total factor productivity intangible assets and spatial dependence in the european regions dettori b marrocu e and paci r total factor productivity intangible assets and spatial dependence in the european regions regional studies the aim of this paper is to analyse the determinants of the efficiency levels across the european regions firstly a regression based measure of regional total factor productivity is derived by estimating a spatial cobb douglas production function secondly the role played by intangible factors human capital social capital and technological capital on total factor productivity levels is investigated by applying the spatial two stage least squares 2sls method and the spatial heteroskedasticy and correlation consistent shac estimator to account for both heteroskedasticity and spatial autocorrelation it turns out that a large part of total factor productivity differences across the european regions is explained by disparities in the endowments of these intangible assets dettori b marrocu e and paci r

factor substitution and discrimination in labor markets the object of this paper is to provide a theoretical framework for explaining the absence of substitution of non discriminated factors for discriminated factors as a consequence of legislation designed to reduce or eliminate their pay differentials an example of such types of regulations or laws is equal pay legislation this absence of substitution has been noted in the empirical literature typical examples in this area are for example hiring of whites vis a vis blacks males vis a vis females migrants versus non migrants and hiring by castes the discriminated factors are usually paid less than their non discriminated counterparts two interesting and related questions arise in this context first why do profit maximizing but discriminating firms hire both types of factors the theory of discrimination fails to provide a satisfactory answer to this question second does an increase in payment to a discriminated factor via legislation necessarily result in a decrease in its usage given a neoclassical production function that allows for substitution two models are presented to show that such an outcome may not result and in fact the relationship may be the exact opposite that is an increase in the payment to a discriminated factor may increase its usage one can distinguish at least two approaches for incorporating the exploitation of a factor of production first one may like to treat the discriminated and non discriminated workers as identical factors of production and argue that the discriminated workers are paid less than the non discriminated workers second both factors may be treated as separate and indispensable factors of production but for institutional or other non economic reasons the discriminated factor is paid less than the value of its marginal product in this latter case the factor is exploited in the robinsonian sense the second approach has some advantages over the first economic rationality in the first approach would suggest that the firms should only hire the cheaper or the dearer factor but not both as a result of discrimination tastes however in the real world it is commonly observed that both types of factors are hired simultaneously in this approach there is the possibility of firms re switching between both types of factors therefore this paper extends the discrimination literature to show how firms may hire both factors using the second approach one can logically raise the question of substitution of non discriminated for discriminated factors as a consequence of higher rewards we show in a robinsonian type exploitation model that there is no substitution theorem

public trust the law and financial investment abstract how does trust evolve in markets what is the optimal level of regulation and how does this affect trust formation and economic growth in a theoretical model we analyze these questions given the value of social capital and the potential for growth in the market when social capital is valuable regulation and trustfulness are substitutes in this case regulation may cause lower aggregate investment and decreased economic growth when the social capital is less valuable regulation and trustfulness may be complements in the paper we analyze the optimal level of regulation and highlight the novel predictions of the model

capital markets and urban unemployment in this paper we investigate conditions under which reductions in distortions in one market improve national welfare despite the presence of distortions in another market the specific distortions we study are a differential between capital rentals and a rigid urban wage we also introduce a diagrammatic technique which may find use in the analysis of other problems

the solaria syndrome social capital in a growing hyper technological economy we develop a dynamic model to analyze the sources and the evolution of social participation and social capital in a growing economy characterized by exogenous technical progress starting from the assumption that the well being of agents basically depends on material and relational goods we show that the best case scenarios hold when technology and social capital both support just one of the two productions at the expenses of the other however trajectories are possible where technology and social interaction balance one another in fostering the growth of both the social and the private sector of the economy along such tracks technology may play a crucial role in supporting a socially sustainable economic growth

corruption norm violation and decay in social capital the paper studies the link between corruption and social capital measured as trust using data from a lab experiment subjects play either a harassment bribery game or a strategically identical but differently framed ultimatum game followed by a trust game in a second experiment we elicit social appropriateness norm of actions in the bribery game and ultimatum game treatments our experimental design allows us to examine whether subjects who have been asked to pay a bribe are less likely to trust than those in an isomorphic role in the ultimatum game we also uncover the underlying mechanism behind any such behavioral spillover results suggest that a there is a negative spillover effect of corruption on trust and the effect increases with decrease in social appropriateness norm of the bribe demand b lower trust in the bribery game treatment is explained by lower expected return on trust c surprisingly for both the bribery and ultimatum game treatments social appropriateness norm violation engenders the decay in trust through its adverse effect on belief about trustworthiness

digit preference in cps unemployment data abstract in analyses of cps unemployment duration data it is necessary to smooth the observed responses prior to inference to accommodate the effects of digit preference in this note i show that popular methods of smoothing have significant effects on estimates of expected duration the time series properties of this statistic are less severely affected

trusting behavior in a repeated investment game we compare a seven period repeated investment game to the one shot investment game on an average in the repeated game player a the trustor sends more and player b the trustee returns a larger percentage than in the one shot game both the amount sent and the percentage returned increase up to period 5 and drop sharply thereafter the reciprocity hypothesis for b players behavior is compatible with the first five periods but in the two end periods most b players behaved strategically by not returning the reciprocity hypothesis for a players behavior is compatible for all periods of the game

