a life cycle consumption model with liquidity constraints theory and empirical results a structural consumption model incorporating endogenous liquidity constraints is fit to a cross section of 798 u s families liquidity constrained families are estimated to constitute 19 4 percent of the population sampled a group that accounts for 16 7 percent of consumption in the population sampled in sample simulations of the model suggest that a temporary tax has three to four times more impact on aggregate consumption than it would if liquidity constraints were not in effect copyright 1987 by the econometric society

unions and profitability over the 1980s some evidence on union firm bargaining in the united kingdom in this paper an attempt is made to assess the behaviour of the rate of return on sales of unionised firms as compared to the non unionised ones in the late 1980s in the united kingdom the main aim is to examine what has happened to the relationship between unionisation and profitability after the changes in the union legislation competition environment and cyclical variations that took place over this period the impact of different forms of union firm bargaining on the union profitability effect is also examined the data reveal that the negative union effect on profitability exists even after controlling for firm specific fixed effects but that it has been sharply reduced over the 1980s

the hyperbolic consumption model calibration simulation and empirical evaluation ur preferences for the long run tend to conflict with our short run behavior when planning for the long run we intend to meet our deadlines exercise regularly and eat healthfully but in the short run we have little interest in revising manuscripts jogging on the stairmaster and skipping the chocolate souffleala mode delay of gratification is a nice long term goal but instant gratification is disconcertingly tempting this gap between long run intentions and short run actions is apparent across a wide range of behaviors including saving choices a 1997 survey found that 76 percent of respondents believe they should be saving more for retirement looking only at respondents who believed they were at an age where you should be seriously saving already the survey found that 55 percent reported being behind in their savings and only 6 percent reported being ahead farkas and johnson 1997 the report on the survey concluded t he gaps between people s atti tudes intentions and behavior are troubling and threaten increased insecurity and dissatisfaction for people when they retire americans are simply not doing what logic and their own reasoning suggests they should be doing a 1993 luntz webber merrill lynch survey found similar answers when baby boomers were asked what percentage of your annual household income do you think you should save for retirement and what percentage of your annual

changes in food purchases at retirement in france abstract we estimate the impact of retirement on food expenditure and food quantities purchased using detailed home scan panel data on food purchases and household characteristics in france we identify a causal relationship by exploiting the french legal minimum age for retirement as an exogenous shock to retirement behavior upon retirement households significantly decrease their expenditure on food and the amount of food purchased households with lower pre retirement income appear to be more severely affected our results indicate that the decrease in food quantities purchased at the aggregate level is driven by a decline in purchases of food from animal origins a reduced consumption of animal based food products is likely to undermine the diet balance of retirees

product market competition and the industry price cost markup fluctuations abstract we examine the role played by imperfect competition in the response of markups to energy price and monetary changes we find i for concentrated industries markups increase with monetary expansion and decrease when energy prices increase the elasticity with respect to energy prices is greater than monetary changes ii for low concentration industries markups are virtually unaffected by monetary changes and the energy price elasticities are statistically insignificant iii markups are procyclical over the industry specific cycle and iv increased import competition lowers markups only in the concentrated industries the energy price increases decreases during the 1970s 1980s may have been a key factor contributing to the narrowing widening of the markup gap between high and low concentration industries we provide evidence that procyclical markups in concentrated industries are not being driven by differences in the degree of labor hoarding between low and high concentration industries

expectations and realizations of work after retirement this paper analyzes a puzzling aspect of retirement behavior known as unretirement nearly 50 percent of retirees follow a nontraditional retirement path that involves partial retirement or unretirement and at least 26 percent of retirees later unretire i explore two possible explanations 1 unretirement transitions result from failures in planning or financial shocks and 2 unretirement transitions are anticipated prior to retirement reflecting a more complex retirement process i show that unretirement was anticipated for the vast majority of those returning to work and is not a result of financial shocks poor planning or low wealth accumulation

strategic pricing models and interpretation of price war data abstract price wars cartel breakdowns and other seemingly disequilibrium pricing phenomena are examined questions of interest include when do breakdowns occur how long do they last what determines their severity and are they characterized by increased cross sectional price dispersion and or temporal price volatility the first half of the paper explains how the choice of punishment strategy the specification of the stochastic shocks to the system and the assumptions regarding observability determine the pricing dynamics implicit in several theoretical price war models theories are classified into imperfect monitoring models in which players actions cannot be observed learning models in which structural parameters are unknown to the players and cyclical models in which observability is perfect but business cycles affect the difficulty of colluding the second half in contrast examines data on prices actually set by firms in industries which are subject to periodic wars when the models are confronted with the data we can see how well oligopoly theory explains the behavior of the firms in these industries the object of the exercise is not to pick a winner instead the role of industry characteristics in determining pricing dynamics is assessed and the reasons why simple models may fail to explain complex pricing patterns are examined finally directions for future research are suggested by the empirical regularities which are uncovered

using subjective income expectations to test for excess sensitivity of consumption to predicted income growth abstract we test for precautionary saving and excess sensitivity of consumption to predicted income growth using a 1989 1993 panel survey of italian households that has measures of subjective income and inflation expectations these expectations provide a powerful instrument for predicting income growth the empirical specification controls for predictable changes in labor supply and allows a fairly general specification for the stochastic structure of the forecast error we find that consumption growth is positively correlated with the expected variance of income and uncorrelated with predicted income growth overall the results support the precautionary saving model

the intertemporal stability of the concentration margins relationship using a longitudinal data base we find that there has been a substantial narrowing of the spread between the price cost margins of concentrated and unconcentrated industries including measures of macroeconomic fluctuations into standard price cost margin regressions we find significant differences in cyclical behavior across market structure we also explore a possible explanation unionization for differences in cyclical behavior finally we investigate the degree to which our results are affected by the potential simultaneity of concentration advertising and the price cost margin

