prices policing and policy the dynamics of crime booms and busts in many historical episodes criminal activity displays booms and busts one clear example is the case of metal crime in the uk and elsewhere where in the face of big increases in value driven by world commodity prices thefts rose very sharply in the 2000s after which they fell this paper studies the respective roles of prices policing and policy in shaping this crime boom and bust separate study of each reveals metal crime being driven up via sizeable and significant metal crime price elasticities and driven down by changes in policing and policy a regression based decomposition analysis confirms that all three of the hypothesised factors considered in the paper prices policing and policy were empirically important in the different stages of metal theft s boom and bust

spillover effects in wage determination an econometric analysis 1991 spillover effects in wage determination an econometric analysis applied economics vol 23 no 9 pp 1473 1482

the influence of motivations and environment on business start ups some hints for public policies abstract this paper examines entrepreneurial motivations to start a business in different perceived environmental settings motivations to start a business for a sample of 163 entrepreneurs from growing and declining regions in the north center and south of italy were factor analysed in order to identify the main groupings of variables that lead people to start their own business the results proved to be highly consistent with friberg s 1975 1976 findings on incentives to start a business the motivation factor scores were then clustered and three verv different classes of entrepreneurs were identified each driven by very different sets of motivations self actualizers who started their business driven by a thirst for achievement and a sense of independence and autonomy discontented entrepreneurs unhappy with present working conditions and followers of family tradition role models the relationship between individuals motivations and their perceptions of the environment was then investigated resources and incentives to start a business were factor and cluster analyzed to yield three very different types of perceived environments munificent environments characterized by efficient infrastructures established capital markets and the availability of incentives to start a business supportive environments in which the creation of an infrastructure specifically aimed at encouraging new companies could lead to a significant increase in entrepreneurship sparse environments lacking both infrastructure and capital availability the proportions of entrepreneurial types differ significantly in each environment government intervention in stimulating the diffusion of entrepreneurship is legitimized by the role new companies play in job and wealth creation and the diffusion of innovation within a territory these results suggest some implications for public policies instead of blanket incentive policies applied on a wide geographical basis policies tailored on a local basis may be more effective in stimulating new venture creation

measuring positive externalities from unobservable victim precaution an empirical analysis of lojack lojack is a hidden radio transmitter device used for retrieving stolen vehicles because there is no external indication that lojack has been installed it does not directly affect the likelihood that a protected car will be stolen there may however be positive externalities due to general deterrence we find that the availability of lojack is associated with a sharp fall in auto theft rates of other crime do not change appreciably at least historically the marginal social benefit of an additional unit of lojack has been fifteen times greater than the marginal social cost in high crime areas those who install lojack however obtain less than 10 percent of the total social benefits leading to underprovision by the market

sacrifice and stigma reducing free riding in cults communes and other collectives this paper presents an economic analysis of religious behavior that accounts for the continuing success of groups with strange requirements and seemingly inefficient prohibitions the analysis does not presuppose any special motives for religious activity rather religion is modeled as a club good that displays positive returns to participatory crowding the analysis demonstrates that efficient religions with perfectly rational members may benefit from stigma self sacrifice and bizarre behavioral restrictions the model also addresses sacrifice in nonreligious social clubs fraternities communes political parties work groups and families

an economic model of representative democracy this paper develops an approach to the study of democratic policy making where politicians are selected by the people from those citizens who present themselves as candidates for public office the approach has a number of attractive features first it is a conceptualization of a pure form of representative democracy in which government is by as well as of the people second the model is analytically tractable being able to handle multidimensional issue and policy spaces very naturally third it provides a vehicle for answering normative questions about the performance of representative democracy

working time and labour demand in finnish manufacturing short run and long run effects the effect of changes in the standard working time on employment and average hours is studied using pooled data from five finnish manufacturing industries the model is an error correction model which makes it possible to separate short run reductions in standard hours increase employment there is evidence that the long run effect of working time on employment has changed over time in the 1970s reductions in hours have had positive long run employment effects but in the 1980s the positive short run impact has been neutralized in the long run changes in standard hours do not influence the utilization rate of labour which is defined as the ratio of overtime hours to standard hours in the short run the utilization rate is influenced by output changes

does the disclosure of gun ownership affect crime evidence from new york abstract while the social costs of gun violence are high opponents of gun restrictions argue that gun ownership deters crime and creates a positive externality by increasing unobserved risk to criminals this paper investigates the evidence for these two deterrence channels exploiting the sudden disclosure of all handgun permit holders names and addresses in two new york counties permit holders have more crime incidents at their homes relative to non permit holders in the baseline which is not driven by selection into neighborhoods i find little evidence in favor of direct deterrence and little evidence of peer deterrence instead i find that victimization is associated with a higher likelihood of future gun ownership