social capital and institutional trust evidence from bolivia s popular participation decentralisation reforms this article uses bolivia s emblematic process of decentralisation popular participation to explore the elusive relationship between interpersonal and institutional trust as central components of social capital the evidence corroborates the notion that basic social interaction and more complex institutional settings are strongly co related such as the trust that individuals place in their governments and institutions the data also shows that social capital has a direct effect on civic activism and political behaviour at the individual level the notion of social capital is present throughout the analysis as this type of capital allows observing and measuring changes in social structures that affect more complex institutional arrangements

on representative social capital abstract this paper analyzes the behavior of subjects randomly drawn from the dutch population who reveal their capacity to provide and sustain social capital by their propensity to invest and reward investments in an economic experiment we find that heterogeneity in behavior is characterized by several asymmetries men the young and elderly and low educated individuals invest relatively less but reward significantly more investments the age effects are found to corroborate existing findings whereas those of gender and education do not higher expected levels of investments by others are found to have a positive and significant effect on own investments finally a laboratory experiment with student subjects is found to provide a lower bound of the population level of social capital

aggregate consequences of limited contract enforceability we study a general equilibrium model in which entrepreneurs finance investment with optimal financial contracts because of enforceability problems contracts are constrained efficient we show that limited enforceability amplifies the impact of technological innovations on aggregate output this implies that economies with lower enforceability of contracts are characterized by greater macroeconomic volatility a key assumption for the amplification result is that defaulting entrepreneurs are not excluded from the market

altruism jealousy and the theory of optimal non linear taxation abstract this paper studies optimal non linear taxes in a world in which there is altruism and jealousy a formula for optimal marginal tax rates is derived which turns out to be a simple and intuitively appealing extension of a result due to mirrlees the paper shows that in this sort of economy all of optimal tax theory s general results either no longer hold or need not hold and it sets out appropriate modifications to standard tax rules

distinguishing trust from risk an anatomy of the investment game the role of trust in promoting economic activity and societal development has received considerable academic attention by social scientists a popular way to measure trust at the individual level is the so called investment game berg dickhaut and mccabe 1995 it has been widely noted however that risk attitudes can also affect decisions in this game and thus in principle confound inferences about trust we provide novel evidence shedding light on the role of risk attitudes for trusting decisions to the best of our knowledge our data are the first rigorous evidence that i aggregate investment distributions differ significantly between trust and risk environments and ii risk attitudes predict individual investment decisions in risk games but not in the corresponding trust games our results are convergent evidence that trust decisions are not tightly connected to a person s risk attitudes and they lend support to the trust interpretation of decisions in investment games

does social capital increase political accountability an empirical test for flemish municipalities social capital has been shown to positively influence government performance boix and posner br j polit sci 28 686 693 1998 suggest a possible explanation social capital makes citizens monitor the government more closely such monitoring will be more explicit to the extent that instrumental voting motivations outweigh expressive considerations we identify social capital as a source that facilitates instrumental voting and thus political accountability we present an empirical test of the boix and posner hypothesis and find a positive link between perceived quality of government and election results of the incumbent parties crucially we find this link to be stronger in municipalities high in social capital

trust and development in this paper we examine linkages between social trust and economic development using for the first time a panel of data we confirm earlier cross sectional studies finding that trust is a significant factor in development and also show for the first time that trust significantly interacts with both investment in physical and human capital we provide a robustness analysis of our results via a set of jackknife experiments on our main equations and the trust coefficients and interactions are very tightly distributed indicating that the results are not highly sample dependent we also consider whether trust directly influences investment and find that in a panel framework it does not unless we allow for a trust education interaction in the investment equation

social identification and redistribution in heterogeneous federations evidence from germany and belgium recent evidence of increasing income heterogeneity within developed countries has reignited debates concerning the redistribution of income and wealth in this article we contribute to this debate

unemployment insurance and male unemployment duration in canada a model of unemployment duration is estimated with weekly micro data on canadian men entitlement provisions in the unemployment insurance program and demand conditions are found to have a significant effect on the probability of leaving unemployment the probability of a worker leaving unemployment declines with the duration of unemployment holding unemployment insurance entitlement constant when entitlement is allowed to vary the probability of leaving first falls and then generally rises with unemployment duration these results are robust with respect to allowing for person specific unobserved heterogeneity and alternative specifications of duration dependence

the firm size farm size and transaction costs the case of hazelnut farms in turkey this study analyzes the effects of transaction costs on the size of hazelnut farms in turkey the study finds that higher land slope and higher variance of rain as transaction cost increasing natural effects lead to smaller hazelnut land holdings high slope and weather variation can increase the costs of monitoring the laborers make moving inputs or output up and down harder limit the use of machinery and reduce contractual performance of labor contracts for farm production functions land is a complex input with measurable interactions with nature contrary to common production theory approaches that take natural properties of land as given the study develops a production function that incorporates natural properties such as slope and rain variance the study utilizes two separate data sets for the estimations the first data set explores the characteristics of hazelnut farmers while the second one analyzes the regional characteristics of hazelnut farms

