measuring the pay disparity between typically female occupations and other jobs a bivariate selectivity approach the author of this study using a bivariate probit selectivity model with data from the 1984 panel survey of income dynamics finds that women in female dominated jobs earned 6 15 percent less than

the crowding hypothesis and comparable worth although women s pay and occupational distribution have improved during the past few years it is still true that women earn considerably less than men and that their occupational distribution is substantially different because progress has been slow toward equality in the labor market some have called for a comparable worth policy proponents of this approach argue that occupational segregation contributes to the earnings disparity between women and men one theoretical justification for this position is the crowding hypothesis this paper first explains this theory and presents a method used to test its principal hypothesis it then describes an extension of this design for estimating the phenomenon that comparable worth policies address empirical studies conducted in this area are viewed and new findings are presented finally limitations of this analysis are discussed i introduction

occupational self selection a human capital approach to sex differences in occupational structure a rich and diverse literature exists concerning the distribution of labor incomes one approach namely that of human capital concentrates on lifetime accumulation paths of earnings capacity units human capital individual variations in human capital imply differences in earnings power thereby yielding strong implications concerning earnings distribution within a population despite its explanatory power the human capital model has been widely criticized one criticism centers on its inability to obtain inferences concerning occupational distribution the purpose of this paper is to alleviate at least some such criticism by applying the hedonic price approach so as to embed occupational choice into the human capital framework the significance is that neoclassical economic theory can be used to obtain implications concerning the determinants of occupational structure excerpt

wage and price control policies in transition economies abstract this paper studies the structural impact of wage and price control policies in transition economies using a two sector three factor small open economy model it illustrates the results quantitatively via simulation exercises at the earlier stage of the transition when labor is immobile a strict control on the price of the nontradables and the wage rate minimizes the fall in employment and output also a more severe control on the price of the nontradables than on the wage rate alleviates the fall in the real wage at negligible costs in lost employment and output at the later stage of the transition when labor becomes mobile the liberalization of the price of the nontradables can proceed faster than that of the wage rate this policy combination increases employment and output and reduces the shortage for the nontradables but lowers the real wage

mass privatization state capacity and economic growth in post communist countries why did the transition from socialism to capitalism result in improved growth in some countries and significant economic decline in others scholars have advanced three main arguments 1 successful countries rapidly implemented neoliberal policies 2 failures were not due to poli cies but to poor institutional environments and 3 policies were counterproductive because they damaged the state we present a state centered theory and empirically demonstrate for the first time one of several possible mechanisms linking neoliberal policies to poor economic performance mass privatization programs where implemented created a massive fiscal shock for post communist governments thereby undermining the development of private sector gover nance institutions and severely exacerbating the transformational recession we performed cross national panel regressions for a sample of 25 post communist countries between 1990 and 2000 and found that mass privatization programs negatively affected economic growth state capacity and property rights protection we further tested these findings with firm level data from a rep resentative survey of managers in 3 550 companies operating in 24 post communist countries within countries that implemented mass privatized programs newly privatized firms were sub stantially less likely to engage in industrial restructuring but considerably more likely to use bar ter and accumulate tax arrears than their state owned counterparts

federalism chinese style the political basis for economic success in china china s remarkable economic success rests on a foundation of political reform providing a considerable degree of credible commitment to markets this reform reflects a special type of institutionalized decentralization that the authors call federalism chinese style this form of decentralization has three consequences first it fosters competition not only in product markets but also among local governments for labor and foreign capital this competition in turn encourages local government experimentation and learning with new forms of enterprises regulation and economic relationships second it provides incentives for local governments to promote local economic prosperity finally it provides a significant amount of protection to local governments and their enterprises from political intrusion by the central government

incentives and loss of control in an optimal hierarchy this paper studies incentives and loss of control in a hierarchy model which combines and generalizes the models of williamson calvo wellisz and keren levhari in our model of the hierarchy the levels of effort from managers and workers the wage scales the span of control and in particular the total number of tiers are all endogenous using optimal control techniques we show that in the optimal hierarchy the wage scales and effort levels decrease as one moves down the hierarchy as the hierarchy expands with no technological progress workers exert less effort and are paid less top managers work harder and are paid more and the wage distribution becomes increasingly skewed

innovation and bureaucracy under soft and hard budget constraints because of the inherent uncertainty promotion of innovation critically depends on screening mechanisms to select projects this paper studies the relationship between bureaucracy and financial constraints as two such mechanisms the lack of commitment to hard financial constraints interferes with its ex post screening capability ex ante bureaucratic screening is optimally chosen as a substitute however bureaucracy makes mistakes by rejecting promising projects and delays innovation and the efficiency loss due to soft financial constraints increases as prior knowledge becomes worse and as research stage investment requirements become lower in a centralized economy bureaucracy may reduce the number of parallel projects particularly for projects with higher uncertainties and less research stage requirements this theory fits much of the evidence and in particular it explains why the computer industry but not the nuclear or aerospace industries has fared so poorly in centralized economies the fundamental importance of innovation to the survival and evolution of economic systems and organizations has long been recognized marx 1978 schumpeter 1950 innovation is characterized by its inherent uncertainty because it is a process whose every element takes considerable time in revealing its true features and ultimate effects schumpeter 1950 p 83 and people are unable to anticipate the future impact of successful innovations even after their technical feasibility has been established rosenberg 1994 an understanding of how different systems and organizations deal with the uncertainties associated with innovation and the resultant consequences is crucial for understanding alternative economic systems and organizations in this paper we provide a theory to analyse how different systems screen uncertain innovative projects and the impact of the various screening mechanisms on those systems we distinguish two alternative screening mechanisms the bureaucratic screening mechanism vs the market screening mechanism the latter is directly linked to financial constraints with this perspective our theory explains why centralized economies did well in certain areas of innovation but fared poorly in others for instance in the early 1960s the west was frightened by the ussr s great success in launching the first unmanned satellite and the first manned space capsule while in the 1980s in contrast the centralized system