testing for the effects of concealed weapons laws specification errors and robustness abstract in 1997 john lott and david mustard published an important paper in which they found that right to carry concealed weapons laws reduce violent crime although lott and mustard appear to do all possible variations of the analysis a closer reading reveals that the study might suffer from several possibly important errors i reestimate the model and check for incorrect functional form omitted variables and possible second order bias in the t ratios lott and mustard s basic conclusions are generally robust with respect to these potential econometric problems overall right to carry concealed weapons laws tend to reduce violent crime the effect on property crime is more uncertain i find evidence that these laws also reduce burglary

business borrowing and control a theory of entrepreneurial types a formal model of the bank borrowing decision by the small firm is provided to explain why some entrepreneurs borrow and others do not and why some businesses grow and others remain stationary over long periods loan capital is productive and increases the firm s revenue but brings the business under the control of the bank profits generated by borrowing are a good increasing owner utility whereas control is a bad reducing it the consequent tradeoff between borrowing and control implies that the business optimum will involve borrowing less than the amount that maximises profits if owner control aversion is strong enough equilibrium may involve a corner solution with the business being entirely self funding the above result holds under conditions of symmetric information and zero credit rationing dynamic analysis distinguishes one group of entrepreneurs movers whose preferences towards control evolve through time and their control aversion diminishes from another group stayers whose preferences remain stationary for the movers borrowing increases over time up to a profit maximising optimum whereas for the stayers independence of control is maintained but at the expense of non growth

more guns more crime this paper examines the relationship between gun ownership and crime previous research has suffered from a lack of reliable data on gun ownership i exploit a unique data set to reliably estimate annual rates of gun ownership at both the state and the county levels during the past two decades my findings demonstrate that changes in gun ownership are significantly positively related to changes in the homicide rate with this relationship driven almost entirely by an impact of gun ownership on murders in which a gun is used the effect of gun ownership on all other crime categories is much less marked recent reductions in the fraction of households owning a gun can explain one third of the differential decline in gun homicides relative to nongun homicides since 1993

the social costs of gun ownership abstract this paper provides new estimates of the effect of household gun prevalence on homicide rates and infers the marginal external cost of handgun ownership the estimates utilize a superior proxy for gun prevalence the percentage of suicides committed with a gun which we validate using county and state level panels for 20 years we estimate the elasticity of homicide with respect to gun prevalence as between 0 1 and 0 3 all of the effect of gun prevalence is on gun homicide rates under certain reasonable assumptions the average annual marginal social cost of household gun ownership is in the range 100 to 1800

the relationship between size growth and profitability of commercial banks using a dynamic panel model for more than 15 000 banks from 148 countries from 1988 to 2010 we investigate the interaction between size growth and profitability of banks for our total sample we cannot reject the hypotheses that the variability of bank profitability and the level and variability of bank growth are independent of bank size however in high income organization for economic cooperation and development oecd countries bigger banks grow slower but are more profitable than small banks while bank growth is not persistent bank profitability is persistent finally we find that bank growth and bank profitability are independent of each other

sect subsidy and sacrifice an economist s view of ultra orthodox jews israeli ultra orthodox men study full time in yeshiva until age 40 on average why do fathers with families in poverty choose yeshiva over work draft deferments subsidize yeshiva attendance yet attendance typically continues long after exemption fertility rates are high tfr 7 6 and rising a social interaction approach explains these anomalies yeshiva attendance signals commitment to the community which provides mutual insurance to members prohibitions strengthen communities by effectively taxing real wages inducing high fertility historically the incursion of markets into traditional communities produces ultra orthodoxy subsidies induce dramatic reductions in labor supply and unparalleled increases in fertility illustrating extreme responses social groups may have to interventions

testing for unit roots in panel data are wages on different bargaining levels cointegrated theoritical considerations suggest that spillover forces equalize wages for similar jobs thus it is expected that firm wages are cointegrated with the corresponding wage rates on an industrial level in this paper we apply various unit root tests to a panel of wage data we show that the familiar techniques can be adopted to this type of data allowing for unobserved heterogeneity and common time effects our results suggest that firm and industry wages both possess a unit root in the autoregressive representation however ther is only weak evidence for a cointegration realtionship

guns laws and public shootings in the united states abstractsince the late 1990s there have been increasing numbers of public shootings carried out with firearms in the united states these tragedies continually renew the regulatory debate concerning public safety while considering civil liberties using a unique data set we investigate whether laws correspond to whether an event occurs and the effects of event specific characteristics on public shooting outcomes in particular we analyse how state specific gun laws the types of firearms the shooting venues and the mental health of the gunman impact the outcomes of public shootings results show that most gun laws are unrelated to whether an event occurs in addition common state and federal gun laws that outlaw assault weapons are unrelated to the likelihood of an assault weapon being used during a public shooting event moreover results show that the use of assault weapons is not related to more victims or fatalities than other types of guns however the use of hand guns shot guns and high capac