social capital and entrepreneurial activity a pseudo panel approach abstract this paper uses a pseudo panel approach at an age based cohort level to investigate the extent to which social capital accounts for differences in entrepreneurial activities the findings suggest that trust measured by trust either in strangers or in public institutions facilitates entrepreneurship we also find that parents emphasis on individual achievement relative to interpersonal relations in raising their child is positively associated with entrepreneurship evidence suggests that both social norms and networks influence entrepreneurship these results do not change when we use social capital measured at the national level

the productivity of trust this paper tests whether social trust affects total factor productivity tfp using both development and growth accounting we find strong evidence of a causal positive effect of social trust on the level and growth of tfp we moreover observe that the effect of social trust on tfp runs through economic judicial institutions but not through political institutions those findings resist a series of robustness checks

tenure security human capital and soil conservation in an overlapping generation rural economy we develop an overlapping generation model of rural agricultural households to examine whether tenure security and subsistence needs influence the choice between unexploited topsoil and investment in children s human capital as the mode of transfer of wealth a unique dataset from bangladesh finds that tenure security is associated with greater topsoil conservation and lower human capital investment therefore there exists a tradeoff between these two modes of transfer we suggest that increased public expenditure on schooling which substitutes private expenditure may lower the pressure on land and soil resources

life cycle consumption under social interactions abstract in this paper we examine how social interactions affect consumption decisions at various levels of aggregation in a life cycle economy made up of peer groups for this purpose we consider two analytically solvable life cycle models one under certainty equivalent behavior and one under prudence and explicitly allow for three different forms of social interactions in peer groups namely conformism altruism and jealousy we show that whether social interactions have any effects on individuals optimal consumption decisions critically depends on intertemporal rather than static considerations this is true regardless of whether individuals preferences are time separable or exhibit habit formation and whether information within peer groups is homogeneous or disparate it implies that analyzing the effects of social interactions in static rather than intertemporal settings is likely to be misleading we also show that social interactions when coupled with either habit formation or prudence can significantly strengthen the effects of habit formation or prudence in the direction of resolving two well known puzzles in the literature on the permanent income hypothesis namely excess smoothness and excess sensitivity

the firm as a dedicated hierarchy a theory of the origins and growth of firms in the formative stages of their businesses entrepreneurs have to provide incentives for employees to protect rather than steal the source of organizational rents we study how the entrepreneur s response to this problem determines the organization s internal structure growth and its eventual size large steep hierarchies will predominate in physical capital intensive industries and will have seniority based promotion policies by contrast e at hierarchies will prevail in human capital intensive industries and will have up or out promotion systems furthermore e at hierarchies will have more distinctive technologies or cultures than steep hierarchies the model points to some essential differences between organized hierarchies and markets at the root of most enterprises generating economic surplus is an entrepreneur with a unique critical resource such as an idea good customer relationships a new tool or superior management technique a fundamental problem of entrepreneurship is how to enlist the cooperation of the many agents necessary for production without ceding to them too much of the surplus generated by the enterprise the risk of being expropriated however is always inherent in production in particular the entrepreneur has to give her employees whom we call managers close proximity or access to the critical resource for them to learn to produce effectively for example a manager has to understand the idea be in contact with the key customers and suppliers or even learn the entrepreneur s unique managerial techniques in order to work effectively but access also gives the manager the opportunity to expropriate this critical resource and compete against the entrepreneur managers may steal the idea walk away with clients or mimic the entrepreneur s management style and start up a rival concern the greater the access a manager has the more he can appropriate and the more effectively he can compete this paper explores the role of organizational design in

the isomorphism hypothesis the prisoner s dilemma as intertemporal allocation and vice versa abstract economists model the choice of the current self in intertemporal allocation as the outcome of identity the current and future selves belong to the same decision maker by the sheer fact they reside in the same biological skin defined by biological identity the economists should be consistent and likewise model the choice of each player in the prisoner s dilemma or generally the social dilemma as the outcome of identity the selves of the players belong to the same decision maker by the sheer fact they reside in the same social skin defined by social identity if the economists consider cooperation rather than defection to be the rational strategy of the current self in intertemporal allocations they should be consistent and consider cooperation rather than defection to be the rational strategy of each player in social dilemmas symmetrically if the economists judge defection rather than cooperation to be the rational strategy in social dilemmas it behooves them to also judge defection rather than cooperation to be the rational strategy in intertemporal allocations

constitutional verbosity and social trust a common argument in the trust literature is that high trust cultures allow efficient commercial contracts to be shorter covering fewer contingencies we take this idea to the topic of social contracts specifically we ask whether social trust affects the length and detail of constitutions cross country estimates suggest that national trust levels are indeed robustly and negatively associated with the length of countries constitutions

social trust and human capital formation abstract social trust positively contributes to secondary education enrollment rates in a cross section of countries country specific characteristics that are significant in explaining secondary school enrollment include the degree of income inequality and the percent of the population identified as muslim

applicant screening and performance related outcomes a fundamental problem faced by employers is how to elicit effort from employees most economic models suggest that employers meet this challenge by monitoring employees carefully to prevent shirking but there is another option that relies on heterogeneity across employees and that is to screen job candidates to find workers with a stronger work ethic who require less monitoring we might therefore expect employers who screen candidates more intensively to monitor them less using data from a national sample of us employers we find that employers who screen applicants more intensively for factors that should predict work ethic also monitor employees less and also make greater use of systems such as teamwork where monitoring by supervisors is more difficult this screening is also associated with higher wages higher employee productivity and lower involuntary turnover rates screening for other attributes such as work experiences and academic performance does not produce these results jel codes m51 m54 j30

