an empirical analysis of post merger organizational integration we study post merger organizational integration using linked employer employee data integration is implemented by reassigning a small number of high skilled workers especially in r d and management workforce mixing is concentrated to establishments set up after merger rather than to previously existing establishments worker turnover is high after merger but new hiring yields stable total employment target employees have higher turnover and reassignment particularly if the target firm is small relative to the acquiring firm these findings might suggest that integration is costly but can be achieved by focusing on key employees alternatively the reassignment of a few key employees is sufficient for achieving integration

the political economy of linguistic cleavages article i nfo this paper uses a linguistic tree describing the genealogical relationship between all 6912 world languages to compute measures of diversity at different levels of linguistic aggregation by doing so we let the data inform us on which linguistic cleavages are most relevant for a range of political economy outcomes rather than making ad hoc choices we find that deep cleavages originating thousands of years ago lead to better predictors of civil conflict and redistribution the opposite pattern emerges when it comes to the impact of linguistic diversity on growth and public goods provision where finer distinctions between languages matter 2011 elsevier b v all rights reserved

the dilemmas of market socialism capital market reform in china part i bonds this two part article analyses the attempts to reform the socialist financial system in china by diversifying financial assets and introducing capital markets the approach used is that of political economy in the sense of elucidating the interplay between political and economic interests actors and issues in the reform process part i discusses the issue of bonds by governments and enterprises although the reform era has seen gradual progress towards something resembling a bond market in terms of a diversification of bond types and growing competition between bond issues there is no evidence that this has improved allocative efficiency in the economy rather bonds have functioned as one instrument in a complex struggle for resources between political institutional and economic actors in the context of a continuing shortage economy this competitive system falls far short of a true market rather it embodies powerful systemic factors reflecting the basic structural and institutional features o

wages mobility and firm performance advantages and insights from using matched worker firm data to illustrate the wide applicability of longitudinal matched employer employee data we study the simultaneous determination of worker mobility and wage rates using an econometric model that allows for both individual and firm level heterogeneity the model is estimated using longitudinally linked employer employee data from france structural results for mobility show remarkable heterogeneity with both positive and negative duration dependence present in a significant proportion of firms the average structural returns to seniority are essentially zero but this result masks enormous heterogeneity with positive seniority returns found in low starting wage firms

monetary policy and exchange rate volatility in a small open economy we lay out a small open economy version of the calvo sticky price model and show how the equilibrium dynamics can be reduced to a simple representation in domestic inflation and the output gap we use the resulting framework to analyse the macroeconomic implications of three alternative rulebased policy regimes for the small open economy domestic inflation and cpi based taylor rules and an exchange rate peg we show that a key difference among these regimes lies in the relative amount of exchange rate volatility that they entail we also discuss a special case for which domestic inflation targeting constitutes the optimal policy and where a simple second order approximation to the utility of the representative consumer can be derived and used to evaluate the welfare losses associated with the suboptimal rules

variance properties of solow s productivity residual and their cyclical implications abstract for the united states economy 1960 1989 the correlation between the growth rates of the solow residual and the real price of energy government spending is 0 55 0 09 this study develops a model to see if it quantitatively captures the endogenous transmission mechanism underlying the observed solow residual correlations it does the transmission mechanism depends on endogenous capital utilization incorporating shocks to true technology energy prices and government spending the model economy accounts for 76 or 89 percent of u s output volatility and is generally consistent with features of u s business cycles

do wages rise with job seniority a reassessment the authors provide new estimates of the return to job seniority using a dataset similar to that employed in joseph altonji and robert shakotko do wages rise with job seniority review of economic studies 1987 and robert topel specific capital mobility and wages journal of political economy 1991 they consider the strengths and weaknesses of these studies treatment of economy wide trends their dating conventions for tenure and wages their handling of wage observations that might span multiple jobs and their estimation approaches re estimation points to an effect often years of tenure on the log wage equal to 11 which is above the preferred estimate of altonji and shakotko but far below that of topel changes in earnings distributions and in the employment relationship motivate the examination of more recent data perhaps surprisingly the return to tenure has probably increased over time