financial institutions and the financial crisis in east asia abstract this paper investigates institutional reasons for the soft budget constraint problem and how the soft budget constraint problem creates conditions which may result in a financial crisis as a consequence of soft budget constraints bad projects do not stop bad loans accumulate and banks and depositors do not receive bad news on time poorly informed depositors are then likely to herd to overinvest when there is no bankruptcy frenzy and they are likely to herd to panic when bankruptcy occurs crash which may be the result of excessive bad loans that are also a consequence of soft budget constraints in contrast under hard budget constraints information is disclosed quickly regarding liquidation better informed investors are then less likely to herd wrongly

do esops enhance firm performance evidence from china s reform experiment abstract china introduced employee stock ownership plans esops in 1992 purely as an employee incentive scheme the government initiated the policy experiment on esops as part of china s reform of its state owned enterprises and it was abruptly terminated 2 years after initiation this policy experiment resulted in an exogenous sample of esops that allows us to provide the first evidence from chinese firms on the performance esop relation after examining a variety of performance measures including roa roe tobin s q and productivity we find little difference in performance between esop firms and non esop firms

unequal assignment and unequal promotion in job ladders in this study gender differentials in professional status attainment are analyzed in the theoretical literature unequal treatment of females is often rationalized by their higher probability of quitting to test this hypothesis empirically we use data from the austrian microcensus and find that neither the risk of childbearing nor different productive characteristics can explain the crowding of females in lower hierarchical positions females have to fulfill higher ability standards to be promoted work experience is not rewarded in the same manner as it is for men

the influence of black markets on a queue rationed centrally planned economy abstract in centrally planned economies in which prices are fixed and the rationing mechanism is waiting line queues we show that an equilibrium of waiting times exists we then introduce a black market in which individuals can trade commodities that they have acquired through the official economy an equilibrium of black market prices and waiting times is shown to exist further the economy with a black market is queue efficient however the introduction of black markets is not necessarily a pareto improvement over an economy without black markets even when we allow winners to compensate losers

the politician and his banker should the european union grant state aid through an institution like the european investment bank this paper evaluates the efficiency of different measures for granting state aid we use a theoretical model with firms that differ in their creditworthiness and compare different types of subsidies with indirect subsidization through public banks we find that in a large parameter range the politician prefers public banks to direct subsidies because they avoid windfall gains to entrepreneurs and they economize on screening costs for similar reasons they may increase social welfare relative to subsidies one important prerequisite for this result is that public banks must not be allowed to fully compete with private banks however from a welfare perspective a politician uses public banks inefficiently often

a study of the impact of sectoral shifts on aggregate unemployment in canada the recent trend in macro economic literature has been to explain cycles in aggregate output and employment in terms of unexpected nominal shocks only in these models the natural rate of unemployment is constant this paper diverges from this approach and following a recent paper by david lilien 1982 considers the impact of real as well as nominal variables the main findings are 1 a significant part of the fluctuations in the canadian unemployment over the 1957 83 period was caused by real shocks to the economy and 2 most of the transmission of the business cycle from the united states to canada is effected through real variables as well une etude de limpact de deplacements sectoriels sur le niveau de ch6mage agrege au canada dans la litterature macroeconomique recente on a eu tendance a expliquer les cycles dans le niveau de la production et de l emploi a peu pres strictement en termes de chocs nominaux non anticipes dans ces modeles le taux de ch6mage naturel est constant ce memoire prend des distances par rapport a cette approche et suit pluto t la direction suggeree par un memoire recent de david lilien qui considere l impact des variables reelles tout autant que celui des variables nominales les resultats principaux sont 1 une portion significative des fluctuations dans le niveau du chomage canadien entre 1957 et 1983 a et causee par des chocs reels subis par l economie 2 le gros de h1 transmission du cycle economique des etats unis vers le canada se fait par le truchement des variables reelles

why trading speed matters a tale of queue rationing under price controls we show that queue rationing under price controls is one driver of high frequency trading uniform tick sizes constrain price competition and create rents for liquidity provision particularly for securities with lower prices the time priority rule allocates rents to high frequency traders hfts because of their speed advantage an increase in relative tick size defined as uniform tick sizes divided by security prices increases the fraction of liquidity provided by hfts but harms liquidity we find that the message to trade ratio is a poor cross sectional proxy for hfts liquidity provision stocks with more liquidity provided by hfts have lower message to trade ratios received september 15 2015 editorial decision october 7 2017 by editor robin greenwood

