public employment and the welfare state in sweden this is a nontechnical summary of a much longer study which will appear with the same title in richard freeman birgitta swedenborg and robert topel eds forthcoming i am especially indebted to henry ohlsson and birgitta swedenborg and to stan engerman vic fuchs assar lindbeck stephen lundgren and agnar sandmo for comments on initial drafts i alone am responsible for the views expressed here

the futile quest for a grand explanation of long run government expenditure this paper carries out a critical reappraisal of the two contending theories purporting to explain long run government spending wagner s law and different variants of the ratchet effect we analyze data spanning from the early 19 th century until the present day in sweden and the united kingdom hence in contrast to previous studies we evaluate the validity of wagner s law and the ratchet effect hypothesis over a very long time period starting at the beginning of industrialization cointegration analysis is used to investigate the long run relationships between government expenditure and gdp focusing on sub periods and structural breaks moreover we test the ratchet effect hypothesis by estimating models which allow for asymmetric adjustment according to our main results wagner s law does not hold in the long run although the data are consistent with wagner s law between roughly 1860 and the mid 1970s this can be traced to the formation of the modern public sector including the introduction of public education health care and so forth yet wagner s law did not hold during the initial industrialization phase before 1860 and in recent periods gdp only affects the government spending share when we control for population age structure finally we find some evidence of asymmetric adjustment in the uk particularly in the post wwii period however the ratchet effect is not a general cause of the growth of government spending

do labor market policies have displacement effects evidence from a clustered randomized experiment this article reports the results from a randomized experiment designed to evaluate the direct and indirect displacement impacts of job placement assistance on the labor market outcomes of young educated job seekers in france we use a two step design in the first step the proportions of job seekers to be assigned to treatment 0 25 50 75 or 100 were randomly drawn for each of the 235 labor markets e g cities participating in the experiment then in each labor market eligible job seekers were randomly assigned to the treatment following this proportion after eight months eligible unemployed youths who were assigned to the program were significantly more likely to have found a stable job than those who were not but these gains are transitory and they appear to have come partly at the expense of eligible workers who did not benefit from the program particularly in labor markets where they compete mainly with other educated workers and in weak labor markets overall the program seems to have had very little net benefits

analyzing the impact of the world s largest public works project on crime india started the implementation of a rural public works program in 2006 covering all districts of the country within 3 years the program guarantees 100 days of employment per year at minimum wage to each rural household with the goal of reducing joblessness and poverty we exploit the design and implementation of this program to investigate its employment impact on various types of crimes to provide rare evidence on the employment crime relationship in a developing country context we find that employment generated by the program has a negative impact on both property crime and violent crime the same conclusion is reached when we analyze the impact of the program using its staggered rollout structure as the source of identification in a difference in difference analysis although crime elasticities with respect to employment are small this finding represents another dimension of the social benefit generated by the program jel k4 e24 h54

reducing the bullwhip effect looking through the appropriate lens demand amplification now frequently referred to as bullwhip is potentially a very costly phenomenon it can lead to stock outs large and expensive capacity utilisation swings lower quality products and considerable production transport on costs as deliveries are ramped up and down at the whim of the supply chain however the detection of bullwhip depends on which lens is used this in turn depends on the background and requirements of various players within the value stream to gain insight into this scenario we exploit a relatively simple replenishment model because new and novel analytic solutions have been derived for all important performance metrics comparison of the competing bullwhip measures is thereby greatly streamlined in the complex real world the likelihood is that supply chains will generate even greater inconsistency between alternative variance shock and filter lens viewpoints

investor valuation of the abandonment option abstract we investigate whether investors price the option to abandon a firm at its exit value theory prices this real option as an american put with both a stochastic strike price exit value and a stochastic value of the underlying security the value of cash flows the empirical implications are that firm value increases in exit value after controlling for expected going concern cash flows and that more generalizable assets produce more abandonment option value using discounted earnings forecasts to proxy for expected cash flows and prior literature to categorize asset generalizability we find strong support for the predictions of abandonment option theory

dynamic responses to changing demand a model of the reallocation process in small and large municipalities in norway local government priorities between local services are analysed in a community preference model emphasizing income effects and demographic factors the model is built into a partia adjustment framework with endogenous speed of adjustment to study the dynamic responses of local governments to shifting demand the empirical analysis of the reallocation process separates between small and large municipalities in terms of population size serious sluggishness of the adjustment is documented with large municipalities experiencing stronger inertia than the small the small authorities have been able to respond more effectively to the restructuring pressure from demographic shift

direct displacement effects of labour market programmes using a panel of 250 swedish municipalities over the period 1987 1996 we examine the direct displacement effects of active labour market programmes almps compared to earlier studies on this topic we have more and better data based on our gmm estimations we find that there are direct displacement effects from subsidised employment in the order of approximately 65 but that there seem to be no significant displacement effects from training this result seems to be robust to several alternative specifications