takeover motives during the conglomerate merger wave this article examines the stock market response to acquisition announcements during and immediately after the conglomerate merger wave of the late 1960s the main finding is that acquirer shareholders benefited from diversification acquisitions which implies that diversification was not driven by managerial objectives it is also shown that the market responded positively to bidders who retained the management of target companies and negatively to bidders who replaced target management this is consistent with the hypothesis that the market favored acquisitions intended to exploit managerial synergies it suggests that the market disliked takeovers that were motivated to discipline target management evidence on buyer and target price earnings ratios is presented that is inconsistent with the conjecture that conglomerates were able to mislead investors by earnings per share manipulation

business cycles in an oil economy abstract the recent oil price fall has created concern among policy makers regarding the consequences of terms of trade shocks for resource rich countries this concern is not a minor one the world s commodity exporters combined are responsible for 15 20 of global value added we develop and estimate a two country new keynesian model in order to quantify the importance of oil price shocks for norway a large prototype petroleum exporter domestic supply chains link mainland non oil norway to the off shore oil industry while fiscal authorities accumulate income in a sovereign wealth fund oil prices and the international business cycle are jointly determined abroad these features allow us to disentangle the structural sources of oil price fluctuations and how they affect mainland norway the estimated model provides three key results first oil price movements represent an important source of macroeconomic volatility in mainland norway second while no two shocks cause the same dynamics conventional trade channels make an economically less significant difference for the transmission of global shocks to the oil exporter than to oil importers third the domestic oil industry s supply chain is an important transmission mechanism for oil price movements while the prevailing fiscal regime provides substantial protection against external shocks

on the job search and the wage distribution the article structually estimates an on the job search model of job separations given each employer pays observably equivalent workers the same but wages are dispersed across employers an employer s separation flow is the sum of an exogenous outflow unrelated to the wage and a job to job flow that decreases with the employer s wage using data from the danish integrated database for labour market research the empirical results imply as predicted by theory that search effort declines with the wage furthermore the estimates explain the employment effect defined as the horizontal difference between the distribution of wages earned and the wage offer distribution

china s macroeconomic performance and management during transition since reforms started in 1978 china has combined rapid growth with moderate price stability this paper analyzes china s macroeconomic performance over the past fifteen years with special attention to factors responsible both for the pace of economic expansion and the periodic fluctuations regarding the former the author identifies four sources of stimuli administrative decentralization high levels of fixed capital investment the elastic supply and quality of the labor force and the increasing volume of savings supplemented in recent years by a large inflow of foreign direct investment future growth with stability calls for controlling and implementing banking and fiscal reform

oil and the macroeconomy since world war ii all but one of the u s recessions since world war ii have been preceded typically with a lag of around three fourths of a year by a dramatic increase in the price of crude petroleum this does not mean that oil shocks caused these recessions evidence is presented however that even over the period 1948 72 this correlation is statistically significant and nonspurious supporting the proposition that oil shocks were a contributing factor in at least some of the u s recessions prior to 1972 by extension energy price increases may account for much of post opec macroeconomic performance

the boundaries of multinational enterprises and the theory of international trade this paper begins with a review of empirical evidence on multinational firms conceptual underpinnings of a theory are developed relying in particular on the notion of knowledge capital as a mobile joint input into geographically separated production facilities this idea is embedded in a simple two country general equilibrium model that supports multinational production in equilibrium under conditions consistent with the empirical evidence the final section examines internalization and shows why certain properties of knowledge capital also imply a preference for transferring technologies internally within the firm rather than through arm s length markets

reform in hungary abstract the paper examines reform issues facing hungary concentrating on sequencing the liberalisation of domestic markets international trade and demonopolisation creating competitive conditions in product and factor markets is a precondition for the success of other reforms trade liberalisation could play a key role but is constrained by the large debt so demonopolisation is a critical first step if privatisation is to be undertaken quickly there is an argument for making transfers proportional to the implied asset value of state pensions and reducing subsequent pension payments