infrastructure and public utilities privatization in developing countries should governments in developing countries promote private ownership and deregulated prices in noncompetitive sectors or should they run publicly owned firms and regulate prices at the expense of rents to insiders a theoretical model is used to answer these normative questions the analysis focuses on the tradeoff between fiscal benefits and consumer surplus during privatization of noncompetitive sectors privatization transfers control rights to private interests and eliminates public subsidies yielding benefits to taxpayers at the cost of increased prices for consumers in developing countries where budget constraints are tight privatization and price liberalization may be optimal for low profitability industries but suboptimal for more profitable industries and once a market has room for more than one firm governments may prefer to regulate the industry without a credible regulatory agency regulation is achieved through public ownership

occupational segregation and career advancement abstract this paper analyzes women s job choice in order to discriminate between different theories we model the joint determination of occupation and career advancement our results support the crowding hypothesis of occupational segregation and are against human capital and compensating wage differentials explanations

sex discrimination and competition in product and labour markets theoritical explanations for wage discrimination collapse in the long run because competition should drive discriminations firms out of the market in product markets with imperfect competition em

the gender pay gap fringe benefits and occupational crowding using data from the 1991 national longitudinal survey of youth the authors estimate earnings equations for each of seven occupational categories and the aggregate sample when fringe benefits are excluded from the compensation measure a gender coefficient is statistically significant that is women are found to have received significantly lower compensation than men within six of the seven occupational categories the exception being the most female dominated category when an index of compensation that includes fringe benefits is used however a gender coefficient is significant in only one category which contains relatively heterogeneous jobs gender specific regressions are used to estimate what part of the earnings gap between men and women is due to differences in traits the results indicate that occupational assignment is the primary determinant of the pay gap a result that is consistent with a crowding explanation of that gap

international effects of stock market dispersion we study the extent to which stock market dispersion is related to unemployment and output growth for 16 countries over 20 years using panel vector auto regressions and panel dynamic regressions we find increases in stock market dispersion across industries to induce future increases in unemployment and future decreases in industrial production ip growth moreover the responses of unemployment and ip growth following a positive shock to stock market dispersion are persistent and are robust to various controls sample periods and estimation methods our article provides cross country evidence in support of the hypothesis that shifts in demand across industries negatively affect employment

the performance effect of managerial ownership evidence from china abstract by examining a sample of non listed chinese firms we provide the first evidence from china for the effect of managerial ownership on firm performance in matching sample comparisons we find that firms of significant managerial ownership outperform firms whose managers do not own equity shares our further results indicate the relation between firm performance and managerial ownership is nonlinear and the inflection point at which the relation turns negative occurs at ownership above 50 compared with previous studies our results are less likely to suffer from an endogeneity problem due to the non list nature of our sample and the unique institutional environment in china

the anatomy of the directive capacity of the socialist state this article discusses the problem of the directive capacity of the socialist state defined as the ability to identify opportunities available within both the domestic and international political economy and to develop and implement policies the focus is not on how the directive capacity of the socialist state is actually used by the elites but on the identification of basic mechanisms shaping it the following questions are addressed what is the relationship between politics and economics in state socialism and how does it determine directive capacity what are the underlying structures that shape the socialist state economy interaction what mechanisms have developed within the framework of state socialism that compensate for lack of pressures toward higher efficiency what are the system s limitations and what strategies are available to increase the directive capacity

the myth of the east asian miracle the macroeconomic implications of soft budgets gregate risk let us call the aggregate of the high risk projects the risky project and the aggregate of the other projects the low risk project it is easy to imagine that within a broad range of the parameters a rational risk averse investor would diversify her investment portfolio between the assets of these two projects reflecting the desire for a higher return and at the same time the desire to avoid excessive risks meanwhile the total investment savings of the investor should reflect the individual s balance between currenit and future consumption

heterogeneous preferences compensating wage differentials and comparable worth this paper sets up a general equilibrium model of a world of heterogeneous jobs and heterogeneous tastes and uses the model to i analyze the effects of employer discrimination and ii predict the likely consequences of requiring equal pay for jobs of comparable worth it shows that employment of both women and men is likely to fall as a result of comparable worth it also shows that when individuals tastes are heterogeneous neither comparable worth nor the simple model of compensating differentials on which it is based provides useful insights into wage determination in particular when tastes are heterogeneous there is no reason to expect equal pay for jobs of comparable worth even in the absence of employer discrimination

sectoral shifts and cyclical unemployment a substantial fraction of cyclical unemployment is better characterized as fluctuations of the frictional or natural rate than as deviations from some relatively stable natural rate shifts of employment demand between sectors of the economy necessitate continuous labor reallocation since it takes time for workers to find new jobs some unemployment is unavoidable this paper presents evidence that most of the unemployment fluctuations of the seventies unlike those in the sixties were induced by unusual structural shifts within the u s economy simple time series models of layoffs and unemployment are constructed that include a measure of structural shifts within the labor market these models are estimated and a derived natural rate series is constructed