mandatory retirement and the consumption puzzle disentangling price and quantity declines this study investigates changes in household consumption at retirement based on a comprehensive diary based household survey from china we focus on disentangling price changes from quantity changes at retirement the mandatory retirement policy in china provides a quasi experimental setting for nonparametric identification of the true causal effects of fully anticipated retirement using a regression discontinuity design we find that food expenditure declines at retirement particularly among the less educated group we further show that this decline is driven by a reduction in prices rather than quantities these findings along with a documented increase in shopping time for food upon retirement among the less educated households are consistent with a time allocation model in which education enhances the value of leisure jel j26 c21

building partnerships to create social and economic value at the base of the global development pyramid this article written with calton hartman and bevan develops the position that poverty globally can be alleviated if not eradicated if western industrial companies and other commercial institutions will form partnerships and collaborations in the emerging economies these efforts are not intended to arise from any form of philanthropy indeed the authors here argue both i that charity simply makes those people it sets out to assist even more dependent and ii that there is evidence to suggest that globally even in the poorest communities what is free is not valued nearly as much as those goods or services for which one has to pay even if only a few cents indeed the collaborations proposed here are not dependency relationships but partnerships which are truly equitable business relationships that create value added for both parties

the retirement consumption puzzle a marital bargaining approach abstract evidence from several countries reveals a substantial drop in household consumption around the age of retirement that is difficult to explain with life cycle models using food consumption data from more than 550 households from the panel study of income dynamics for the years 1979 1986 and 1989 1992 we find that married couple households decrease their expenditures on both food consumed at home and away from home by about 9 following the retirement of the male household head no significant decrease in consumption is found for single households either in a sample of males or a pooled sample of single males and females these results are consistent with a model of marital bargaining in which wives prefer to save more than their husbands do to support an expected longer retirement period and relative control over household decisions is affected by control over market income the pattern of the consumption decline which is increasing in the age gap between husband and wife lends further support to this interpretation

rent sharing and workers bargaining power an empirical cross country cross industry panel analysis this paper studies how rents are shared between capital and labour using industry level panel data for 19 oecd countries over the 1988 2007 period the first step is an explanation of the rent creation process we provide evidence of a significant impact of regulation on value added prices at the industry level relative to the value added price for the overall economy rent in the second step we dissect the value added sharing process running ols and iv estimations our results confirm the blanchard giavazzi 2003 prediction the impact of rents on the capital share depends on workers bargaining power this article is protected by copyright all rights reserved

a systematic review of the bottom base of the pyramid literature cumulative evidence and future directions sixteen years ago prahalad and hart strategy business 26 2 14 2002 introduced the possibility of both profitably serving the poor and alleviating poverty this first iteration of the bottom base of the pyramid approach known as bop 1 0 focused on selling to the poor in 2008 after ethical criticisms leveled at it the field moved to bop 2 0 instead emphasizing business co venturing since 2015 we have witnessed some calls for a new iteration bop 3 0 with the focus broadening to a more sustainable development approach to poverty alleviation in this paper we seek to answer the question how has the bop approach evolved over the past 16 years and has it delivered on its early promise we conducted a systematic review of 276 papers published in journals in this period utilizing a rigorous correspondence analysis method to map key trends and then further examined the 22 empirical studies conducted on the bop approach our results suggest that the field has evolved passing through a number of trends and coming full circle with our analysis pointing to more recent bop literature emphasizing similar themes to those espoused in the initial bop iteration i e treating the bop as consumers rather than reflecting the principles espoused in either bop 2 0 or bop 3 0 our analysis also points to a lack of clear evidence that the bop concept has delivered on its promise either to businesses that they can serve bop markets profitably or to bop participants that involvement by multinational corporations will help alleviate poverty

oligopoly supergames some empirical evidence on prices and margins this paper is a panel data study on the behavior of prices and margins of oligopolies involved in repeated games the authors examine two supergame models which generate very different predictions about the cyclical behavior of prices and margins evidence on the levels of price cost margins indicates that oligopolies achieve equilibria that more closely resemble a one shot cournot nash outcome than monopoly the authors find however that industries with high price cost margins exhibit cyclical price behavior which is quite different from that of unconcentrated industries little evidence of price wars during either recessions or booms is found copyright 1987 by blackwell publishing ltd

expectations based reference dependent life cycle consumption this study incorporates a recent preference specification of expectations based loss aversion which has been applied broadly in microeconomics into a classic macro model to offer a unified explanation for three empirical observations about life cycle consumption first loss aversion explains excess smoothness and sensitivity that is the empirical observation that consumption responds to income shocks with a lag intuitively such lagged responses allow the agent to delay painful losses in consumption until his expectations have adjusted secondly the preferences generate a hump shaped consumption profile early in life consumption is low due to a first order precautionary savings motive however as uncertainty resolves over time this motive is dominated by time inconsistent overconsumption that eventually leads to declining consumption towards the end of life thirdly consumption drops at retirement prior to retirement the agent wants to overconsume his uncertain income before his expectations catch up post retirement however income is no longer uncertain and overconsumption is associated with a sure loss in future consumption as an empirical contribution i structurally estimate the preference parameters using life cycle consumption data my estimates match those obtained in experiments and other micro studies and generate the degree of excess smoothness observed in macro consumption data