the persistence of profit a new empirical interpretation abstract inferences are drawn about the true coefficients which correspond to sample estimates of a persistence of profit model fitted over a large number of firms this is done by generating simulated sampling distributions for the estimators over various distributional assumptions profits seem to be stationary for all firms with an average short run persistence coefficient of 0 59 higher than most previous estimates long run profit rates differ between firms although by less than is suggested by direct observation of variations in mean profit rates calculated over time short run persistence appears to be inversely related to unsystematic variation in profit

creative destruction among industrial firms in the united states there is a growing interest in dynamic modeling of capitalism as recent experience has demonstrated the importance of innovation in shaping the structure and growth rate of capitalist nations economists recognize that innovation by its nature describes a dynamic evolutionary model of capitalism which is inadequately described by the equilibrium models which have dominated economic thought since the 19th century

the growth of us credit unions abstract the growth of us credit unions during the 1990s is investigated empirically using univariate and multivariate cross sectional and panel estimation techniques univariate tests of the law of proportionate effect suggest that in general large credit unions grew faster than their smaller counterparts on average credit unions with above average growth in one period tended to experience below average growth in the next smaller credit unions tended to have more variable growth than large ones while credit unions share a common co operative philosophy they differ in terms of age profile scope for membership growth charter type and financial structure and performance in estimations of a multivariate growth model most of these characteristics are found to have a significant influence on the size growth relationship while large state chartered credit unions grew faster than their smaller counterparts the reverse was true for federally chartered credit unions in general if larger credit unions grew faster than smaller ones they tended to do so for specific reasons because their charters were less restrictive because they were more efficient or because they had a financial structure that was more conducive to growth therefore credit union growth was not random but highly systematic

the value of technology improvements in games with externalities a fresh look at offsetting behavior abstract we model the effect of safety technology improvements in a symmetric game in which each player s payoff depends on his own precaution and the other players average precaution we derive conditions under which an improved technology increases or decreases players equilibrium utilities for mandatory safety technologies the direction of the welfare effect depends on whether the externality between players is positive or negative and on whether the technology improvement is a complement or substitute for individual precaution for safety technologies that individuals can choose whether or not to purchase individuals expend too much on reducing the loss size but may spend either too much or too little on features that reduce an individual s loss probability

crime protection investment spillovers theory and evidence from the city of buenos aires abstract this paper studies spillover effects from private crime protection technologies criminals and victims interact in a frictional market for offenses private protection diverts crime towards unprotected targets but also discourages criminal activity the relative strength of these two effects determines the sign of externalities among potential victims using originally collected data from buenos aires evidence shows that i private protection investment is spatially concentrated and ii neighbors investment in private protection has a causal positive and significant effect on own investment to achieve identification i exploit variation in the investment status of close neighbors as induced by their knowledge of crimes targeting friends relatives acquaintances or others and occurred farther away neighbors investment in alarms and cameras significantly increases a household s propensity to invest in the same technology externalities raise the scope for government intervention while geo referenced information on private protection can inform policy with regard to the spatial distribution of policing effort and public investment in security

crime and social interactions the high variance of crime rates across time and space is one of the oldest puzzles in the social sciences this variance appears too high to be explained by changes in the exogenous costs and benefits of crime we present a model where social interactions create enough covariance across individuals to explain the high cross city variance of crime rates this model provides an index of social interactions which suggests that the amount of social interactions is highest in petty crimes moderate in more serious crimes and almost negligible in murder and rape

an estimate of resource expenditures on transfer activity in the united states this paper details resource expenditures on nonexchange noncharity transfer activity in the united states in 1985 expenditures designed to facilitate and inhibit nonexchange transfers executed privately or through the state are reported the numbers indicate that individuals plausibly invested nearly a trillion dollars in transfer activity that year nominal gnp in 1985 was just over 4 trillion which includes numerous transfer related resource investments that arguably should be subtracted out transfer activity thus apparently constitutes a much larger fraction of all economic activity conducted in the united states than previously recognized

unemployment a survey this paper presents a survey of the economics of unemployment it covers competitive and imperfect competition models the role of different methods of wage determination and explanation of postwar unemployment patterns in the oecd countries copyright 1990 by royal economic society

investment dynamics with fixed capital adjustment cost and capital market imperfections this paper examines the implications of financing frictions on capital stocks and on capital accumulation in the presence of non convex costs of adjusting the capital stock in this setup finance has an influence on both the level of capital and the timing of investment finance and productivity are complements and finance influences investment the strongest when firms wish to significantly adjust capital for fundamental reasons these theoretical considerations are confronted with uk data while finance is mostly irrelevant for long term capital decision the short run investment function shows a significant impact of finance which is also strongest for strong fundamental investment incentives