economic adjustment and political forces poland since 1970 postwar poland has experienced relatively great economic instability and recurring political upheavals at least by east european standards recent dramatic developments include a severe economic crisis following an extended period of spectacular growth the collapse of the once popular leadership of edward gierek the creation of the first independent trade unions under a communist regime and the replacement of party with military rule bear witness to the severity of poland s political disruptions have economic or political factors caused the economic crisis which are the critical factors escalating internal political tensions and enormous external political pressures have caused poland s current economic collapse preventing the successful implementation of adjustment policies the underlying sources of these political forces namely worker disillusionment with communist practices and confrontational relations between the superpowers have not eased to date the current malaise is likely to continue for some time

reform without losers an interpretation of china s dual track approach to transition this paper develops a simple model to analyze the dual track approach to market liberalization as a mechanism for implementing efficient pareto improving economic reform that is reform achieving efficiency without creating losers the approach based on the continued enforcement of the existing plan while simultaneously liberalizing the market can be understood as a method for making implicit lump sum transfers to compensate potential losers of the reform the model highlights the critical roles of enforcement of the plan for achieving pareto improvement and full liberalization of the market track for achieving efficiency we examine how the dual track approach has worked in product and labor market liberalization in china

tests of the chronic shortage hypothesis the case of poland in the analysis of econometric disequilibrium models it is common to test the n ull hypothesis of equilibrium against the disequilibrium alternat ive this paper tests the null hypothesis of all excess demand tha all observations correspond to positive excess demand against the alternative that permits excess demand of either sign the auth ors use a test due to rogers 1984 which their monte carlo experime nts suggest performs well in small samples as well as a quasi like lihood ratio test which is a suggestive heuristic procedure the da ta are from the aggregate consumption goods market in poland 1955 80 and the paper is thus a test of j kornai s assertion that chroni c shortage characterizes such cpes the results conclusively reject the all excess demand hypothesis for the polish case and the rogers test promises to be of considerable practical use copyright 1988 by mit press

trends in earnings differentials by gender 1971 1981 this paper clarifies trends in relative earnings by sex over the decade 1971 1981 and decomposes these trends to determine which factors contributed to a decline and which to an increase our analyses are based upon data from the annual demographic files of the current population survey for 1972 and 1982 this study is unique in that it estimates earnings functions in each year which are corrected for selectivity bias it is found that such a correction markedly raises the progress of white women relative to men among blacks the impact of the selectivity bias correction was to substantially lower the relative earnings increase of women however the coefficients on the selectivity variable were not significant the findings suggest declining sex role specialization and discrimination as conventionally measured over the decade on the other hand contrary to expectations the total effect of variables reflecting the sex composition of the individuals occupation worked to widen the sex differential over the period the sex differential was also adversely affected by a decline in the relative return to education especially for whites authors modified

recent theoretical work on the soft budget constraint the soft budget constraint is a syndrome that was identified and studied by janos kornai in his analysis of centrally planned economies see kornai 1980 the syndrome is said to arise when a seemingly unprofitable enterprise is bailed out by the government or the enterprise s creditors in other words the enterprise is not held to a fixed budget but finds its budget constraint softened by the infusion of additional credit when it is on the verge of failure kornai viewed the soft budget constraint as a crucial ingredient for explaining the salient features of socialist economic performance in particular the pervasiveness of shortages one interesting puzzle is why centrally planned economies have been particularly susceptible to the influence of the soft budget constraint the capitalist world is hardly immune as the recent financial crisis in asia attests but on the whole it has proved less vulnerable indeed the very origin of the soft budget constraint and the mechanism by which it gives rise to shortages and other undesirable effects are also obviously important questions although kornai s work has long been well known and appreciated answers to these associated theoretical questions have been hazarded only recently in maskin 1996 i surveyed some of the initial efforts in this direction including mathias dewatripont and maskin 1995 which argues that centralization of credit can give rise to soft budget constraints because it facilitates the refinancing of

the gap between male and female pay in the spanish tourism industry abstract this paper analyzes wage differentials between male and female workers in the spanish tourism industry using a large administratively matched employer employee data set obtained from a representative sample of companies this allows us to control for unobserved firm specific factors likely to affect the magnitude of the gender wage gap our findings indicate that male workers earn on average 6 7 higher monthly wages than their socially comparable female counterparts in particular the type of contract held the qualifications required for the job and the specific sub sector of employment are very important variables in explaining this gender wage difference we also find that only around 12 of the mean wage difference in the tourism industry cannot be explained by differences in observable characteristics which is well below the average for the rest of the industries in spain 87 our interpretation is that minimum wage legislation provides a particularly effective protection to women in the tourism industry which is characterized by a large number of low wage earners

measures of shortage and monetary overhang in the polish economy this paper attempts to cast light on the debate about the existence and size of a monetary overhang in household money balances in command economies four measures of shortage or price deformation are constructed for the polish economy and used to test for the existence of shortage money balances in poland 1965 1989 the approach involves estimating relationships for household money balances 1965 1993 a period that spans both central planning and the post 1990 period of liberalised prices the principal finding is that the evolution of household money balances in poland cannot be explained without invoking measures of shortage and an overhang during the planning period the estimates suggest an overhang with a maximum of just over 40 of money balances

a dynamic model of trade frictions and disequilibrium in the housing market a dynamic stock flow model is developed to analyze and simulate housing markets with partial rent control trade frictions and spillovers a notion of equilibrium is suggested and related to walrasian equilibrium existence uniqueness and comparative statics properties of equilibria are analyzed in some examples of housing markets with and without price control stability properties and dynamic responses to demand and supply shocks are studied by means of computer simulations in a final simulation experiment a black market for rent controlled dwelling units is introduced