profit margins and the business cycle evidence from uk manufacturing firms this paper presents some empirical models of profitability using panel data covering 709 large u k companies ove r the 1970s and 1980s focusing specifically on the role of aggregate demand shocks in shaping firm level profitability in basic regressi ons and in quite complex econometric models the results suggest that firm level profit margins fell heavily during the deep manufacturing recession of the early 1980s and as such are consistent with model s predicting the procyclical nature of profit margins this result hol ds across different product groups producer goods consumer durables a nd nondurables though the timing of the impact of aggregate shocks appears to differ copyright 1993 by blackwell publishing ltd

consumption during retirement the missing link in the life cycle this study presents the first evidence on the relation of consumption to lifetime wealth based on data from the 1973 and 1975 retirement history survey that have been linked to social security earnings records nearly 500 white married fully retired couples ages 62 69 form the basis of the analysis on average their consumption early in retirement exceeds by 14 percent the income that their financial pension and social security wealth can generate this implies that their saving both private and through social security is insufficient to sustain consumption throughout the rest of their lives additional evidence based on changes in spending between 1973 and 1975 shows that these households respond by reducing their real consumption at a rate sufficient to generate positive changes in net financial worth within a few years after retirement these two pieces of evidence can be rationalized by a rate of time preference much higher than the interest rate coupled with either a bequest motive or uncertainty about the length of life they also imply that even when combined with private pensions and savings social security in the united states today does not enable most recipients to maintain their living standard at the levels they enjoyed before they retired this abstract was borrowed from another version of this item

does home production replace consumption spending evidence from shocks in housing wealth in the great recession becker s theory of home production suggests substitutability between consumption spending and home production using panel data with detailed information on spending and time use we analyze househ

workers compensation and consumption smoothing abstract this paper investigates the consumption smoothing benefits of state workers compensation wc programs these programs are among the largest and most controversial forms of social insurance with the putative purpose of supporting families affected by unexpected income shocks due to workplace injuries and illnesses using health and retirement study hrs data for a sample of workers who have experienced a work related work limiting disability i find that a 10 increase in wc benefit generosity offsets the drop in household consumption upon injury by 3 to 5 moreover my estimates imply that if benefits were very low the drop in consumption upon injury would be in the range of 30 a model adapted from the literature on optimal social insurance yields a formula for the optimal level of wc benefits which depends on empirical estimates of the consumption smoothing parameter my calculations suggest that current wc benefit levels are somewhat higher than optimal

correlated demand shocks and price wars during booms the supergame theoretic model of price competition rotemberg and saloner 1986 is re examined in the case of serially correlated demand shocks the equilibrium price is shown to exhibit the same counter cyclical movement as in the i i d case if the discount factor and the number of firms satisfy certain relationship

single name credit risk portfolio risk and credit rationing this paper introduces non diversifiable risk in the stiglitz weiss adverse selection model so that an increase in the average riskiness of the borrower pool causes higher portfolio risk this opens up the possibility of equilibrium credit rationing comparative statics analysis shows that an increase in risk aversion turns a two price equilibrium into a rationing equilibrium a two price equilibrium is more inefficient than a rationing equilibrium and a usury law that rules out the higher of the two interest rates can be welfare improving contrary to the common result the equilibrium may be characterized by over investment

the developing world is poorer than we thought but no less successful in the fight against poverty a new data set on national poverty lines is combined with new price data and almost 700 household surveys to estimate absolute poverty measures for the developing world we find that 25 of the population lived in poverty in 2005 as judged by what poverty typically means in the world s poorest countries this is higher than past estimates substantial overall progress is still indicated the corresponding poverty rate was 52 in 1981 but progress was very uneven across regions the trends over time and regional profile are robust to various changes in methodology though precise counts are more sensitive

competition effects of price liberalization in insurance insurance services have a prominent role in modern societies empirical evaluation of market interactions in insurance is however scarce to fill this gap two models are proposed each captures the main features of either regulated or deregulated markets three levels of decisions reinsurance sales effort and prices generate testable predictions on firm behavior with respect to sales effort choices recent evolution of the portuguese market provides a natural data set for application estimation before and after price deregulation reveals a noticeable change in behavior coordination has characterized the interaction under price regulation competition between firms has increased after deregulation copyright 1996 by blackwell publishing ltd

when institutional change outruns the change agent the contested terrain of entrepreneurial microfinance for those in poverty we argue that institutional change moves through stages punctuated by recurring attempts to formally redefine the boundaries and logics of organizational fields that institutional entrepreneurs initially establish with a grounded theory model we demonstrate that institutional change in microfinance started with dominant development logic shifted to market logic and got stuck in a conflict over regulatory logic we show how the role of the entrepreneur can change markedly over time while the institutional change process continues unabated we present institutional entrepreneurship as an evolving phenomenon and suggest that the interplay between institutional entrepreneurs and established organizational fields is highly nuanced

the cyclical behavior of price elasticity of demand the mark up of price above marginal cost can vary either procyclically or countercyclically across the business cycle depending upon competitive variations among industries the nature of aggregate demand growth international trade market elasticities and other factors the influence of the business cycle and changes in industry growth on market elasticities can in turn impact market performance via the inverse relationship of market elasticity of demand to price cost margin this paper provides evidence on the cyclical behavior of domestic price elasticity of demand for a panel of 38 four digit u s food manufacturing industries from 1972 to 1987 this is a sector that has been found in earlier studies to exhibit countercyclical price cost margins over this period recent theoretical work on business cycles under imperfect competition suggests that one reason for countercyclical profit margins is that elasticities of demand may become less elastic during recessions estimates of price elasticities of demand are used as the dependent variable in a regression model examining the influence of the business cycle and other variables on demand elasticity