privately produced general deterrence in this study we use county data on private security establishments and employment for 1977 92 to test two hypotheses first we test whether private security deters crime second we test whether john lott and david mustard s estimates of the impact of shall issue laws on crime are biased because of a lack of controls for private security we find little evidence that private security reduces the crime rates for assault or larceny some estimates suggest murder robbery and or auto theft may be deterred by private security although these results are not robust of all the index crime categories only rape is estimated to have a consistent negative relationship with private security in addition we find little evidence that the lott and mustard results are biased because of a lack of controls for the private security measures employed in this study

the occupations of regulators influence occupational regulation evidence from the us private security industry licensing requirements for us private security firms and guards differ substantially from state to state state regulatory institutions for this industry also vary considerably some states have specialized regulatory boards with industry personnel guards firm owners and or public police as board members while others rely on non specialized regulators such as departments of commerce state professional regulation or consumer affairs these cross state variations in licensing requirements and regulatory institutions provide an opportunity to explore relationships between the two private security regulation is of particular interest in this context because previous empirical research implies that allocating more resources to private security reduces crime and that relatively stringent licensing requirements limit entry thereby increasing crime a panel of 1991 2010 state data is employed to see if particular regulatory institutions are associated with particular licensing requirements empirical results suggest that requirements for entry into this market tend to be relatively strict when active private security personnel are in control of licensing and that different patterns of regulation generally apply when police or non specialized agencies control licensing therefore both public interest and private interest explanations for the observed relationships between the structure of regulatory institutions and resulting licensing requirements are discussed

personal liberties religiosity and effort abstract in this paper we study the role of religiosity in influencing the choice of labor effort many religions promote restrictions on personal liberties such as divorce abortion gender parity or gay marriage often regulated by law we assume that the higher the degree of religiosity of an individual the less he enjoys such personal liberties and the less he likes to be in a society which allows them while seculars enjoy such liberties by standard consumer theory the differential valuation induced by religiosity influences individual decisions on other dimensions as well notably labour supply we show empirically that this nexus holds and that the size of the effect is large specifically we construct an index of personal liberties and find solid evidence in support of the joint effect of religiosity and liberties on labor effort our empirical results indicate that religiosity interacted with the legal level of liberties has a significant and strong negative effect on labor supply and that increases in the cap on liberties have a negative effect on the labor supply of the religious individuals and positive for the secular

adam smith and the ethics of contemporary capitalism this paper presents a theoretical elaboration of the ethical framework of classical capitalism as formulated by adam smith in reaction to the dominant mercantilism of his day it is seen that smith s project was profoundly ethical and designed to emancipate the consumer from a producer and state dominated economy over time however the various dysfunctions of a capitalist economy e g concentration of wealth market power became manifest and the utilitarian ethical basis of the system eroded contemporary capitalism dominated as it is by large corporations entrenched political interests and persistent social pathologies bears little resemblance to the system which smith envisioned would serve the common man most critiques of capitalism are launched from a marxian based perspective we find however that by illustrating the wide gap between the reality of contemporary capitalism and the model of amoral political economy developed by smith the father of capitalism proves to be the most trenchant critic of the current order

the demand for english league football a club level analysis a demand equation is estimated for 19 large urban based english football league clubs over the period 1962 3 to 1991 2 in order to analyse the economic determinants of club attendances while controlling for football specific factors attendances are measured with and without correction for admission of season ticket holders using an error correction specification to model attendances it is shown that both adjusted and unadjusted attendances respond to real ticket prices in the long run in 17 and 18 clubs respectively the price elasticity is typically larger for adjusted attendances suggesting that casual spectators are more price sensitive than season ticket holders among football specific factors league position goals scored and promotion and relegation between the divisions are all important determinants of attendance patterns

is the swedish central government a wage leader is the swedish central government a wage leader this question is studied empirically in a vector error correction model using a unique high quality data set it is first shown that salaries of white collar workers in the private sector and central government are cointegrated it is then found that private sector salaries are weakly exogenous to the system of equations this means that the private sector is the wage leader in the long run model it is also found that changes in central government salaries do not granger cause changes in private sector salaries together these findings clearly demonstrate that the central government is not placing undue pressure on salaries in the private sector the central government is not acting as a wage leader

the effect of prison population size on crime rates evidence from prison overcrowding litigation simultaneity between prisoner populations and crime rates makes it difficult to isolate the causal effect of changes in prison populations on crime to break that simultaneity this paper uses prison overcrowding litigation in a state as an instrument for changes in the prison population the resulting elasticities are two to three times greater than those of previous studies a one prisoner reduction is associated with an increase of fifteen index i crimes per year while calculations of the costs of crime are inherently uncertain it appears that the social benefits associated with crime reduction equal or exceed the social costs of incarceration for the marginal prisoner