new evidence on sex segregation and sex differences in wages from matched employee employer data we use new matched employer employee data to estimate the contributions of sex segregation and wage differences by sex within occupation industry establishment and occupation establishment cells to the overall sex gap in wages in contrast to earlier data used to study this question our data cover all industries and occupations across all regions of the united states we find that segregation of women into lower paying occupations industries establishments and occupations within establishments accounts for a sizable fraction of the sex gap in wages nonetheless approximately one half of the sex gap in wages remains attributable to the individual s sex

agricultural productivity under socialism abstract this paper comprises an analysis of the causes of the disappointing development of agricultural productivity under state socialism stress is laid on the underlying theoretical explanation the inadequacies of marxist agrarian theory these are excessive stress on economies of scale exaggerated expectations concerning the gains from abolishing private ownership and failure to foresee the costs of the one nation one factory model use is made of empirical material about the ussr china and other countries

demand for grazing on public lands a disequilibrium approach a demand function for grazing on western public rangelands is estimated since the federal government sets the grazing fee and rations the quantity of animal unit months aums a disequilibrium market model is developed the estimate of own price elasticity of demand 0 178 suggests a 0 82 percent revenue gain for a 1 percent fee increase results show that most western states experienced excess supply of aums since the mid 1980s suggesting a relatively high fee the levels of demand and effective supply vary substantially across states this implies that state or region specific factors should be incorporated in setting the grazing fee

sectoral shifts and cyclical unemployment reconsidered this paper develops a new measure of reallocation shocks based on the variance of industry stock market excess returns to assess the contribution of sectoral reallocation to unemployment in the postwar u s economy the beveridge curve relationship is used to establish that this series isolates reallocation shocks reallocation shocks are found to explain only a moderate share of the fluctuations in aggregate unemployment on average over the period however reallocation accounted for a substantial share of increases in unemployment in several episodes particularly the mid 1970s reallocation shocks also account for a larger share of fluctuations in unemployment of longer durations than of shorter durations

a theory of bot concession contracts in this paper we discuss the choice for build operate and transfer bot concessions when governments and firm managers do not share the same information regarding the operation characteristics of a facility we show that larger shadow costs of public funds and larger information asymmetries entice governments to choose bot concessions this result stems from a trade off between the government s shadow costs of financing the construction and the operation of the facility and the excessive usage price that the consumer may face during the concession period the incentives to choose bot concessions increase as a function of informational asymmetries between governments and potential bot concession holders and with the possibility of transferring the concession project characteristics to the public authority at the termination of the concession

stabilization and recession in a transitional economy the case of poland abstract this paper analyzes the polish experiences in 1990 of the stabilization shock therapy implemented simultaneously with the set of system transforming reforms the orthodox exchange rate based stabilization program brought about a substantial reduction in inflation and the establishment of market clearing prices but the economy fell into unexpectedly deep recession our findings suggest that the recession which has been common to all postsocialist countries was mainly caused by a system specific output decline related to the dismantling of a centrally planned system and the transition to market economy

short and long run credit constraints in french agriculture a directional distance function framework using expenditure constrained profit functions this empirical application investigates the eventual presence of credit constraints using a panel of french farmers the credit constrained profit maximization model proposed by fare grosskopf and lee is extended in three ways first we rephrase the model in terms of directional distance functions to allow duality with the profit function second we model credit constraints in the short run and investment constraints in the long run using short and long run profit functions third we lag the expenditure constraint one year to account for the separation between planning and production we find empirical evidence of credit and investment constraints financially unconstrained farmers are larger perform better and seem to benefit from a virtuous circle where access to financial markets allows better productive choices

industrial capitalisation and spatial transformation in chinese cities strategic repositioning state owned enterprise capitalisation and the reproduction of urban space in beijing this study examines the urbanisation of capital in the context of a socialist economy undergoing profound market transition it identifies the dynamics of state capital as a missing link in understanding the variegated forces shaping chinese cities through a case study of beijing china s capital city contrary to the popular perception of the rolling back of state owned enterprises soes as a natural outcome of capital switching from a declining primary circuit to a booming secondary circuit this empirical study of urban transformation in the beijing metropolis identifies an intriguing trajectory of capitalisation without privatisation whereby the commodification of the land and housing market has been accompanied by a growing share of capital assets under the ownership control of soes and a spatial concentration of state capital toward the city centre since the turn of the new century the development experience centred on the capitalisation of soes is shown to be reflective of the new strategic

socialist economics the disequilibrium school and the shortage economy the economics literature about behavior and policy in the stylized socialist economy has passed through three main phases the first phase emanated essentially from the barone lange von mises debate before world war ii its main focus was on how a socialist economy could operate efficiently in the absence of markets and private property the second phase occurring mostly since world war ii has been concerned primarily with coming to grips with the organization institutions and planning process of economies that profess to have realized some form of the ideal socialist economy several writers have sought to generalize on the basis of these empirical features without really aiming at a rigorous formal theory of the various agents in a centrally planned economy the third phase has occurred since the mid 1970s when some began to work out propositions on and formalize models of micro and macroeconomic behavior in stylized centrally planned economies and sought to buttress their theoretical approach with macroeconometric measurements that have since been used as a platform for formulating policy recommendations there have been three main strands in this third type of inquiry ickes 1984

