifications fixed effects cluster effects and random effects and survive in six of the seven individual country samples the exceptions being hungary for sales growth and romania for labor productivity growth

the financial and operating performance of privatized firms during the 1990s this study compares the pre and postprivatization financial and operating performance of 85 companies from 28 industrialized countries that were privatized through public share offerings for the period from 1990 through 1996 we document significant increases in profitability output operating efficiency and dividend payments and significant decreases in leverage ratios for our full sample of firms after privatization and for most subsamples examined capital expenditures increase significantly in absolute terms but not relative to sales employment declines but insignificantly combined with results from two previous directly comparable studies these findings strongly suggest that privatization yields significant performance improvements during the past two decades the privatization of state owned enterprises has moved from being a radical almost desperate policy initiative of the thatcher government in britain to being an accepted economic policy for governments of all ideological stripes according to gibbon 1998 860 billion has been raised by governments worldwide through privatizations with the bulk of this total coming since 1987 and at least one commentator roche 1996 predicts that no less than 6 trillion will be raised through privatizations over the next two decades in 1997 alone sales of public enterprises totaled a record 161 billion worldwide with more than 110 billion of the total coming during the second half of the year and 1998 s total of almost 140 billion indicates that the pace shows no sign of slackening as we approach a new millennium

priorities and sequencing in privatization evidence from czech firm panel data abstract while privatization of state owned enterprises has been one of the most important aspects of the economic transition from a centrally planned to a market system no transition economy has privatized all its firms simultaneously this raises the question of whether governments privatize firms strategically in this paper we examine the determinants of the sequencing of privatization to obtain testable predictions about the factors that may affect sequencing we investigate the following competing government objectives i maximizing efficiency through resource allocation ii maximizing public goodwill from the free transfers of shares to the public iii minimizing political costs iv maximizing efficiency through information gains and v maximizing privatization revenues next we use firm level data from the czech republic to test the competing predictions about the sequencing of privatization consistent with the hypotheses of a government priority on revenues and public goodwill we find strong evidence that more profitable firms were privatized first the sequencing of privatization is also consistent with maximizing efficiency through information gains our results indicate that many empirical studies of the effects of privatization on firm performance suffer from a selection bias

regulation competition and liberalization in many countries throughout the world regulators are struggling to determine whether and how to introduce competition into regulated industries this essay examines the complexities involved in the liberalization process while stressing the importance of case specific analyses this essay distinguishes liberalization policies that generally are procompetitive from corresponding anticompetitive liberalization policies

the real effects of government owned banks evidence from an emerging market using plant level data for brazilian manufacturing firms this paper provides evidence that government control over banks leads to significant political influence over the real decisions of firms i find that firms eligible for government bank lending expand employment in politically attractive regions near elections these expansions are associated with additional favorable borrowing from government banks further these persistent expansions take place just before competitive elections and are associated with lower future employment growth by firms in other regions the analysis suggests that politicians in brazil use bank lending to shift employment towards politically attractive regions and away from unattractive regions

employment and economic growth in costa rica abstract costa rica s economic growth in the last 25 years has had favorable labor market and income distribution consequences overall employment growth kept pace with labor force growth the mix of jobs improved real wages rose and relative inequality and absolute poverty fell but during the economic crisis of 1980 1982 when real per capita income plummeted labor market conditions deteriorated markedly unemployment doubled employment composition worsened and real wages fell by 40 growth labor market conditions and income distribution

perspectives on poverty and income inequality in brazil abstract exploratory analysis of the advance tabulations of the 1980 brazilian demographic census suggests the proportion of the population in poverty fell during the decade 1970 1980 the degree of inequality of the distribution of the income of individuals apparently remained about the same from 1970 to 1980 after rising in the 1960s this near constancy of the overall inequality of income distribution resulted from two offsetting changes a narrowing of the gap between rural and urban incomes and greater inequality within the rural sector

selection staging and sequencing in the recent chinese privatization selection in privatization is a decision making process of choosing state owned enterprises soes prioritizing and sequencing privatizing events and determining the extent of private ownership in partial privatization we investigate this process in an important but rarely studied case of china based on the soe population over 1998 2008 we track 49 456 wholly soes and identify 9 359 privatization cases over time our econometric analysis concludes i the privatization selection is a complex decision making process in which local governments balance between various economic financial and political objectives ii in the recent chinese privatization firm performance relates to the selection staging and sequencing in privatization in an inverted u fashion the worse and the best performing soes are more likely to remain state owned maintain higher state holding when privatized and are less likely to be privatized later in time these patterns suggest the privatization reform slowdown and the underlying changes in the privatization policy