does religion distract the poor income and issue voting around the world this article asks whether religion undermines the negative relationship between income and left voting that is assumed in standard political economy models of democracy analysis of cross country survey data reveals that this correlation disappears among religious individuals in countries that use proportional representation this is the case in large part because there is a moral values dimension that has a correlation with income that is equal in magnitude but has the opposite sign as the economic dimension and the votes of the religious are better explained by their positions on moral than economic issues especially in countries with multiparty systems the authors conclude by discussing implications for theories of redistribution

belief in a just world and redistributive politics international surveys reveal wide differences between the views held in different countries concerning the causes of wealth or poverty and the extent to which people are responsible for their own fate at the same time social ethnographies and experiments by psychologists demonstrate individuals recurrent struggle with cognitive dissonance as they seek to maintain and pass on to their children a view of the world where effort ultimately pays off and everyone gets their just deserts this paper offers a model that helps explain i why most people feel such a need to believe in a just world ii why this need and therefore the prevalence of the belief varies considerably across countries iii the implications of this phenomenon for international differences in political ideology levels of redistribution labor supply aggregate income and popular perceptions of the poor the model shows in particular how complementarities arise endogenously between individuals desired beliefs or ideological choices resulting in two equilibria a first american equilibrium is characterized by a high prevalence of just world beliefs among the population and relatively laissez faire policies the other european equilibrium is characterized by more pessimism about the role of effort in economic outcomes and a more extensive welfare state more generally the paper develops a theory of collective beliefs and motivated cognitions including those concerning money consumption and happiness as well as religion

the demand for football in the regions of england and wales dobson s m and goddard j a 1996 the demand for football in the regions of england and wales reg studies 30 443 453 this paper investigates the determinants of the demand for football in the regions of england and wales using annual time series data over a 37 year period we use a dynamic error correction model to identify economic and football specific factors which determine attendances in the short run and long run the short run influences on demand are performance admission price and goal scoring performance and the unemployment rate are identified as significant long run determinants of attendance although the relationship between attendance share and performance seems to exhibit a strong regional dimension we find only weak evidence of regional variation in the coefficients of the attendance model itself dobson s m et goddard j a 1996 la demande de football aux regions de l angleterre et des pays de galles reg studies 30 443 453 cet article examine les determinants de la de

do firm sizes and profit rates converge evidence on gibrat s law and the persistence of profits in the long run three panel unit root tests are applied to a 31 year firm size growth and profit rate data set for 96 large quoted uk firms all tests reject the unit root null for log size if the augmented dickey fuller autoregressions exclude a linear time trend if a linear trend is included the results are more ambiguous and appear to differ systematically between tests the view that firm growth is either random or near random does not receive unequivocal support in all tests there is however strong and consistent evidence of mean reversion in profit rates

persistence of shocks and their sources in a multisectoral model of uk output growth this paper develops a multisectoral framework for the measurement of persistence of shocks to sectoral and aggregate output and provides a decomposition of the contribution of shocks from different sources to the overall persistence measure the framework is applied to u k output data distinguishing four types of macroeconomic shocks innovations in money supply growth stock returns exchange rates and oil prices among the macro shocks exchange rate shocks have the largest persistence effects on aggregate output through their effects on manufacturing sectors the contribution of the identified macro shocks to total persistence was small however compared to that of sector specific shocks copyright 1992 by royal economic society

why the poor do not expropriate the rich an old argument in new garb we consider a political economy with two partisan parties each party represents a given constituency of voters if one party labour represents poor voters and the other christian democrats rich voters if a redistributive tax policy is the only issue and if there are no incentive considerations then in equilibrium the party representing the poor will propose a tax rate of unity if however there are two issues tax policy and religion for instance then this is not generally the case the analysis shows that if a simple condition on the distribution of voter preferences holds then as the salience of the non economic issue increases the tax rate proposed by labour in equilibrium will fall possibly even to zero even though a majority of the population may have an ideal tax rate of unity 1998 elsevier science s a all rights reserved

the economic epidemiology of crime economic analysis of infectious diseases emphasizes the self correcting character of epidemics as rising risk of infection causes potential victims to take self protective measures we apply the analysis to crime showing how rational potential victims of crime will take increased self protective measures in response to rising crime rates causing those rates to moderate victim responses to crime can offset public expenditures on crime control this implies that there may be a natural rate of crime that is difficult for the public sector to affect we show that victim responses to crime can impart a cyclical pattern to crime rates and discuss the implications of our analysis for gun control and present empirical evidence concerning the responsiveness of self protective measures to crime rates and the cyclical pattern of those rates