is there a retirement consumption puzzle evidence using subjective retirement expectations abstract previous research finds a systematic decrease in consumption at retirement a finding that is inconsistent with the life cycle permanent income hypothesis if retirement is an expected event in this paper we use workers subjective beliefs about their retirement dates as an instrument for retirement after demonstrating that subjective retirement expectations are strong predictors of subsequent retirement decisions we still find a consumption decline at retirement for workers who retire when expected however our estimates of this consumption fall are about a third less than those found when we instead rely on the instrumental variables strategy used in prior studies

union contracts and the life cycle permanent income hypothesis this paper isolates households in the psid whose heads can be matched to particular long term union contracts with high confidence the author uses use published information on these contracts to construct a household specific measure of expected wage growth he finds that predictable wage movements are significantly correlated with consumption changes contrary to neoclassical consumption theory the author finds that consumption responds more strongly to predictable income declines than to predictable income increases this asymmetry is inconsistent with liquidity constraints and myopia but is qualitatively consistent with models in which preferences exhibit loss aversion copyright 1995 by american economic association

business cycles and the relationship between concentration and price cost margins using a newly constructed panel data base we examine changes in price cost margins in 284 manufacturing industries between 1958 and 1981 a key finding is a dramatic narrowing of the spread between the margins of concentrated and unconcentrated industries over this period we provide evidence that this narrowing is a result of the greater sensitivity of price cost margins in more concentrated industries to demand fluctuations this finding is robust to the inclusion of other industry variables and to measures of import competition the results indicate that cross sectional estimates of the concentration margins relationship are likely to be both biased and misleading

mitigating principal agent problems in base of the pyramid markets an identity spillover perspective the potential for profitably distributing products to previously underserved base of the pyramid bop markets as a means of poverty alleviation has received growing interest within the management field however such business models often struggle with the agency costs that arise between the firm and local sales agents as the institutions and infrastructure in bop markets make traditional contractual and monitoring mechanisms difficult and expensive to employ we present the results of two complementary studies which were both conducted with salespeople in rural guatemala the first study employed a quasi experimental field study combined with in depth interviews while the second study was a laboratory experiment the results of the studies suggest that identity based mechanisms can potentially mitigate agency costs through a positive identity spillover effect in multiproduct settings abstract from author

scale effects time varying markups and the cyclical behaviour of primal and dual productivity this paper presents estimates of the degree of returns to scale using nonparametric measures of primal and dual productivity for 2 digit us manufacturing industries as part of the analysis the cyclical behaviour of primal and dual productivity measures are considered time varying markups are allowed for and the small sample properties of the instrumental variables estimator used to derive the estimates from the primal and dual relations examined both the primal and dual estimates indicate the existence of increasing returns to scale for the durable goods industries the simulation results indicate there is a slight tendency for the dual equation estimates to overestimate the degree of returns to scale however small sample bias appears to be most severe for the non durable goods industries

do retirement dreams come true the effect of unanticipated events on retirement plans analyzing data from the retirement history study the authors find that the retirement plans of male workers aged 58 63 in 1969 were significantly affected by unanticipated events over the next decade specifically unanticipated increases in social security wealth induced retirement earlier than originally planned as did deterioration in personal health whereas the recession of the 1970s tended to delay retirement this evidence that policy changes do affect retirement behavior in systematic ways provides support for the decision by congress to defer until the turn of the century the application of several important provisions of the 1983 amendments to the social security act

bankers at the gate microfinance and the high cost of borrowed logics in this paper we examine how the interaction between influences of commercial banking and poverty alleviation shaped the evolution of modern microfinance using institutional theory as a lens we observe that the commercial banking logic increasingly displaced the microfinance field s foundational poverty alleviation and development principles over time we argue that this process of displacement can occur inadvertently as organizations that embody multiple logics draw disproportionately on only one of those logics when developing legitimating accounts of their activity to stakeholders furthermore we introduce the concept of permeability the extent to which the elements of a logic are ambiguous and loosely coupled to explain why some logics may be more or less open to the influence of other logics we conclude by discussing implications for entrepreneurship and poverty alleviation more generally

earnings expectations revisions and realizations during the spring and the fall of 1993 respondents to a national household survey were asked to report expectations of spring 1994 weekly earnings elicited in the form of subjective probabilities these data are potentially much more informative than are typical reports of economic expectations subjective probability distributions of future weekly earnings are estimated for each respondent based on his or her reports of a series of subjective probabilities this paper analyzes the cross sectional variation in expectations revisions of expectations between the spring and the fall of 1993 and the relationship between 1993 expectations and the distribution of spring 1994 earnings realizations generally positive findings on the validity of the data bode well for the prospects of eliciting expectations in future surveys

reinventing strategies for emerging markets beyond the transnational model with established markets becoming saturated multinational corporations mncs have turned increasingly to emerging markets ems in the developing world such em strategies have been targeted almost exclusively at the wealthy elite at the top of the economic pyramid recently however a number of mncs have launched new initiatives that explore the untapped market potential at the base of the economic pyramid the largest and fastest growing segment of the world s population reaching the four billion people in these markets poses both tremendous opportunities and unique challenges to mncs as conventional wisdom about mnc global capabilities and subsidiary strategy in ems may not be appropriate how mncs can successfully enter these low income markets has not been effectively addressed in the literatures on global and em strategies an exploratory analysis involving interviews with mnc managers original case studies and archival material indicates that the transnational model of national responsiveness global efficiency and worldwide learning may not be sufficient results suggest that the success of initiatives targeting low income markets is enhanced by recognizing that western style patterns of economic development may not occur in these business environments business strategies that rely on leveraging the strengths of the existing market environment outperform those that focus on overcoming weaknesses these strategies include developing relationships with non traditional partners co inventing custom solutions and building local capacity together these successful strategies suggest the importance of mncs developing a global capability in social embeddedness