rent seeking noncompensated transfers and laws of succession my purpose in this paper is to analyze inefficiencies that may emerge from the noncompensated transfer of valued rights among persons this source of inefficiency has not to my knowledge been fully incorporated either in the economic theory of property rights or in orthodox tax analysis my discussion is based on the elementary fact that all noncompensated transfers are rents to the recipients implications for the emergence of rent seeking behavior follow straightforwardly the now familiar propositions to the effect that rent seeking may dissipate economic value can be applied to a variety of transfer settings only a few of which are explored in this paper 1 to the extent that the efficiency criterion is the relevant norm direct implications may be drawn for policy with respect to the laws or rules for succession

employment spells and unemployment insurance eligibility requirements in this paper we examine whether the requirements that workers must satisfy to qualify for unemployment insurance ui benefits in any succeeding period of joblessness affect the duration of employment spells this behavioral consequence of a ui system has been neglected in empirical research which has instead focused on the effects of ui parameters on the actions of the unemployed the effect is identified by a unique change in the eligibility requirements of the canadian ui system in 1990 which increased the weeks of employment required to establish ui eligibility we provide a variety of estimates of this behavioral effect in our preferred set of results we find a significant increase in the employment hazard in the week that an individual satisfies the eligibility requirement in many regions of the country in the spirit of feldstein s 1976 study of temporary layoffs the results provide new evidence of the impact of ui system parameters on the actions of employers and workers

honesty beliefs about honesty and economic growth in 15 countries the honesty of people in an online panel from 15 countries was measured in two experiments reporting a coin flip with a reward for heads and an online quiz with the possibility of cheating there are large differences in honesty across countries average honesty is positively correlated with per capita gdp this is driven mostly by gdp differences arising before 1950 rather than by gdp growth since 1950 a country s average honesty correlates with the proportion of its population that is protestant these facts suggest a long run relationship between honesty and economic development the experiment also elicited participants expectations about different countries levels of honesty expectations were not correlated with reality instead they appear to be driven by cognitive biases including self projection

consumer behaviour with environmental and social externalities implications for analysis and policy in this paper we summarise some of our recent work on consumer behaviour drawing on recent developments in behavioural economics particularly linked to sociol ogy as much as psychology in which consumers are embedded in a social context so their behaviour is shaped by their interactions with other consumers for the purpose of this paper we also allow consumption to cause environmental damage analysing the social context of consumption naturally lends itself to the use of game theoretic tools we shall be con cernedwithtwowaysinwhichsocialinteractionsaffectconsumerpreferencesandbehaviour socially embeddedpreferences wherethebehaviourofotherconsumersaffectanindividual s preferences and hence consumption we consider two examples conspicuous consumption and consumption norms and socially directed preferences where people display altruistic behaviour our aim is to show that building links between sociological and behavioural eco nomic approaches to the study of consumer behaviour can lead to significant and surprising implications for conventional economic analysis and policy prescriptions especially with respect to environmental policy

trust social capital and economic development many argue that elements of a society s norms culture or social capital are central to understanding its development however these notions have been difficult to capture in economic models here we explore ap ossible role for trustworthiness as corresponding to social capital individuals are trustworthy when they perform in accordance with promises even if this does not maximize their payoffs the usual focus on incentive structures in motivating behaviour plays no role here instead we emphasize more deep seated modes of behaviour and consider trustworthy agents being socialized to act as they do to model this socialization we borrow from a process of preference evolution pioneered by bisin and verdier 2001 the model developed endogenously accounts for social capital and explores its role in the process of economic development it captures in a simple formal way the interaction between social capital and the economy s productive processes the results obtained caution against rapid reform and provide an explanation for why late developing countries may not easily be able to transplant the modes of production that have proved useful in the west

altruism and global environmental taxes a global externality like the ghg emissions leading to climate change are both due to free riding at the individual level as well as the government level a government aiming to maximise domestic social welfare may make individuals internalise the damage within their country but will free ride on the damage caused to other countries only a global cooperative solution could internalise global damage entirely if individuals have altruistic concern for others but continue to believe that their consumption is negligible relative to the total they will not change their behaviour however this paper shows that in a multi country setting the global equilibrium levels of consumption for both the non cooperative and cooperative solutions are affected by altruism the key results are a that non cooperative governments maximising domestic welfare will internalise some of the damage inflicted on other countries depending on the level of altruistic concern individuals have and b the cooperative global optimum also changes as altruism leads individuals to effectively experience damage in other countries as well as the direct damage to them since altruistic concern for others may vary across countries global welfare then becomes a function of the relative levels of altruistic concern between countries

the impact of being offered and receiving classroom training on the employment histories of disadvantaged women evidence from experimental data we address two questions using experimental data on disadvantaged women first what is the impact of being offered jtpa classroom training on the duration of unemployment and employment second what is the effect of actually participating in this training on the length of such spells belonging to the treatment group shortens unemployment spells but has no effect on employment spells actually participating in training has a larger positive effect on the exit rate from unemployment than the effect of simply being a member of the treatment group ignoring the endogeneity of actual training in estimation substantially underestimates its effect