the effects of state and federal background checks on state level gun related murder rates the purpose of the present study was to determine whether firearm background checks are significantly related to gun related murder rates the present study differs from prior research in several ways first a large longitudinal data set is used data for 50 states for the period 1980 2011 are examined second the effects of both federal and state background checks including state mandated private sales background checks are estimated finally a fixed effects model that controls for both state level and year specific effects is used results suggest that states that require dealer background checks have lower gun related murder rates than other states in addition after implementation of the brady act gun related murder rates fell however the results also suggest that for the entire period in question states with private sales background checks had higher gun related murder rates than states with no such background checks if one only looks the brady act period however then the private sales

insurance self protection and the economics of terrorism abstract this paper investigates the rationale for public intervention in the terrorism insurance market it argues that government subsidies for terror insurance have the effect of discouraging self protection and limiting the negative externalities associated with self protection cautious self protective behavior by a target can hurt public goods like national prestige if it is seen as giving in to the terrorists and may increase the loss probabilities faced by others by encouraging terrorists to substitute toward more vulnerable targets we argue that these externalities in protection are essential for normative analysis of government intervention in insurance markets and may also explain why availability problems in this market have engendered much stronger government responses than similar problems in other catastrophe insurance markets

crime and the timing of work abstract two striking facts describe work timing in the united states a lower propensity to work evenings and nights in large metropolitan areas and a secular decline in such work since 1973 one explanation is higher and possibly increasing crime in large areas i link current population survey data on work timing to fbi crime reports neither fact is explained by changes in nor inter area differences in crime rates but higher homicide rates do reduce such work this reduction implicitly costs the economy between 4 and 10 billion this negative externality illustrates a larger class of previously unmeasured costs of social pathologies

church state separation and redistribution we analyze how religion affects voting and redistribution our model directs attention away from the particular faith belief or risk attitudes of religious individuals and emphasizes instead how organized religion opens the door to standard group based distributive politics we argue that organized religion makes it possible for the rich and the religious poor to form electoral coalitions in favor of low taxes and limited redistribution such electoral coalitions form out of simple material self interest and they occur at the expense of the secular poor however the material reward to the religious poor from supporting such electoral coalitions depends on the institutional context as state support for religion increases poor religious voters have greater incentives to vote with poor secular voters in favor of parties that support high taxes the analysis therefore highlights the possibilities of understanding how religion affects politics without asserting that religious individuals differ systematically from secular ones in their values or preferences

serial correlation and the fixed effects model this paper generalizes the durbin watson type statistics to test the ols residuals from the fixed effects model for serial independence also generalized are the tests proposed by sargan and bhargava for the hypothesis that the residuals form a random walk a method for efficient estimation of the parameters is also developed finally an earnings function is estimated using the michigan survey of income dynamics in order to illustrate the uses of the tests and the estimation procedures developed in this paper

evolutionary implementation in a public goods game abstract we consider implementation of the efficient state in a large population public goods game due to positive externalities the efficient state is different from the nash equilibrium of the game we apply a transfer scheme equal to the externality in the game the externality adjusted public goods game is a potential game with a unique nash equilibrium which is the efficient state of the original game it is also a continuous strategy aggregative game we introduce the best response dynamic for such aggregative potential games to show evolutionary implementation agents converge to the efficient state under this dynamic in the externality adjusted game we extend this result to other prominent evolutionary dynamics the pure externality price scheme however causes a budget deficit a modification of this scheme solves this problem while evolutionarily implementing efficiency

the social efficiency of private decisions to enforce property rights costs must be incurred if an owner is to enforce private property rights effectively we show that in a perfectly competitive economy private decisions to enforce rights may result in either more or less enforcement than is socially efficient cases of multiple stable equilibria occur and an equilibrium may be locally but not globally efficient resources may not be employed in their socially most valuable uses and enforcement may be accompanied by inefficient investment in resource productivity