the world distribution of income falling poverty and convergence period we estimate the world distribution of income by integrating individual income distributions for 138 countries between 1970 and 2000 country distributions are constructed by combining national accounts gdp per capita to anchor the mean with survey data to pin down the dispersion poverty rates and head counts are reported for four specific poverty lines rates in 2000 were between one third and one half of what they were in 1970 for all four lines there were between 250 and 500 million fewer poor in 2000 than in 1970 we estimate eight indexes of income inequality implied by our world distribution of income all of them show reductions in global inequality during the 1980s and 1990s

changes in consumption at retirement evidence from panel data abstract previous empirical literature has found a sharp decline in consumption during the first years of retirement implying that individuals do not save enough for their retirement this phenomenon is called the retirement consumption puzzle we find no evidence of the retirement consumption puzzle using panel data from 1980 to 2000 consumption is defined as nondurable expenditure a more comprehensive measure than only food used in many of the previous studies we find that food expenditure declines at retirement which is consistent with previous studies

market structure and price cost margins in a paper that has become a standard reference in the structure conductperformance approach to industrial economics cowling and waterson 1976 developed a theoretical rationale for expecting industry profitability to be positively correlated with the level of concentration their model based on a simple algebraic description of oligopoly behaviour has been interpreted as providing a justification for the common empirical practice of cross industry regression analysis of price cost margins in terms of concentration levels in the present paper we show that on further examination this model implies a joint determination of margins and concentration this provides some interesting comparative static results of relevance to inter industry differences in concentration levels equally however it leads to various cautionary insights concerning the meaning of price cost margin versus concentration regressions

children s resources in collective households identification estimation and an application to child poverty in malawi children s resources matter but they are hard to identify because consumption is typically mea sured at the household level modern collective household models permit some identication of indi vidual household member resources but these models typically either ignore children or treat them as attributes of adults we propose a collective household model in which children are people with their own utility functions possibly assigned to them by parents extending the frameworks of browning chiappori and lewbel 2007 and lewbel and pendakur 2008 we show identication of children s resource shares within households we invoke semiparametric restrictions on individual preferences and use data on the household level consumption of assignable private goods to achieve identication of each individual s resource share within the household we show this without being able to observe consumption by individual household members of goods that are partly or wholly shared goods within the household further we obtain identication using only engel curves and so do not require ob served price variation in the data we estimate our model using data from malawi andnd that as the number of children in a household grows women s resource shares fall and children s resource shares rise and men s resource shares are basically unchanged we alsond evidence of gender bias against girls and observe that the resource shares of mothers and children are increasing in the education level of the mother finally we use our estimates to construct poverty indices at the person level andnd that per capita poverty indices understate the incidence of child poverty in malawi

the retirement consumption conundrum evidence from a consumption survey abstract recent studies have shown that food consumption declines at retirement we use broader definitions of consumption from the consumer expenditure survey and find that the so called retirement consumption puzzle is solved by using comprehensive consumption data

entrepreneurship as a solution to poverty individuals living in poverty remain a critical issue this special issue focuses on how entrepreneurship can help to solve such poverty rather than viewing those in poverty as a market for goods the solution lies in understanding how to help those living in poverty create their own businesses ultimately entrepreneurship among those in poverty will create a long lasting solution to their poverty herein we initially examine the extant knowledge about entrepreneurship we then examine where future research on this important topic should move finally we introduce the five articles that make up this special issue these five articles came from the initial 71 submissions and enhance our knowledge about entrepreneurship as a pathway to reducing poverty

the retirement consumption puzzle evidence from a regression discontinuity approach in this paper we investigate the size of the consumption drop at retirement in italy we use micro data on food and total non durable household spending covering the period 1993 2004 and evaluate the change in consumption that accompanies retirement by exploiting the exogenous variability in pension eligibility to correct for the endogenous nature of the retirement decision we take a regression discontinuity design approach and make the identifying assumption that consumption would be the same around the threshold for pension eligibility if individuals would not retire we check in our data that a non negligible fraction of individuals retire as soon as they become eligible and estimate at 9 8 the part of the non durable consumption drop that is associated with retirement induced by eligibility we show that such fall is not driven by liquidity problems for the less well off in the population and can be accounted for by drops in goods that are work related expenses or leisure substitutes however we also show that retirement induces a significant drop in the number of grown children living with their parents and this can account for most of the retirement consumption drop

the retirement consumption puzzle in china abstract using data from china s urban household survey and exploiting china s mandatory retirement policy we use the regression discontinuity approach to estimate the impact of retirement on household expenditures retirement reduces total non durable expenditures by 20 percent among the categories of non durable expenditures retirement reduces work related expenditures and expenditures on food consumed at home but has an insignificant effect on entertainment expenditures after excluding these three components retirement does not have an effect on the remaining non durable expenditures it suggests that the retirement consumption puzzle might not be a puzzle if a life cycle model with home production is considered

collusion profitability and welfare theory and evidence abstract in a differentiated oligopoly model with free entry the static welfare loss from collusion is larger the lower the entry cost the larger the market size and the higher the degree of product differentiation the cartel overcharge is larger the lower the entry cost and the larger the market size and is independent of the degree of product differentiation these theoretical results are consistent with evidence from a natural experiment of policy reform the introduction of cartel law in the uk in the late 1950s price cost margins declined after the breakdown of cartels in low capital and larger sized industries relative to capital intensive and smaller sized ones there is weaker evidence of a fall in price cost margins in consumer good and advertising intensive relative to producer good and low advertising industries crucially these effects are not observed for industries that were not affected by the cartel law a comparison of these findings with evidence on the incidence of collusion suggests that the welfare loss from collusive pricing may often be smaller in industries where cartels tend to form than in those where collusion is more difficult to sustain