local market size social capital and outsourcing evidence from emilia romagna based on a unique dataset concerning small firms operating in the machinery and equipment industry in emilia romagna italy we estimate the separate effects of social capital and local market size on the probability to either fully or partially outsource parts of the production process we are able to distinguish 29 different phases of the production cycle from design to early processing to post production our estimates show that 1 social capital influences the full outsourcing of core assembly and post assembly activities while local market size affects the full outsourcing of early processing activities 2 neither social capital nor local market size have a statistically significant effect on the probability of partially outsourcing any step of the production process robustness tests confirm our results vis a vis the endogeneity of the local market size and social capital and the potential modifiable area unit problem relating to local market size

trust in large organizations several authors suggest that trust is an important determinant of cooperation between strangers in a society and therefore of performance of social institutions we argue that trust should be particularly important for the performance of large organizations in a cross section of countries evidence on government performance participation in civic and professional societies importance of large firms and the performance of social institutions more generally supports this hypothesis moreover trust is lower in countries with dominant hierarchical religions which may have deterred networks of cooperation trust hold up remarkably well on a cross section of countries this abstract was borrowed from another version of this item

the right amount of trust we investigate the relationship between individual trust and individual economic performance we find that individual income is hump shaped in a measure of intensity of trust beliefs heterogeneity of trust beliefs in the population coupled with the tendency of individuals to extrapolate beliefs about others from their own levels of trustworthiness could generate this non monotonic relationship highly trustworthy individuals tend to form overly optimistic beliefs to assume too much social risk and to be cheated more often ultimately performing less well than those with a belief close to the mean trustworthiness of the population on the other hand less trustworthy individuals form overly pessimistic beliefs and avoid being cheated but give up profitable opportunities therefore underperforming the cost of either too much or too little trust is comparable to the income lost by foregoing college our findings in large scale survey data are supported and extended with experimental findings we show that in the trust game own trustworthiness and beliefs about others trustworthiness are strongly correlated and persistent and that patterns in earnings lost due to incorrect beliefs are comparable to those in the survey data

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

endogenous institutional selection building trust and economic growth abstract private order market institutions founded on trust based relational contracts suffer adverse selection and moral hazard problems while public order market institutions have a limited capacity to enforce contracts i model agent selection between contract enforcement institutions and demonstrate that the state s contract enforcement capacity is complementary to private order contract enforcement institutions for low to moderate levels of public order enforcement capacity this suggests that initial improvements to public order institutions cause the accumulation of trust and result in economic growth in both institutions however i show that the private order institution must collapse once the public order contract enforcement capacity is too great

motives for private transfers over the life cycle an analytical framework and evidence for peru abstract this paper tests for the motives for private income transfers we consider two motives altruism and exchange the question of private transfer motives is important because such motivation can influence the effects of public income transfers on the distribution of income using a household survey for peru we find that transfer amounts received increase with recipient pre transfer income which contradicts a key prediction of the strong form of the altruism hypothesis but is consistent with exchange we also find that capital market imperfections are likely to be an important cause of private transfers and that social security benefits crowd out the incidence of private transfers

on the expenditure dependence of children s resource shares abstract collective household models posit that each household member has access to a fraction of the household budget called a resource share which defines the shadow budget faced by a household member together with the within household shadow price vector the shadow budget determines the material well being of the household member in general it is difficult to identify resource shares from typical household level consumption data however several recent papers have shown that if resource shares do not depend on total household expenditure then identification of resource shares may proceed from commonly available engel curve data unfortunately typical datasets do not allow the testing of this restriction in this paper we use a novel italian dataset to establish that children s resource shares do not exhibit much dependence on total household expenditure thus identification of resource shares on the basis of this restriction may be valid

as an economy becomes more developed do people become less altruistic abstractinter household private transfers are one of the main informal insurance mechanisms that prevalently implemented in developing countries unfortunately most of the literatures investigates

can good projects succeed in bad communities abstract the lack of social capital is frequently given as an explanation for why communities perform poorly yet to what extent can project design compensate for these community specific constraints i address this question by examining determinants of collective success in a costly problem for developing economies the upkeep of local public goods it is often difficult to obtain reliable outcome measures for comparable collective tasks across well defined communities in order to address this i conducted detailed surveys of community maintained infrastructure projects in northern pakistan the findings show that while community specific constraints do matter their impact can be mitigated by better project design inequality social fragmentation and lack of leadership in the community do have adverse consequences but these can be overcome by changes in project complexity community participation and return distribution moreover the evidence suggests that better design matters even more for communities with poorer attributes the use of community fixed effects and instrumental variables offers a significant improvement in empirical identification over previous studies these results provide evidence that appropriate design can enable projects to succeed even in bad communities

flexible parametric estimation of duration and competing risk models in this paper we specify and estimate a flexible parametric proportional hazards model the model specification is flexibly parametric in the sense that the baseline hazard is non parametric while the effect of the covariates takes a particular functional form we also add parametric heterogeneity to the underlying hazard model specification we specify a flexible parametric proportional competing risks model which permits unrestricted correlation among the risks unemployment duration data are then analysed using the flexible parametric duration and competing risks specifications we find an important effect arising from the exhaustion of unemployment insurance and significantly different hazards for the two types of risks new jobs and recalls