the impact of china s economic reforms on agricultural productivity growth this paper presents a method for assessing the relative importance of price increases and strengthened individual incentives due to the introduction of the responsibility system for the post 1978 increase in china s agricultural productivity data on post 1978 chinese agricultural performance suggest that a little over three quarters of the measured productivity increase is due to payment system changes and the remainder to price increases we also use our method to calculate incentive indices giving an estimate of the fraction of their marginal product that peasants received under the pre 1978 regime

monetary policy and welfare in a small open economy this paper analyzes optimal monetary policy in a small open economy featuring monopolistic competition and nominal rigidities it shows that the utility based loss function for this economy can be written as a quadratic expression of domestic inflation output gap and real exchange rate the presence of an internal monopolistic distortion and a terms of trade externality drives optimal policy away from domestic inflation targeting and affects the optimal level of exchange rate volatility when domestic and foreign goods are close substitutes for each other the optimal policy rule implies lower real exchange rate volatility than a domestic inflation targeting regime the reverse is true when the elasticity of substitution between goods is low

optimal tax rates and tax design during systemic reform abstract budgets in eastern europe are under strain as taxes are reformed and receipts fall should expenditure be maintained or should personal taxes be cut this paper asks how optimal tax rates might respond to a transition in which the government becomes less averse to inequality but the inequality in skills increases these are roughly offsetting and less important than falling enterprise revenue and the decline in the efficiency of personal taxation both of which cause a sharp fall in optimal transfers tax design consists of balancing the diffeiing inefficiencies of incompleteness in indirect tax coverage against evasion prone direct taxes

multinational firms and technology transfer the authors construct an oligopoly model in which a multinational firm has a technology superior to those of local firms in the host country workers employed by the multinational acquire knowledge of the superior technology and can spread their knowledge to local firms by switching employers the multinational chooses to pay a wage premium to prevent local firms from hiring away its workers if the local firms are sufficiently disadvantaged or if there are enough local firms diffusion of the superior technology benefits local firms at the expense of workers whose wages suffer the host government might have an incentive to attract foreign direct investment even when technology transfer will not result because of the wage premium local employees of the multinational firm earn also foreign direct investment with technology transfer may reduce the total economic rent the host country earns

the postsocialist transitions in comparative perspective policy issues and recent experience abstract this paper examines the postsocialist transition in eastern europe the reforms in china and the postdirigiste transitions in latin america the paper analyzes the initial conditions that gave rise to processes of reform in the different countries the main strategies for economic reform shock treatment gradualism and mixed strategies discussing their conditioning factors and rationale the actual record of these policies in terms of key indicators of economic performance such as inflation gdp growth external sector sustainability progress in privatization and the social costs of adjustment in addition the paper discusses interdependencies between economic and political reforms during the course of systemic transformation

language and the theory of the firm we characterize efficient technical languages and study their interaction with the scope and structure of organizations efficient languages use precise words for frequent events and vague words for unusual ones a broader organizational scope allows for more synergies to be captured but reduces within unit efficiency since it requires a more generic language a manager working as specialized translator may also be used to achieve between unit coordination while maintaining separate languages our theory reconciles two recent well documented phenomena within organizations the recent increase in information centralization and the reduction in hierarchical centralization

rational inattention and organizational focus this paper studies optimal communication flows in organizations a production process can be coordinated ex ante by letting agents stick to a prespecified plan of action alternatively agents may adapt to task specific shocks in which case tasks must be coordinated ex post using communication when attention is scarce an optimal organization coordinates only a few tasks ex post those tasks are higher performing more adaptive to the environment and influential hence scarce attention requires setting priorities not just local optimization our results provide microfoundations for a central idea in the management literature that firms should focus on a limited set of core competencies