the behaviour of productivity growth rates and price cost margins during contractions and expansions panel data on thirteen two digit us manufacturing industries were analysed using a random coefficients approach to determine the behaviour of total factor productivity growth rates and price marginal cost ratios during recessions and expansions results show 1 productivity growth is procyclical it decreases during recessions and increases during expansions in addition the decrease during recessions is greater than the increase during expansions 2 the price marginal cost ratio is very asymmetric it decreases during recessions but shows no significant movement during an expansion the lower price marginal cost ratio during a recession implies that the elasticity of output with respect to labour decreases thus not only does the level of productivity fall but the productivity of labour relative to capital also falls these characteristics are consistent with labour hoarding

retirement and consumption in a life cycle model consumption expenditure declines sharply at the time of retirement for many households but the majority maintain a smooth consumption path a simple life cycle model with uncertainty about the time of retirement can account for this pattern a richer version of the model is calibrated to data from the health and retirement study hrs the median change in consumption expenditure at retirement generated by the model is zero while the mean is negative matching the hrs data however the magnitude of the drop in consumption among households that experience a decline is too small in the model compared to the data

the sensitivity of consumption to transitory income estimates from panel data on households we investigate the stochastic relation between income and consumption specifically consumption of food within a panel of about 2 000 households our major findings are 1 consumption responds much more strongly to permanent than to transitory movements of income 2 the response to transitory income is nonetheless clearly positive 3 a simple test independent of our model of consumption rejects a central implication of the pure life cycle permanent income hypothesis the observed covariation of income and consumption is compatible with pure life cycle permanent income behavior on the part of80 percent of families and simple proportionality of consumption and income among the remaining 20 percent as a general matter our findings support the view that families respond differently to different sources of income variations in particular temporary income tax policies have smaller effects on consumption than do other more permanent changes in income of the same magnitude this abstract was borrowed from another version of this item

optimal cartel equilibria with imperfect monitoring abstract there exist optimal symmetric equilibria in the green porter model 4 8 having an elementary intertemporal structure such an equilibrium is described entirely by two subsets of price space and two quantities the only production levels used by firms in any contingency the central technique employed in the analysis is the reduction of the repeated game to a family of static games

unions and the capture of economic rents an investigation using british firm level data this paper considers the relationship between unions and profitability in a sample of large british firms in 1984 and 1985 the initial finding is that unionised firms have significantly lower profit margins than otherwise comparable non union firms tests of whether the ability of unions to influence profit margins varies with the product and labour market characteristics of the firms in which they are located are then conducted the ability of unions to capture economic rents is seen to be significantly greater in firms which have a high market share and or operate in highly unionised industries

poverty alleviation through partnerships a road less travelled for business governments and entrepreneurs while investigating the role of business and accepting that profitable partnerships are the primary solution for poverty alleviation we voice certain concerns that we hope will extend the authors discourse in alleviating poverty through profitable partnerships we present a model that we believe can serve as an effective framework for addressing these issues we then establish the imperative of inclusive growth here we engage with the necessity of formulating strategies that focus on the pace and importantly the pattern of economic growth including its social and cultural dimensions we also deliberate on the parameters of inclusive growth with the overriding objective of ensuring that multiple strata of society share the benefits of globalization turning to the critical role of institutions in promoting social welfare we explore the impact of government policy vis a vis the leverage enjoyed by other social institutions despite the reality that state and private interests often operate at cross purposes we argue that government must still be an integral part of the solution matrix with direction from other social institutions entrepreneurial forces can be unleashed to tackle endemic poverty prevalent in the base of the pyramid we then provide an in depth case study in which the availability of telecommunications in rural areas was utilized as a means to foster development and ensure inclusive growth the conclusion examines lessons learned while operationalizing the model and spells out the impact of our enablers at ground level

profit margins and business cycles in the brazilian industry a panel data study the paper investigates the relationship between profit margins and business cycle in the brazilian industry during the 1992 1998 period taking as reference a dynamic panel data model founded around a conjectural variation framework the empirical results indicate procyclical behaviour of profit margins for the aggregate business cycle but is less clear in the case of sector specific business cycle variables among the most robust results one can highlight the roles of lagged profitability and import intensity and the negligible role of union density schmalensee in 1985 american economic review 75 pp 341 51 outlined three theoretical interpretations associated with the empirical model classical revisionist and managerial econometric tests on the related restrictions do not allow one to exclusively legitimate any of the three interpretations

the market for wireless electricity the case of india a wireless revolution has transformed telecoms in india and in other emerging markets the electricity market on the other hand remains underdeveloped we define wireless electricity as renewable energy produced within a few hundred meters of the point of consumption a wireless revolution in electricity would solve the problem of electricity deficit empower people at the bottom of the pyramid and mitigate the environmental impact of bringing hundreds of millions out of poverty as the indian economy grows renewables are technically proven and economically viable in certain situations but their use remains peripheral the stark difference in the diffusion patterns in telecoms and electricity has been ignored by leaders in government business and academics we present common frameworks to explain the different directions of reform in telecoms and electricity we explain some of the dynamics which prevent the diffusion of wireless electricity we use a causal loop diagram to explain the status quo in the off grid electricity market and propose changes which will lead to the formation of a market for wireless electricity india has the entrepreneurial talent to develop this market and the largest number of potential customers the world will benefit as a result