stagflationary effects of stabilization programs in reforming socialist countries enterprise side and household side factors dismantling subsidies could give rise to serious macroeconomic difficulties in the short run this article explores a view based on the enterprise sector as a central source and main channel of the stagflation phenomenon using as an example the stagflation that followed the 1990 stabilization program in poland the stagflation phenomenon is linked to features of the financial market that are somewhat peculiar to reforming socialist economies the weak credit links between households and enterprises and the existence of large interenterprise debt the policy implications of the enterprise side view include more explicit consideration of initial conditions in the credit market implementation of privatization schemes and the development of a domestic banking

modelling parallel markets in centrally planned economies the case of the automobile market in poland most empirical work dealing with socialist economies appears to be oriented towards macroeconomic problems or at least to the study of highly aggregated time series examples are provided by howard 1976 lacko 1975 podkaminer 1982 portes and winter 1980 portes et al 1983 1984a b 1985 welfe 1983 and charemza and gronicki 1988 only relatively infrequently has a particular market been the target of detailed empirical investigation a case in point is the study of the hungarian car market by kapitany kornai and szabo 1984 and chapter 15 of this volume

external ambition and economic performance realist approaches to international politics raise the possibility that external policies based on expanding military power may undermine the economic bases of that power the links between external strategy and economic performance can be classified as fiscal macroeconomic effects structural microeconomic and structural effects and protectionist effects on foreign economic policy the case of prewar japan suggests that for countries at an intermediate position in the international power hierarchy and in the international division of labor the positive effects of external ambition on economic performance may dominate other cases national socialist germany contemporary developing countries and the postwar superpowers seem to confirm that international position is a principal determinant of these effects

stock market dispersion and unemployment abstract the sectoral shifts hypothesis advanced by lilien 1982 and davis 1987 suggests that unemployment is in part the result of resources being reallocated from declining to expanding sectors of the economy using u s data from 1931 to 1987 we test this hypothesis by constructing an index measuring the dispersion among stock prices from different industries we find that lagged values of this index significantly affect unemployment we show that the stock market dispersion index is less contaminated by aggregate demand influences than lilien s employment dispersion index which makes our test less vulnerable to the abraham and katz 1986 critique

financial structure and reforms in central and eastern europe in the 1980s abstract the paper analyzes the evolution of the financial structure of the countries of central and eastern europe during the 1980s in these countries the financial system is assigned a limited and mostly passive function this needs to be seen in the context of the allocative system of centrally planned economies where the transfer of financial resources between sectors is largely performed directly by the state through the price system taxes and subsidies the analysis focuses specifically on hungary poland and czechoslovakia the development of their financial structure is assessed through a number of quantitative indicators we find that the partial economic and financial reforms introduced in hungary and poland before 1989 did not substantially modify the role and performance of the financial system whose size in relation to the real economy remained modest at the same time however the reforms exacerbated some of the distortions of the planned system and generated larger macroeconomic imbalances the effects of which tend to cloud the interpretation of financial indicators at the end of 1980 the banking systems of hungary and poland although formally decentralized continued to allocate credit mostly according to automatic criteria and had virtually no experience in assessing and monitoring borrowers and investment projects in this respect they differed little from that of czechoslovakia which remained based on the classic model of a single state bank

unemployment in canada and the united states reduced form unemployment equations containing aggregate demand structural and frictional variables are estimated for canada and the united states post 1981 increases in unemployment rates are explained almost entirely by aggr egate demand variables although structural sectoral variables make i mportant contributions to changes in the gap between the two countrie s unemployment rates for both countries the results support the fo llowing monetarist propositions monetary variables are the prime determinants of the business cycle exogenous investment shocks are typically of minor importance and macro policy has tended to be dest abilizing

federalism and the soft budget constraint the government s incentives to bail out inefficient projects are determined by the trade off between political benefits and economic costs the latter depending on the decentralization of government two effects of federalism are derived first fiscal competition among local governments under factor mobility increases the opportunity costs of bailout and thus serves as a commitment device the competition effect second monetary centralization together with fiscal decentralization induces a conflict of interests and thus may harden budget constraints and reduce inflation the checks and balance effect the authors analysis is used to interpret china s recent experience of transition to a market economy copyright 1998 by american economic association

the impact of sectoral shifts and the aggregate labour market on unemployment duration this study investigates the effects of sectoral shifts among industries on unemployment duration these effects are decomposed into two subeffects the overall effect and the specific industrial effect the former is equal for all of the unemployed in all industries while the latter depends on the tightness of the demand for labour of the industry in question in addition the impact of the aggregate labour market on unemployment duration is also explored the empirical results show that most of the overall and all of the specific effects are significant indicating that the sectoral shifts among industries as well as the aggregate labour market do in fact impact unemployment duration and that the effects on unemployment duration vary in terms of their tightness in the different industrial labour markets