when does coordination require centralization this paper compares centralized and decentralized coordination when manag ers are privately informed and communicate strategically we consider a multi divisional organization in which decisions must be adapted to local conditions but also coordinated with each other information about local conditions is dispersed and held by self interested division managers who communicate via cheap talk the only available formal mechanism is the allocation of decision rights we show that a higher need for coordination improves horizontal com

does flattening government improve economic performance evidence from china this paper examines a causal relationship between the flattening of a government hierarchy and economic performance by exploiting a panel data set on government reorganization in china from 1995 to 2012 delayering has led to increases in revenue and inter governmental transfers for county governments but the associated enlarged span of control makes it difficult for upper level governments to coordinate and monitor local ones this has led to a reduction in county governments total public expenditure and pro growth expenditure as well as an increase in land corruption overall the flattening of the government hierarchy has a negative effect on economic performance

do wages rise with job seniority many previous studies have found a strong positive effect of job seniority tenure on wages this paper re examines the evidence using a simple instrumental variables scheme to deal with the fact that tenure is likely to be related to unobserved individual and job characteristics that affect the wage we use the variation of tenure over a given job match as the principal instrumental variable for tenure the variation in tenure over the job is uncorrelated by construction with the fixed individual and job match specific components of the error term of the wage equation our main finding is that the partial effect of tenure on wages is small and that general labour market experience and job shopping account for most wage growth over a career the strong cross section relationship between tenure and wages is due primarily to heterogeneity bias prior researchers see mincer and jovanovic 1981 bartel and borjas 1981 borjas 1981 cline 1979 and mellow 1981 and many others have established that job seniority has a strong positive relationship with wage rates in a cross section or a cross section time series of individuals in this paper we re evaluate the evidence concerning the partial effects on wages of job seniority tenure and total labour market experience the extent to which wages rise with tenure is important for several reasons first and foremost the wage tenure profile is a fundamental question about the structure of earnings over careers second the wage tenure profile is a key determinant of the extent to which the earnings power of individuals is tied to specific jobs and it is important for assessment of the losses suffered by displaced workers hamermesh 1984 third evidence that wages rise with job tenure has been used to explain the decline in quits with tenure since the wage growth on the current job lowers the probability that the worker will locate a superior alternative a growing theoretical literature surveyed in parsons 1984 has taken the evidence of a strong wage tenure profile at face value and sought to provide an explanation for the relationship the most prominent explanation is the theory of specific human capital oi 1962 becker 1962 mincer 1974 parsons 1972 kuratani 1973 and hashimoto 1980 in which the growth of wages with tenure holding experience constant is attributed to the worker s share of investments in firm specific skills more recently lazear 1981 has presented a supervision model of wage growth in which firms defer compensation as a means of inducing workers not to shirk freeman 1977 and harris and holmstrom 1982 provide an explanation for wage growth based on an insurance motive salop and salop 1976 nickell 1976 and guasch and weiss 1982 present adverse selection models of wage growth in which firms use a wage tenure profile as a

organizational structure and product choice in knowledge intensive firms this paper formulates a model in which a firm simultaneously chooses its organizational structure and product position the firm s production is knowledge intensive requiring employees to solve problems a vertical hierarchy in which workers refer unsolved problems to managers facilitates the acquisition and leveraging of managers superior knowledge i show that a larger span of control is complementary to the provision of high value products moreover this complementarity is sustained when employees acquire sufficient knowledge and is further strengthened when the firm enhances its capability of communicating knowledge the model yields testable implications concerning 1 the fit between a firm s product position and span of control 2 the effect of information technology on product innovations and skill biased organizational changes and 3 the heterogeneity in hierarchical structure and human resource management in professional service firms this paper was accepted by bruno cassiman business strategy

labour mobility and returns to experience in foreign firms this paper uses finnish linked employer employee panel data to study whether employees are able to appropriate returns to knowledge accumulated in foreign owned firms when moving to domestic firms the estimates indicate that highly educated employees earn a return to prior experience in a foreign owned firm which is over and above the return to other previous experience these employees do not appear to pay for the knowledge they accumulate in the form of lower starting wages in foreign owned firms