what accounts for the variation in retirement wealth among u s households even among households with similar socioeconomic characteristics saving and wealth vary considerably life cycle models attribute this variation to differences in time preference rates risk tolerance exposure to uncertainty relative tastes for work and leisure at advanced ages and income replacement rates these factors have testable implications concerning the relation between accumulated wealth and the shape of the consumption profile using the panel study of income dynamics and the consumer expenditure survey we find little support for these implications the data are instead consistent with rule of thumb mental accounting or hyperbolic discounting theories of wealth accumulation jel di d91 e21

time to cook expenditure at retirement in spain detailed panel expenditure data from spain reveal little evidence of a retirement consumption puzzle in 1985 2004 there is a drop in food at home expenditure in the later years of the sample along with evidence of households paying lower prices for the food they purchase after retirement however our findings are consistent with a model that allows for home production as long as one accounts for the greater participation in housework by men after retirement coinciding with this latter period our work adds to the evidence from several countries and helps in reconciling the retirement consumption puzzle with life cycle models

consumption retirement and social security evaluating the efficiency of reform that encourages longer careers abstract this paper proposes and analyzes a social security reform in which individuals no longer face the oasi payroll tax after say age 54 or a career of 34 years and their subsequent earnings have no bearing on their benefits we first estimate parameters of a life cycle model our specification includes non separable preferences and possible disability it predicts a consumption expenditure change at retirement we use the magnitude of the expenditure change together with households retirement age decisions to identify key structural parameters the estimated magnitude of the change in consumption expenditure depends importantly on the treatment of consumption by adult children of the household simulations indicate that the reform could increase retirement ages one year or more equivalent variations could average more than 4000 per household and income tax revenues per household could increase by more than 14 000

cooperation v rivalry price cost margins by line of business fl c bureau of economics working papers are preliminary materials circulated to stimulate discussion and critical comment all data contained in them are in the public domain this includes information obtained by the commission which has become part of public record the analyses and conclusions set forth are those of the authors and do not n essarily ref1 t the views of other members of the bureau of economics other commission staff or the commission itself upon request single copies of the paper will be provided references in publications to fit bureau of economics working papers by ffc economists other than acknowledgement by a writer tnat ne has access to such unpublished materials should be cleared with the author to prot t the tentative character of these papers

margins concentration unions and the business cycle theory and evidence for britain abstract a number of recent studies have examined the cyclical relationship between price cost margins concentration and unions u s data has concluded that unions reduce margins margins vary over the cycle and concentration unionisation and the cycle interact in their effect on margins however there is almost no theory to account for these results we propose a simple theory that assumes only that there is overhead labour present at the firm this produces theoretical predictions that can explain these results and discriminate between existing theories we present results of our own using u k panel data and show similar findings to the u s

anticipation of future consumption a monetary perspective we adapt the monetary model sidrauski 1967 to study the hypothesis of anticipation of future consumption we assume that anticipation of future consumption affects an agent s instantaneous utility and that all effects of future consumption on current well being are captured by the stock of future consumption monetary policy effectiveness is thereby reduced and a zero nominal lower interest rate and thus the friedman rule is destabilizing given this we can derive a just stable equilibrium nominal interest rate with matching definitions for inflation and monetary growth we demonstrate that these implied lower bounds match their historical analogues well

microfoundations of macroeconomic price adjustment survey evidence from swedish firms this paper presents the results of a survey on price setting behavior conducted on a large random sample of swedish firms the median firm adjusts the price once a year state and time dependent price setting are about equally important the four highest ranked explanations for price rigidity in this study implicit contracts sluggish costs explicit contracts and the kinked demand curve have close correspondents among the top five places in two similar large scale surveys carried out in the uk and the u s the results point to the importance of the long term relations with customers for the rigidity of prices the estimated share of sales that go to regular customers is more than 80

why do retired workers claim their social security benefits so early a potential explanation based on the cumulative prospect theory abstractsocial security provides longevity insurance for older americans according to expected utility theory models rational households who are not liquidity constrained should delay claiming th

collusion versus differential efficiency testing alternative hypotheses the predictions of collusion and efficiency based static equilibrium explanations of interindustry profitability differences are formally developed and tested using appropriate econometric techniques with intraindustry data on seventy u s internal revenue service minor manufacturing industries in 1963 and 1972 none of the explanations has much explanatory power the 1963 data are consistent with collusion based models while the 1972 data are inconsistent with all non null hypotheses considered patterns of profitability are sharply different in the two years in complex ways apparently unrelated to cyclical forces or the phase ii price controls implications of these results are discussed copyright 1987 by blackwell publishing ltd

giffen behavior and subsistence consumption this paper provides the first real world evidence of giffen behavior i e upward sloping demand subsidizing the prices of dietary staples for extremely poor households in two provinces of china we find strong evidence of giffen behavior for rice in hunan and weaker evidence for wheat in gansu the data provide new insight into the consumption behavior of the poor who act as though maximizing utility subject to subsistence concerns we find that their elasticity of demand depends significantly and nonlinearly on the severity of their poverty understanding this heterogeneity is important for the effective design of welfare programs for the poor jel d12 012

food expenditure and involuntary retirement resolving the retirement consumption puzzle international research has shown that household expenditure on nondurables significantly decreases at retirement a finding that is inconsistent with the standard life cycle model of consumption if retirement is anticipated we analyze australian panel data and find that the decline in grocery and food expenditure is explained by households forced to retire earlier than planned due to a health event or job loss which represent unanticipated wealth shocks for most households retirement is anticipated and there is no decline in basic expenditures however for an important minority retirement is involuntary and these households experience a marked decline across the basic expenditure categories