unemployment insurance and unemployment dynamics one of the puzzling features of the recent behavior of the canadian unemployment rate is its persistence in the presence of a sustained expansion in real national income neither deficient aggregate demand nor a once for all supply side induced increase in the natural rate provides a convincing explanation of this phenomenon this paper presents a model that explains how aspects of unemployment insurance in canada will cause persistence unemployment will be highly serially correlated even if output is not the authors document the increased persistence of the unemployment rate since 1977 and show that the model accounts for much of this phenomenon

inflation or monetary overhang planners preferences in china two models based on utility maximization of economic planners are developed to explain the stock of households money holdings and rate of open inflation in china for the period 1954 85 planners preferences are found to be biased in favour of monetary overhang this bias was reinforced when the bargaining strength of planners vis a vis households was weakened and during the post mao reform period this could help to explain the increase in the value of rents and level of corruption during the reform period

a dynamic model of soft budget constraint abstract we study the soft budget constraint by dynamic models and conclude that the soft budget constraint originated in the investment activities do not match the profit function and policy burdens will intensify the soft budget constraint

hungary s transition to the market the case against a big bang hungary paul hare and tamas revesz among eastern european countries hungary s great advantage is that it began economic reforms in 1968 and slowly introduced the institutions of a market economy during the 1980s these measures laid the foundation for a gradual transition to the market without the need for any sharp break with the past policy mistakes were of course made the most serious extending over several years was the 1970s investment boom funded by foreign capital which contributed to hungary s large debt burden despite this the government accounts are not now in substantial deficit and the balance of payments on current account is in modest surplus nevertheless managing the external debt is now the most difficult of hungary s problems it is important that hungarian joint ventures and privatization are now attracting significant quantities of foreign capital given the quite rapid pace of liberalization since the late 1980s the government s commitment to further changes and a reasonably satisfactory macroeconomic balance though inflation is worrying there is no case for a big bang approach in hungary such a shock could only disrupt established market relationships and expectations with little benefit the most valuable forms of aid for hungary would be debt relief and unrestricted access for hungary s products to ec markets

rethinking internal labor markets new insights from a comparative perspective internal labor markets take different forms in the capitalist and the socialistfirm as the distinctive organizational problems in each economic system produce differing but comparable institutional solutions analysis of systemic uncertainties and the organizational responses of workers and managers yields a comparative model of mirrored opposition in economies in which the firm operates in a market environment systemic uncertainties regarding labor are reduced through internal bureaucratic rules operating according to a classificatory logic in the socialist economy by contrast where systemic uncertainties are produced by a bureaucratic environment the firm responds through internal market transactions based on affiliative ties the market like character of these internal mechanisms is brought into even sharper relief in an analysis of the recent establishment in hungary of semi autonomous subcontracting units inside the enterprise

cyclical fluctuations and sectoral reallocation evidence from the psid abstract this paper documents the correlation between permanent sectoral reallocation and the business cycle using data from the michigan panel study of income dynamics we find that the outflow of workers from goods to services accelerates during recessions the flow from services to stable employment in surables accelerates during booms we also document the contribution of sectoral reallocation to total unemployment permanent switchers account for about a quarter of the total weeks of unemployment during booms this proportion rises to nearly 40 duing recessions

introduction state structures political processes and collective choice in cmea states the similarity of state structures throughout eastern europe helps to explain why the reactions of states in that area to the international economic disturbances of the past decade resemble each other and why they differ from those of states outside the socialist bloc similar state structures however do not explain why the economic strategies of the east european states themselves in response to international economic shocks in the 1970s and 1980s diverged so noticeably the role of state structure is to define kto kovo who can do what to whom relationships in the state and economy in this way state structures define problems that political leaders must solve possibilities among which they may choose and political resources and allies upon which they may draw in the course of their decision making in contrast strategy choices what is to be done are the outcomes of political processes in which leaders mobilize resources and allies to capture positions of power from which they can pursue the purposes they advocate thus differences in foreign economic strategies among member states in the council for mutual economic assistance reflected differences in the dynamic interaction of the form and content of political processes that occurred within common state structures

long term trends in inventory investment in traditional market and post socialist economies abstract inventories form a small but important part of national wealth and constitute the most volatile component of gdp their moves are important indicators of the dynamics of the economy both at the micro and macro level in this paper the authors venture to explain long term macroeconomic inventory investment trends from new perspectives we compiled a data set of 24 oecd countries for the 1970 2011 time period and addressed three sets of questions how can inventory investment be characterised in the sample countries and what are the general tendencies does the analysis on the substantially larger data set compared to those in our previous studies verify earlier results regarding the declining global trend in inventory investment and the convergence of inventory features in different countries a quarter of a century ago a substantial change in the economic systems of certain oecd countries took place the transition of central eastern european countries from planned to market economies the difference in inventory behaviour in the two sets of countries was obtrusive before the transition the changes following the transition reveal very important consequences of systemic changes are there substantial connections between fundamental country characteristics and inventory behaviour can regression and correlation analysis reveal some decisive relationship between certain macroeconomic indicators and inventories our analysis resulted in mostly positive or at least meaningful answers to the above questions and opened up a broad field for further research

slack shortage and discouraged consumers in eastern europe estimates based on smoothing by aggregation as a consequence of aggregation over markets the observed quantity may be less than the quantity demanded and less than the quantity supplied to deal with such situations a new technique is proposed for estimating demand and supply curves and the extent of shortage and slack the technique is applied to the consumption goods markets of czechoslovakia the german democratic republic hungary poland and yugoslavia it is found that shortage even corrected for a discouraged consumer effect is seldom as great as slack