the impact of corruption on firm tax compliance in transition economies whom do you trust tax compliance is an important issue for gov ernments and the public alike to meet public needs and fund public mandates firms around the world are expected to comply with tax laws factors that are related to orga nizational firm tax compliance have not been sufficiently examined in the literature owing to the increasing global influence of transition economies factors associated with firm tax compliance in transition economies are particu larly of interest based on a sample of over 5 000 firms from 22 former soviet bloc transition economies we find that higher levels of corruption and higher levels of par ticularized trust reliance on friends and family are asso ciated with lower levels of tax compliance interestingly we also find that the negative relationship between cor ruption and tax compliance is weakened in situations of higher generalized trust trust in strangers overall our study s results suggest that institutional factors play an important role and are related to firm tax compliance behavior in transition economies

preference heterogeneity power and intrahousehold decision making in rural malaysia abstract this paper examines conjugal household responsibilities roles preference heterogeneity and intrahousehold power relations in rural malay families its three major contributions are to provide an effective initial indicator of separate spheres within the family develop and implement a method for measuring the extent of conjugal preference heterogeneity and illustrate the value of combining this direct measure of preference heterogeneity with a measure of power in estimating household expenditure patterns for three major items food schooling and housing improvement these three measurement innovations applied to the rural malaysia context demonstrate the potential for more direct efforts to model and measure intrahousehold decisions

moral behaviour altruism and environmental policy free riding is often associated with self interested behaviour however if there is a global pollutant free riding will arise if individuals calculate that their emissions are negligible relative to the total so total emissions and hence any damage that they and others suffer will be unaffected by whatever consumption choice they make in this context consumer behaviour and the optimal environmental tax are independent of the degree of altruism for behaviour to change individuals need to make their decisions in a different way we propose a new theory of moral behaviour whereby individuals recognise that they will be worse off by not acting in their own self interest and balance this cost off against the hypothetical moral value of adopting a kantian form of behaviour that is by calculating the consequences of their action by asking what would happen if everyone else acted in the same way as they did we show that a if individuals behave this way then altruism matters and the greater the degree of altruism the more individuals cut back their consumption of a dirty good b nevertheless the optimal environmental tax is exactly the same as that emerging from classical analysis where individuals act in self interested fashion

trust and social collateral this paper builds a theory of trust based on informal contract enforcement in social networks in our model network connections between individuals can be used as social collateral to secure informal borrowing we define network based trust as the largest amount one agent can borrow from another agent and derive a reduced form expression for this quantity which we then use in three applications 1 we predict that dense networks generate bonding social capital that allows transacting valuable assets whereas loose networks create bridging social capital that improves access to cheap favors such as information 2 for job recommendation networks we show that strong ties between employers and trusted recommenders reduce asymmetric information about the quality of job candidates 3 using data from peru we show empirically that network based trust predicts informal borrowing and we structurally estimate and test our model

social capital and the cost of equity abstract we find that a firm s cost of equity is inversely related to the level of social capital in the state where the firm is headquartered further the cost of equity declines when firms move their headquarters from a low social capital state to a state with higher social capital the negative relation between social capital and the cost of equity is statistically significant only for firms facing relatively low levels of product market competition and is not significant for firms with good firm specific reputations we interpret these findings as indicating that social capital serves as a societal monitoring mechanism and can be value enhancing for firms that are perceived as having greater agency problems and face weak product market monitoring

shared agency the dominant spouse s impact on education expenditure summary in this paper we consider whether it is the gender of the decision maker or the extent of agency that they wield that is crucial to increasing household welfare this is an important question as development policy is often formed on the basis that placing resources in the hands of women results in greater household welfare indonesia provides the ideal opportunity to study this issue because it is home to ethnic groups with very different gender norms from male dominance the patrilineal batak to female dominance the matrilineal minangkabau using ifls data for three rounds we consider the impact of decision making by the dominant spouse on household expenditure on education we find that in indonesia when the dominant spouse male or female has sole control of decision making there is an overall negative impact on education expenditure this leads us to argue that it is more important to consider the issue of spousal dominance than to wholly focus on gender

a model of redistribution under social identification in heterogeneous federations abstract redistribution of resources to accommodate income heterogeneity within a federation is often fiercely debated e g belgium germany or the european union to help elucidate potential drivers behind such debates this article builds on social identity theory to develop a theoretical framework linking jurisdictional identification and preferences towards intra federation redistributive financial flows we show that federal rather than local identification can lead individuals to shift their redistribution preferences against their narrowly defined personal economic interest in contrast to predictions of standard models the sign and strength of this effect depends crucially not only upon individuals characteristics but also upon the social groups i e regions to which they belong we furthermore illustrate that federal rather than regional identification should be more widespread in poorer and or more populous regions within a federation but less common in regions which are very homogeneous internally or very dissimilar from the rest of the federation