collusion in dynamic oligopolies in the presence of entry threats this paper considers a generalized oligopoly supergame where an endogenous entry decision is included the author proves that strategies based on most severe symmetric punishments can sustain some degree of collusion even with arbitrarily small entry barriers provided that the discount rate is sufficiently small the model provides a justification for a view suggesting that neither substantial barriers to entry nor strategic or informational asymmetries are necessary for an oligopoly with some degree of cooperation to prevail copyright 1990 by blackwell publishing ltd

the rationality of retirement expectations and the role of new information this paper tests the rationality of retirement expectations controlling for sample selection and reporting biases we find that retirement expectations in the health and retirement study are consistent with the rational expectations hypothesis we also analyze how new information affects the evolution of retirement expectations and discover that on average individuals correctly anticipate most uncertain events when planning their retirement except for some health shocks the need for additional private health coverage and the probability of a job change our results support a wide variety of models in economics that assume rational behavior

unions and the financial performance of british private sector establishments summary this paper considers the relationship between unions and financial performance using data from the 1980 and 1984 workplace industrial relations surveys a qualitative indicator of financial performance is utilized and ordered probit estimates presented these indicate that unionized establishments are characterized by lower performance levels than are non union concerns the interface between union effects and relative market power is also explored and the ability of unions to extract a share of the available rents is found to be greater if the plants in which they are located possess a higher market share

do other firms matter in oligopolies this paper examines how firms interact with their rivals the main novelty of our approach is that we let conjectural variations depend on the actual ability of other firms to react which we measure by both the physical capacity and financial status of firms our main findings are twofold first physical and financial capacity significantly affect conjectures second we recover the implied conjectural variations and reject homogeneous conjectures we generally find that leaders expect aggressive responses and followers are cournot players

is there a retirement consumption puzzle in japan evidence from a household panel dataset spanning several years using a unique long run panel of japanese households this paper examines the changes in consumption at retirement the retirement consumption puzzle our analysis shows that households expendi

why don t we see poverty convergence average living standards are converging among developing countries and faster growing economies see more progress against poverty yet we do not find poverty convergence countries starting with higher poverty rates do not see higher proportionate rates of poverty reduction the paper tries to explain why analysis of a new dataset suggests that at given mean consumption high initial poverty has an adverse effect on consumption growth and also makes growth less poverty reducing thus for many poor countries the growth advantage of starting out with a low mean is lost due to a high incidence of poverty jel d63 i31 i32 o15

the business cycle macroeconomic shocks and the cross section the growth of uk quoted companies we bring to light a significant aspect of firm level heterogeneity over the business cycle analysing the responsiveness of firm growth quoted uk companies to aggregate shocks we find that the effects of aggregate shocks are more pronounced for firms in the middle range of growth rapidly growing and rapidly declining firms are less sensitive to aggregate shocks than firms in the interior of the growth range this is consistent with the fact that the higher moments of the distribution of firm growth rates have significant cyclical patterns these findings throw new light on growth of firms as well as on business cycle dynamics

tacit collusion in housing markets the case of santiago chile abstractin this article using a detailed micro database from santiago chile the potential existence of tacit collusion in housing markets is investigated in order to perform the test santiago s housing market is split into four different submarkets using hedonic price analysis and household s socioeconomics characteristics then using a gmm panel data model regressions are run for each submarket correlating industry s markups with the aggregate level of activity the main finding is that low and middle income submarkets present higher average markups and a pro cyclical behaviour this finding is consistent with a market where participants do not face capacity constraints and behave strategically to sustain tacit collusion during increasing demand periods

the impact of cyclical demand movements on collusive behavior recent work by rotemberg and saloner 1986 investigates the effect of the business cycle on optimal collusive pricing by specifying that demand is subject to i i d shocks an implication of the i i d assumption is that firms expectations on future demand are unrelated to the current level of demand we put forth a model that allows for both the level of current demand and firms expectations on future demand to change over time thus it captures two important properties of the business cycle our analysis reveals that while the gain to deviating from a collusive agreement is greatest during booms firms find it most difficult to collude during recessions as the forgone profits from inducing a price war are relatively low an implication of this effect for pricing behavior is that at the same level of demand price is lower when demand is declining than when demand is rising consistent with previous theoretical work we find that firms price countercyclically for a range of values for the discount factor however numerical simulations reveal a greater tendency for firms to price countercyclically during recessions than during booms

consumption versus expenditure previous authors have documented a dramatic decline in food expenditures at the time of retirement we show that this is matched by an equally dramatic rise in time spent shopping for and preparing meals using a novel data set that collects detailed food diaries for a large cross section of u s households we show that neither the quality nor the quantity of food intake deteriorates with retirement status we also show that unemployed households experience a decline in food expenditure and food consumption commensurate with the impact of job displacement on permanent income these results highlight how direct measures of consumption distinguish between anticipated and unanticipated shocks to income whereas measures of expenditures obscure the distinction

is there a retirement savings puzzle in this paper we ask whether households are saving enough for their retirement we use data on income expenditure and expenditure components to analyse patterns of behaviour at and around the time of retirement for successive date of birth cohorts we compare periods of unemployment to periods of retirement and separate expenditures into categories reflecting work related expenditures basic necessities and other goods we find that income typically falls by more at unemployment than retirement but the reverse is true for expenditure we observe falls in expenditure at retirement for all expenditure categories using a stochastic life cycle model including mortality rates we assess the anticipated impact of retirement on consumption against that of unemployment the inter relationship between goods and leisure explains a large part of the persistent fall in expenditure at retirement we argue that the only way in which the life cycle hypothesis could be reconciled with the remaining unanticipated dip in consumption would be with the systematic arrival of unexpected adverse information at the time of retirement