how should monetary policy respond to changes in the relative price of oil considering supply and demand shocks abstract this paper examines optimal monetary policy in a new keynesian model where supply and demand shocks affect the price of oil optimal policy fully stabilizes core inflation when wages are flexible the nominal rate rises falls in response to the demand supply shock with sticky wages core inflation falls rises in response to the demand supply shock impulse response functions from a var estimated with post 1986 u s data show minimal movement in core inflation in response to both shocks the federal funds rate rises falls in response to the demand supply shock consistent with the predictions from the theoretical model for policy that stabilizes core inflation

economic reform in czechoslovakia should we believe in santa klaus czechoslovakia david begg between the wars czechoslovakia was a prosperous market economy important legacies remain but 40 years of planning have caused severe distortions can czechoslovakia again become the jewel in the crown of eastern europe reforms began later than in hungary and poland but are now proceeding apace traditional sequencing of reforms is unwise micro reforms deserve greater priority and themselves affect macro credibility monetary and fiscal policies are intended to be tight but worries remain wage indexation a fuzzy exchange rate commitment and rising unemployment enterprise reform divides into better internal and external incentives privatization will be impeded by restoration of property to former owners and in any case is insufficient problems of corporate control will remain and inadequate attention is being given to incentives for state owned enterprises better external incentives require more foreign competition still limited tougher domestic competition policy still inadequate attention to banks and credit where bankruptcy is hard to enforce and balance sheets should be restructured and a temporary wage subsidy activities with negative value added at world prices should cease other activities would be more efficiently supplied through imports i discuss the principles governing the pace of intelligent restructuring and assess the prospects for its success in czechoslovakia

is there really a foreign ownership wage premium evidence from matched employer employee data numerous studies on firm level data have reported higher average wages in foreign owned firms than in domestically owned firms this however does not necessarily imply that the individual worker s wage increase with foreign ownership using detailed matched employer employee data on the entire swedish private sector we examine the effect of foreign ownership on individual wages controlling for individual and firm heterogeneity as well as for possible selection bias in foreign acquisitions we distinguish between foreign greenfields and takeovers and compare foreign owned firms with both domestic multinationals and local firms our results show a considerably smaller wage premium in foreign owned firms than what has been found in studies conducted at a more aggregate level moreover foreign takeovers of swedish firms tend to have no or even a negative effect on wages

should a team be homogeneous abstract should an organization hire people with similar backgrounds or with different backgrounds we formulate this question within the framework of team theory the team is formed by n agents the type of each agent is endogenous and determines his information structure and his cost for the team we show that the sign of complementarity between jobs determines workforce homogeneity with positive complementarities the team should be composed of agents of the same type while with negative complementarities workforce heterogeneity is optimal these results do not rely on the restrictions on the way uncertainty is modeled or on the feasible set of agent types they can be explained in terms of correlation between errors committed by different agents

human capital investment specialization and the wage effects of voluntary labor mobility ahstract analyses of voluntary labor mobility suggest that job search facilitates job change while specific training inhibits mobility further given that specific skills cannot be transferred between jobs and since both search and training are costly it is reasonable for workers to specialize in search or specific training on a given job training or search specialization however implies that estimation methods which treat the incidence of a quit as exogenous underestimate mobility effects on wages the larger wage effects reported here result from simultaneous estimation but also reflect more accurate measurement of wage growth between jobs

inside the family firm the role of families in succession decisions and performance this paper uses a unique dataset from denmark to investigate the impact of family characteristics in corporate decision making and the consequences of these decisions on firm performance we focus on the decision to appoint either a family or an external chief executive officer ceo the paper uses variation in ceo succession decisions that result from the gender of a departing ceo s first born child this is a plausible instrumental variable iv as male firstchild firms are more likely to pass on control to a family ceo relative to female first child firms but the gender of a first child is unlikely to affect firms outcomes we find that family successions have a large negative causal impact on firm performance operating profitability on assets falls by at least four percentage points around ceo transitions our iv estimates are significantly larger than those obtained using ordinary least squares furthermore we show that family ceo underperformance is particularly large for firms in high growth industries and for relatively large firms overall the empirical results demonstrate that professional non family ceos provide extremely valuable services to the organizations they head