bayesian estimation and smoothing of the baseline hazard in discrete time duration models this paper proposes a bayesian approach for estimating and smoothing the baseline hazard in a discrete time hazard model the hazard model is specified as a multiperiod probit model and estimated using a gibbs sampler with data augmentation the baseline hazard specification is smoothed using the smoothness priors introduced by shiller 1973 the methods proposed in this paper are then used to study the effect of canadian unemployment insurance eligibility rules on employment durations from new brunswick canada

distributional effects in household models separate spheres and income pooling we derive distributional eects for a non cooperative alternative to the unitary model of household behaviour we consider the nash equilibria of a voluntary contributions to public goods game our main result is that in general the two partners either choose to contribute to dierent public goods or they contribute to at most one common good the former case corresponds to the separate spheres case of lundberg and pollak 1993 the second outcome yields local income pooling a household will be in dierent regimes depending on the distribution of income within the household any bargaining model with this non cooperative case as a breakdown point will inherit the local income pooling we conclude that targeting bene ts such as child bene ts to one household member may not always have an eect on outcomes

welfare states and social trust this article tests the linkage between institutional configuration and social trust highlighting the role of the welfare states in coordinating interests among different labor market actors this study initially builds a theoretical framework distinguishing training supplemented welfare regimes from transfer based welfare regimes evidence from descriptive and multivariate analyses of world values survey based on 17 advanced industrial democracies supports my argument that public investment in skill provision prevalent in training supplemented welfare states leads to higher accumulation of social trust whereas passive social transfers result in lower social trust especially high investment in public skill provision leads to a decreased gap in social trust between employers and low skilled workers as well as among different occupational groups in addition the negative effect of passive social transfers on trust is greatly ameliorated when it is jointly configured with high active labor market polici

unemployment insurance and unemployment spells this paper tests the effects of the level and length of unemployment insurance benefits on unemployment durations the paper particularly studies individual behavior during the weeks just prior to when benefits lapse higher unemployment insurance benefits are found to have a strong negative effect on the probability of leaving unemployment however the probability of leaving unemployment rises dramatically just prior to when benefits lapse individual data are used with accurate information of spell durations and the level and length of benefits the semiparametric estimation techniques used in the paper yield more plausible estimates than conventional approaches and provide useful diagnostics copyright 1990 by the econometric society

new classical versus neoclassical frameworks a review of yang abstract yang 2001 summarizes new classical economics pioneered by yang 1988 individuals are consumer producers consumption is linked to the level of productive specialization the key parameter is an iceberg transaction cost i e one dollar spent means less than one dollar received autarky specialization occurs when transactions costs are above below a certain threshold firms are collections of consumer producers tied together by contracts trade occurs even if individuals have identical preferences and productive capabilities because there are increasing returns to specialization the division of labor the extent of the market and economic organization are characterized by aggregating

trust regulation and market failures abstract government regulation of firms is associated with more negative externalities and unofficial activity across countries i argue that this correlation mainly reflects causality going from concerns about market failures to demand for government intervention using trust in others as a proxy for such concerns i show that differences in trust explain a great deal of variation in entry regulations then controlling for trust in the regression of market failures on regulation the latter is no longer associated with worse economic outcomes the same result is confirmed when i exploit country population as an alternative source of variation in regulation

the not so dark side of trust does trust increase the size of the shadow economy this paper reports a negative relationship between the size of the shadow economy and generalized trust in a sample of countries both developed and developing that relationship is robust to controlling for a large set of economic policy and institutional variables to changing the estimate of the shadow economy and the estimation period and to controlling for endogeneity it is independent from trust in institutions and from income inequality and is mainly present in the sample of developing countries those findings suggest that the tax compliance effect of trust dominates its role as a substitute for the formal legal system

is trust the missing root of institutions education and development we report evidence that trust is the missing root relating education institutions and economic development we observe that more trust both increases education and improves legal and bureaucratic institutions which in turn spurs economic development we substantiate this intuition with a series of regressions that provide evidence that trust determines both education and the quality of institutions and that education and institutions in turn affect gdp per capita

the american family and family economics abstract gary becker s path breaking treatise on the family 1981 subjected individuals decisions about sex marriage childbearing and childrearing to rational choice analysis the american family has changed radically in recent decades we survey these changes as well as the ongoing effort to understand partnering parenting and care of the elderly as results of maximizing choices made by individuals first we describe the recent changes in the american family the separation of sex marriage and childbearing fewer children and smaller households converging work and education patterns for men and women class divergence in partnering and parenting strategies and the replacement of family functions and home production by government programs and market transactions second we examine recent work in family economics that attempts to explain these changes third we point out some challenging areas for further analysis and highlight issues of commitment in two primary family relationships those b

corruption and culture an experimental analysis article i nfo article history why do some people choose corruption over honesty and others not do the social norms and values prevailing in the societies in which they grew up affect their decisions in 2005 we conducted a bribery experiment and found that among undergraduates we could predict who would act corruptly with reference to the level of corruption in their home country among graduate students we could not in 2007 we replicated our result and also found that time spent in the uk was associated with a decline in the propensity to bribe although this does not explain our inability to predict graduate behaviour we conclude that while corruption may in part be a cultural phenomenon individuals should not be prejudged with reference to their country of origin