military spending and the growth maximizing allocation of public capital a cross country empirical analysis i introduction public spending promotes economic growth by enhancing the productive capacity of private firms the literature recognizes the possibility that different types of public spending e g infrastructure education health and military expenses can exert different impacts on economic growth military spending is a case in point given its value in maintaining both internal and external security military spending increases the incentives to accumulate private capital and attract foreign investment the defense sector also provides a variety of public infrastructure e g roads and communication networks while also enhancing human capital accumulation through training and provision of educational services on the other hand military spending diverts resources that could be more productive for the economy in nonmilitary uses in this sense defense spending may degrade long run economic growth 1 the characterization of the external effect of public spending on private firm decisions has focused on the context of a production function with the specification of the aggregate flow of public spending barro 1990 or the aggregate stock of public capital turnovsky 1997 a line of research takes care to break out different forms of public spending devarajan swaroop and zou 1996 recognize productive and unproductive public spending play distinct roles in an endogenous growth model using a production function kalaitzidakis and kalyvitis 2004 break down public spending into infrastructure and maintenance expenditure while chen 2006 into productive and consumptive spending benoit s 1973 1978 seminal work decomposes growth rates to investigate defense expenditure rates on economic growth for a panel of 44 less developed nations between 1950 and 1965 with a view toward assessing the impact of different forms of public capital on economic growth the production function approach has been undertaken to investigate the impact of government spending by type on growth e g baffes and shah 1998 cross country panel evans and karras 1994 for a panel of states in the united states devarajan swaroop and zou 1996 investigate the impact of public capital types by focusing on growth rates and assume linear relations between the different types of government spending and the growth rate of real per capita gross domestic product gdp 2 however a theoretical growth model developed recently by shieh lai and chang 2002 suggests that the effect of the budget share of military spending on gdp growth is nonlinear following an inverse u shaped pattern building upon theoretical construction in shieh lai and chang 2002 this study derives the growth maximizing values of the shares of public investment allocated to the two different types of public capital i e military and nonmilitary spending as well as the growth maximizing tax rate focusing on a panel of both developed and developing economies an empirical investigation is undertaken to assess the theoretical implications of the model that both the effect of the budget share of military spending and that of the tax rate on long run growth are nonlinear following an inverse u shaped pattern the rest of the paper is organized as follows section ii sets up a representative firm model and derives the growth maximizing levels of the tax rate and the shares of public capital investment section iii sets up the econometric procedures followed and presents an empirical investigation of the theoretical model in a sample of developed and developing economies finally section iv concludes the paper ii theoretical framework we consider a closed economy populated by identical agents consuming and producing a single commodity y without population growth the labor force is equal to the population with labor supplied inelastically on the production side the representative firm j produces its output using a conventional cobb douglas technology i

is it enough evidence from a natural experiment in india s agriculture markets access to information and communication technologies icts such as mobile phone networks is widely known to improve market efficiency in this paper we examine whether access to timely and accurate information provided through ict applications has any additional impact using a detailed data set from reuters market light rml a text message service in india that provides daily price information to market participants we find that this information reduces the geographic price dispersion of crops in rural communities by an average of 12 over and above access to mobile phone technology and other means of communication to identify the effect of information on price dispersion we exploit a natural experiment where bulk text messages were banned unexpectedly across india for 12 days in 2010 we find that besides reducing geographic price dispersion rml also increases the rate at which prices converge across india over time we discuss the implications of this for development organizations and informat

realizing the spirit and impact of adam smith s capitalism through entrepreneurship adam smith argued in the wealth of nations and the theory of moral sentiments that in order to create an effective and productive capitalist system individuals must pursue interests of both the self and society despite this assertion modern economic theory has become tightly focused on the pursuit of economic self interests at the expense of other higher order motives this paper will argue that the tendency to employ such an egocentric strategy often generates externalities and inequalities that serve to detract from the greater welfare of society however by tempering these economic self interests with non economically motivated considerations this paper will suggest that individuals may create tremendous benefits to society precisely as smith outlined more than two centuries ago in defense of this assertion this paper will review an array of theoretical arguments and empirical findings that suggest that today s entrepreneurs are not only seeking to satisfy both selfish and ethical motivations but in so doing they are also contributing substantially to the overall welfare of society through job creation wealth redistribution and a lack of discrimination as such it appears that spirit and impact of the capitalist system that smith envisioned is being realized through entrepreneurship

crime and economic incentives we explore the role that economic incentives particularly changes in wages at the bottom end of the wage distribution play in determining crime rates we use data on the police force areas of england and wales between 1975 and 1996 and find relative falls in the wages of low wage workers lead to increases in crime we carry out a number of experiments with different wage measures including a wage measure that accounts for the effects of changes in the composition of employment these reinforce the picture of a strong association between the low wage labor market and crime the result that incentives play a central role is reinforced further by the strong impact on crime of deterrence measures and of a measure of the returns to crime

consumer privacy and marketing avoidance a static model we introduce the concept of marketing avoidance consumer efforts to conceal themselves and to deflect marketing the setting is one in which sellers market some item through solicitations to potential consumers who differ in their benefit from the item and suffer harm from receiving solicitations concealment by one consumer induces sellers to shift solicitations to other consumers whereas deflection does not solicitations cause two externalities direct harm on consumers and the indirect cost of consumer concealment and deflection we find that in markets where the marginal cost of solicitation is sufficiently low efforts by low benefit consumers to conceal themselves will increase the cost effectiveness of solicitations and lead sellers to market more however concealment by high benefit consumers leads sellers to market less furthermore concealment by low benefit consumers increases direct privacy harm and consumer welfare is higher with deflection than concealment finally it is optimal to impose a charge on solicitations