monetary policy response to oil price shocks how should monetary authorities react to an oil price shock this paper shows that in a noncompetitive economy policies that perfectly stabilize prices entail large welfare costs hence explaining the reluctance of policymakers to enforce them the policy trade off is nontrivial because oil energy is an input to both production and consumption as welfare maximizing policies are hard to implement and communicate i derive a simple interest rate rule that depends only on observables but mimics the optimal plan in all dimensions the optimal rule is hard on core inflation but accommodates oil price changes

notes on the underground monetary policy in resource rich economies how should monetary policy respond to a commodity price shock in a resource rich economy as in the baseline new keynesian model the central bank of a small oil exporting economy faces a tradeoff between the stabilization of domestic infl ation and an appropriately defined output gap but in our framework the output gap depends on oil technology and the weight on output gap stabilization is increasing in the importance of the oil sector given substantial spillovers to the rest of the economy optimal policy calls for a reduction of the interest rate following a drop in the oil price in contrast a central bank with a mandate to stabilize consumer price infl ation would raise interest rates to limit the infl ationary impact of an exchange rate depreciation

the determinants of merger waves an international perspective article i nfo one of the most conspicuous features of mergers is that they come in waves that are correlated with increases in share prices and price earnings ratios we use a natural way to discriminate between pure stock market influences on firm decisions and other influences by examining merger patterns for both listed and unlisted firms if real changes in the economy drive merger waves as some neoclassical theories of mergers predict both listed and unlisted firms should experience waves we find significant differences between listed and unlisted firms as predicted by behavioral theories of merger waves

a meta analysis of the indirect impact of foreign direct investment in old and new eu member states understanding productivity spillovers in this paper we summarise combine and explain recent findings from firm level empirical literature focusing on the indirect impact of foreign direct investment fdi on economic performance measured as productivity in the enlarged europe we have reviewed 52 quantitative studies released between 2000 and 2015 and codified 1 133 estimates we run a regression of regressions which measures the strength of the fdi productivity relationship taking advantage of large number of high quality studies on fdi and its role in explaining the growth in firms productivity in europe we adopt recent meta regression analysis methods funnel asymmetry and precision estimate tests and precision effect estimate with standard errors to explain the heterogeneous impact of fdi this paper assesses the country specific impact of fdi on firms performance after taking publication selection bias econometric modelling and the individual studies characteristics fully into account our results show that on average fdi has a positive indirect impact on productivity the impact is especially significant in selected european countries and we interpret this as a sign of better absorptive capacities in those countries

effective demand enterprise reforms and public finance in china economic reform in china athar hussain and nicholas stern this paper examines some problems of transition from a command to a market economy through an analysis of the most important example to date the reforms in the chinese economy since the late 1970s our focus is on the links between enterprise reforms effective demand and public finance the reforms have created a curious and problematic hybrid of market and command economies with serious problems of coordination they have concentrated almost exclusively on the delegation of decision making to enterprises from the higher to lower tiers of the government without taking into account its implications for investment consumption and public finance an understanding of future policy and lessons for other countries requires a careful examination of the effects of these past policies granting discretion to enterprises over investment and wages has resulted in both an investment and consumption boom but paradoxically a fall in profits there are strong reasons to suppose that the investment ratio has been too high in recent years fuelling inflation and slowing additions to supply by prolonging the gestation period of investment there has been a large increase in liquid assets in the hands of households which makes their expectations increasingly important for macroeconomic policy there is need for concerted financial innovation to diversify household wealth away from liquid assets finally the changes in the composition of government revenue and expenditure are disturbing there is an urgent need for a flexible and broad based tax system and for reducing price subsidies and subsidies to loss making enterprises