altruism cooperation and efficiency agricultural production in polygynous households abstractaltruism toward others can inhibit cooperation by increasing the utility players expect to receive in a noncooperative equilibrium to test this we examine agricultural productivity in west african polygynous households we find cooperation as evidenced by more efficient production is greater among co wives than among husbands and wives using a game theoretic model we show that this outcome can arise because co wives are less altruistic toward each other than toward their husbands we present a variety of robustness checks which suggest results are not driven by selection into polygyny greater propensity for cooperation among women or household heads enforcing others cooperative agreements

presidential address institutions and culture how and why does distant political and economic history shape the functioning of current institutions this paper argues that individual values and convictions about the scope of application of norms of good conduct provide the missing link evidence from a variety of sources points to two main findings first individual values consistent with generalized as opposed to limited morality are widespread in societies that were ruled by non despotic political institutions in the distant past second well functioning institutions are often observed in countries or regions where individual values are consistent with generalized morality and under different identifying assumptions this suggests a causal effect from values to institutional outcomes the paper ends with a discussion of the implications for future research jel a10 d7 e00

fertility choice mortality expectations and interdependent preferences an empirical analysis we investigate the empirical relationship between child mortality and fertility across 46 low and middle income countries specifically we model the effect of mortality expectations and interdependent fertility preferences on fertility the direct marginal effect of mortality expectations on fertility is larger than zero but less than unity this implies that a decrease in mortality rates leads to a decrease in children born but to an increase in the number of surviving children and hence the rate of population growth taking into account interdependent fertility preferences whereby an individual s fertility choice affects the fertility decisions of others the marginal effect of mortality expectations on fertility becomes one hence if we allow for both mortality expectations and the amplifying effect of interdependent fertility preferences a decrease in child mortality has no net effect on the rate of population growth

individual s religiosity enhances trust latin american evidence for the puzzle this paper explores the effect of religious observance and affiliation to the dominant religion catholicism on trust in institutions towards others and market attitudes the analysis is performed using a latin american database of twenty thousand respondents from 2004 by means of ordered probit models the most interesting results are i trust toward others is positively correlated with religious observance and with catholic affiliation ii there is a positive correlation between

family policy with non cooperative families we consider a non cooperative model of a family s time allocation between market work and providing a home produced family public good such as child care or care for the elderly the model predicts underprovision of the public good because of crowding out this does not necessarily warrant public provision in contrast to other approaches in family economics we find that attempts to redistribute between spouses may alter the final distribution within the marriage and that such a policy may be pareto improving we also find that some degree of progressivity of the income tax can be welfare improving

high school completion and future youth unemployment new evidence from high school and beyond in this paper i provide new evidence from high school and beyond hsb on the effects of compulsory attendance on high school completion and future youth unemployment i develop bayesian estimation approaches to the simultaneous equation model with ordered probit and two limit censored regression and the bivariate duration model accounting for the heterogeneity in returns to education and the nonlinearity in the effects of compulsory attendance i find substantial variability in returns to education across schools and evidence of diminishing marginal effects of compulsory attendance on high school completion the simulation results suggest that increasing the compulsory attendance age raises the probability of completing high school and reduces the proportion of time the individuals are unemployed these effects are much more pronounced for disadvantaged students but less pronounced for advantaged students suggesting the potential effects of compulsory attendance on reducing the inequality in education and employment copyright 2005 john wiley sons ltd

universal decentralisation a demand system for collective and unitary models with household public goods the paper defines demand systems that exhibit universal decentralisation we argue that this concept is important in household consumption and labour supply models we show that the concept nests many approaches to the analysis of individual and family behaviour we find conditions for demand with universal decentralisation to be the result of an individual utility maximisation process and also for such demands to be the result of a household welfare maximisation procedure we explore the link between universal decentralisation and quasi separability there are connections between universal decentralisation and a nonlinear idea of the rank of a demand system

altruism in the family and selfishness in the market place adam smith argued in a famous passage that people are selfish in their market transactions it is not from the benevolence of the butcher the brewer or the baker that we expect our dinner but from their regard to their own interest we address ourselves not to their humanity but to their self love and never talk to them of our own necessities but of their advantages 1937 p 14 in an earlier study he said with irony we are not ready to suspect any person of being defective in selfishness 1853 p 446 selfishness in market transactions has been assumed in practically all subsequent discussions of the economic system objections were dismissed with vague allusions to human nature or with an assertion that altruism loses out to selfishness in the struggle to survive in the market sector yet altruism is generally recognized to be important within a family again adam smith said

tranching in the syndicated loan market around the world loan tranching allows banks to manage risk and facilitate firm financing which may be essential for firms that cannot access investors from stock markets we analyze the determinants and benefits of loan tranching by pooling the tranches of individual loans to create the largest cross country sample of syndicated loans covering more than 150 000 loans from multinational and domestic firms we find that in addition to market deal and borrower characteristics legal and institutional differences impact loan tranching strong creditor protection and efficient debt collection increase the probability of tranching and reduce tranche spreads ultimately promoting firms access to debt we also find evidence that tranching facilitates the financing of multinational firms abroad due to the transfer of legal and cultural institutions to foreign subsidiaries overall our results suggest that tranching plays an important role in reducing a country s financial development gap and promotes firms access to debt