incentives equality and contract renegotiations theory and evidence in the chinese banking industry renegotiation plays an important role in contract theory but the empirical study of renegotiation is almost non existent in the literature using a unique dataset from the chinese banking industry we find that the large majority of managerial incentive contracts are renegotiated after performances are realized we develop a model of contract renegotiation where supervisors and managers sign incentive contracts and then renegotiate them in the unique equilibrium of the model incentive contracts are almost always renegotiated ex post even though renegotiation is fully anticipated incentive contracts affect performance the predictions of the model find strong support from our empirical results

applying fixed effects to hierarchical segregation models this paper investigates whether the filing of a title vii class action lawsuit initiated a change in discriminatory promotion patterns at a regional grocery store chain by expanding the empirical implementation of hierarchical segregation models in a panel setting we develop a variation of wage decompositions that takes into consider ation an unbalanced panel design and extends the literature by explicitly formalizing the inclusion of the unobserved heterogeneous effects while there have been many studies that pro

new market socialism a case for rejuvenation or inspired alchemy the aim of this paper is to examine the relative merits and drawbacks of two recent models of market socialism proposed by bardhan and roemer this is done first by putting these models into the perspective of the history of economic thought thus after presenting the basic elements of the early lange model as well as the austrian and new information economics critiques the necessary comparisons and contrasts are made to see what new light these new models bring into this debate in addition the internal consistency and coherence of these models is checked in terms of their own proclaimed goals last a more radical methodological critique is provided copyright 2003 oxford university press

output targets the soft budget constraint and the firm under central planning abstract the paper considers the case of an expected profit maximizing firm which has an output target imposed on it by central planners and which may receive partial bailouts if its operating profit is negative the model contains several sources of uncertainty the paper compares the amounts of input use in the pure bailout case the pure output target case the bailout with output target case and the standard competitive case both theoretically and with numerical experiments

sectoral shifts and aggregate unemployment additional empirical evidence 1990 sectoral shifts and aggregate unemployment additional empirical evidence applied economics vol 22 no 3 pp 331 346

soft budget constraints and regional industrial policy reinterpreting the rise and fall of delorean the rise and fall of delorean motor cars limited has traditionally been interpreted as either the result either of john delorean s psychological flaws or as confirming the supposed limitations of activist industrial policy however when the episode is examined in greater historical detail neither of these interpretations is compelling the reinterpretation outlined here draws on institutional analysis as well as a range of archival sources much of it previously unreleased the inefficiencies within the original contractual agreement are highlighted the lack of credibility associated with this agreement was in turn traceable to the institutional environment with its associated risk reward implications under which industrial policy operated this environment had a political element it had been distorted by the troubles and the resulting fears policymakers had of a cumulative causation relationship between violence and unemployment officials in belfast against treasury opposition advocated state led entrepreneurship as a policy response

technological progress and factor utilization in eastern european economic growth frontier production functions are estimated for the industrial sector of four east european countries czechoslovakia the german democratic republic hungary and poland the estimates reveal that the slowdown in industrial growth in these countries is due to a decline in the efficiency or intensity of factor utilization rather than to declining rates of growth of technological progress in all countries changes in the efficiency of resource utilization are found to be more responsive to changes in macroeconomic policies than to economic reforms finally the amount of labor that could be displaced during cyclical downturns is estimated and found to imply potentially high levels of disguised unemployment copyright 1989 by the london school of economics and political science

payment system reform in formerly centrally planned economics abstract the payment system is a linchpin of a functioning market economy but existing payment systems in many formerly centrally planned economies are in a primitive state reflecting the legacy of the monobank system the wholesale payment system can play a fundamental role in facilitating the efficient exchange of goods services and assets and is particularly important in fostering the development of a money market which in turn is a precondition for market based implementation of monetary policy in reforming the payment system some important policy issues especially the allocation of settlement risk need to be addressed

sectoral shifts stock market dispersion and unemployment in canada considerable attention has been given in the last ten years to estimation of the importance of sectoral shifts in explaining short term fluctuations in unemployment recent studies have used us stock prices data to develop indexes of sectoral shocks less affected by cyclical influence than lilien s employment dispersion index two indexes of sectoral shifts for canada based on the sectoral dispersion of stock prices growth rates are calculated these indexes are then used in unemployment equations incorporating variables measuring aggregate demand shocks and structural changes in order to assess the importance of sectoral and cyclical shocks in the determination of the canadian unemployment rate the estimation leads to the conclusion that the major recessions of 1981 82 and 1990 91 have been caused by aggregate demand shocks however both types of shocks contributed to the 1974 75 recession while the mild recession of 1980 was accompanied by an important sectoral shock estimations also show that the mo

the timing of elections in federations a disciplining device against soft budget constraints we introduce political economics into the soft budget constraint problem by asking if the timing of elections has the potential to harden budget constraints specifically we ask under which circumstances the soft budget constraint problem is worse with synchronized elections i e simultaneous central and regional office terms or with staggered elections i e terms of office that do not coincide we find that staggered elections clearly improve fiscal discipline at the local level as well as welfare