the changing returns to crime do criminals respond to prices to what extent does crime follow the pattern of potential gains to illegal activity this article presents evidence on how criminals respond to this key incentive by reporting crime price elasticities estimated from a comprehensive crime dataset containing detailed information on stolen items for london between 2002 and 2012 evidence of significant positive crime price elasticities are shown for a panel of 44 consumer goods and for commodity related goods jewellery fuel and metal crimes the reported evidence indicates that potential gains are a major empirical driver of criminal activity and a crucial part of the economic model of crime the changing structure of goods prices helps to explain over 10 15 of the observed fall in property crime across all goods categories and the majority of the sharp increases in the commodity related goods observed between 2002 and 2012

evidence of creative destruction in the u s economy schumpeter discusses the importance of innovation and new firm entry in a capitalistic economy as a means to creatively destruct oligopolies and generate new economic wealth he warns of rd schumpeter feared the obsolescence of entrepreneurship would result in an increasing concentration of wealth among large corporations and toward socialism

does private security affect crime a test using state regulations as instruments private security is employed to deter criminals from attacking specific targets presumably not to produce general deterrence indeed private security generates negative spillovers as criminals su

housing wealth and consumption a micro panel study there is strong evidence that house prices and consumption are synchronised there is however disagreement over the causes of this link this study examines if there is a wealth effect of house prices on consumption using a household level panel data set with information about house ownership income wealth and demographics for a large sample of the danish population in the period 1987 96 we model the dependence of the growth rate of total household expenditure with unanticipated innovations to house prices controlling for factors related to competing explanations we find little evidence of a housing wealth effect

the race between deterrence and displacement theory and evidence from bank robberies security measures that deter crime may unwittingly displace it to neighboring areas but evidence of displacement is scarce we exploit precise information on the timing and locations of all italia

casinos crime and community costs we examine the relationship between casinos and crime using county level data for the united states between 1977 and 1996 casinos were nonexistent outside nevada before 1978 and expanded to many other states during our sample period most factors that reduce crime occur before or shortly after a casino opens whereas those that increase crime including problem and pathological gambling occur over time the results suggest that the effect on crime is low shortly after a casino opens and grows over time roughly 8 of crime in casino counties in 1996 was attributable to casinos costing the average adult 75 per year

on the interaction of financial frictions and fixed capital adjustment costs evidence from a panel of german firms abstract this paper analyzes the interaction of financial frictions and non convex adjustment costs non convex adjustment costs imply that firm level investment is lumpy firms invest infrequently but each investment is large this allows financial variables to influence investment along two margins they can alter the size of the stock of capital a company wishes to hold in the long run or they can influence the frequency at which investment projects are undertaken the empirical analysis of this paper reveals that finance has nearly no long run influence on the stock of capital in a sample of german companies by contrast the influence of finance on investment decisions is substantial consequently finance primarily affects investment frequencies and financial factors and fundamental capital productivity strongly interact in the determination of investment

the determination of contract wages in west germany the determination of contract wages in west germany is studied within a bargaining framework taking into account some institutional features of the bargaining system as well as the influence of economic forecasts and wage concepts cointegration regressions suggest that in the long run nominal contract wages are linked to prices productivity each with a unit elasticity and unemployment in addition to these factors expectational errors concerning the inflation rate during the contract period and changes in the tax wedge affect real wage growth in the short run but these effects seem to be temporary rather than permanent

persistence of firm level profitability in turkey the dynamics of company profits for 172 of the largest manufacturing firms in turkey are studied a time series analysis is used to estimate the long run projected profits and firm specific speed of adjustment parameters that measures the rate at which short run rents are eroded while persistent profitability differences across firms are observed there is also a moderately quick erosion of rents except for the most highly profitable firms firm characteristics rather than industry effects account for the differences in permanent profits contrary to the widespread view that developing countries suffer from uncompetitive markets the results in this paper suggest that the intensity of competition in turkey is no less than in developed countries and similar to other developing countries

a model of political competition with citizen candidates the authors develop a model of electoral competition in which citizens choose whether or not to run as candidates a winner implements her favorite policy the equilibrium number of candidates depends negatively on the cost of running and positively on the benefits of winning for some parameter values all equilibria under plurality rule have exactly two candidates whose positions are distinct two candidate elections are more likely under plurality rule than under a runoff system the candidates positions are less differentiated under a runoff system there exist equilibria under both systems in which some candidates have no chance of winning

liberte egalite religiosite abstract we study the effect of religiosity on the political choices over redistribution and the legal restrictions on personal liberties we assume that the more religious an individual is i the less he enjoys the use of liberties prohibited by his religion and ii the higher the negative externality experienced when others practice those liberties we show that legal restrictions on liberties has an impact on income inequality we find that when the religious cleavage in society is large high intolerance due to negative externalities leads to a political outcome consisting of repression of liberties and relatively low taxes