changes in the value relevance of earnings and book values over the past forty years this paper investigates systematic changes in the value relevance of earnings and book values over time we report three primary findings first contrary to claims in the professional literature the combined value relevance of earnings and book values has not declined over the past forty years and in fact appears to have increased slightly second while the incremental value relevance of bottom line earnings has declined it has been replaced by increasing value relevance of book values finally much of the shift in value relevance fiom earnings to book values can be explained by the increasing frequency and magnitude of one time items the increasing frequency of negative earnings and changes in average firm size and intangible intensity across time

is globalisation undermining the welfare state this paper analyses the evolution of the welfare states in the majority of oecd countries during the pre globalisation 1946 80 and globalisation 1980 2000 periods our purpose is to find out whether globalisation has produced a convergence towards a smaller welfare state funded increasingly by non mobile factors such as labour property and consumption rather than by mobile factors such as capital the data presented here challenge the claims about such a convergence showing that social public expenditures and public employment have continued to expand during the globalisation period in most oecd countries we also show that the welfare states remain rooted in the political traditions that have governed them copyright 2004 oxford university press

crime rates and local labor market opportunities in the united states 1979 1997 the labor market prospects of young unskilled men fell dramatically in the 1980s and improved in the 1990s crime rates show a reverse pattern increasing during the 1980s and falling in the 1990s because young unskilled men commit most crime this paper seeks to establish a causal relationship between the two trends previous work on the relationship between labor markets and crime focused mainly on the relationship between the unemployment rate and crime and found inconclusive results in contrast this paper examines the impact of both wages and unemployment on crime and uses instrumental variables to establish causality we conclude that both wages and unemployment are significantly related to crime but that wages played a larger role in the crime trends over the last few decades these results are robust to the inclusion of deterrence variables controls for simultaneity and controlling for individual and family characteristics

unemployment and domestic violence theory and evidence is unemployment the overwhelming determinant of domestic violence that many commentators expect it to be the contribution of this paper is to examine theoretically and empirically how changes in unemployment affect the incidence of domestic abuse the key theoretical prediction is that male and female unemployment have opposite signed effects on domestic abuse an increase in male unemployment decreases the incidence of intimate partner violence while an increase in female unemployment increases domestic abuse combining data on intimate partner violence from the british crime survey with locally disaggregated labor market data from the uk s annual population survey we find strong evidence in support of the theoretical prediction

using electoral cycles in police hiring to estimate the effect of police on crime comment previous empirical studies have uncovered little evidence that police reduce crime possibly due to simultaneity problems this paper uses the timing of mayoral and gubernatorial elections as an instrumental variable to identify a causal effect of police on crime increases in the size of police forces are shown to be disproportionately concentrated in mayoral and gubernatorial election years increases in police are shown to substantially reduce violent crime but have a smaller impact on property crime the null hypothesis that the marginal social benefit of reduced crime equals the costs of hiring additional police cannot be rejected

on the impact of order volatility in the european automotive sector order volatility is an unfortunate fact of life facing most suppliers of both products and services in this paper we are concerned with establishing the magnitude of the problem faced by the european automotive sector the evidence has been acquired via the site based quick scan audit methodology qsam production scheduler strategy is thereby classified according to a new five set schema as observed via individual value stream volatilities system variables have then been codified and correlated with customer order volatility powerful statistically significant relationships emerge from this evidence this generally but not wholly supports intrinsic views on what constitutes good practice a specific interface between supplier and oem shows the existence of a positive loop that acts as a vicious circle to create unnecessary volatility in material flow

the welfare costs of union wage compression abstract this paper calculates the quantitative significance of the welfare costs of union wage compression this is done in a dynamic general equilibrium model with overlapping generations where agents choose both schooling human capital and assets physical capital the labor market in this model is characterized as a right to manage contract which allows unions to compress wage differentials between high and low skilled workers by implementing a binding minimum wage this paper shows that when labor markets are competitive even low levels of wage compression lead to large welfare losses since wage compression creates costly unemployment among low skilled workers the effect of wage compression on the supply of skilled labor however is rather small since the disincentive effect of a lower high skilled wage is to a large extent offset by a lower opportunity cost of schooling due to higher unemployment

upper secondary school completion and the business cycle previous evidence suggests that enrollment in post compulsory education increases decreases in cyclical downturns upturns however little evidence exists on whether enrollment is successfully transformed into completed education this paper adds to the literature by analyzing the relationship between completion of upper secondary education and regional unemployment using norwegian regional panel data on students graduating from compulsory school between 1981 and 2004 we find robust evidence that completion rates are countercyclical our results suggest that poor labor market conditions when starting upper secondary education have a lasting effect and motivate students to stay in school and graduate

the swedish third way an assessment of the performance and validity of the rehn meidner model the swedish third way an assessment of the performance and validity of the rehn meidner model

municipal labor demand in the presence of uncertainty an econometric approach we specify a model of municipal labor demand when resource flows available to the municipality are uncertain the model allows us to test the hypothesis that employment decisions are rational in the sense that they incorporate all available information at the time that the decisions are made we find that for our sample of communities on the whole one cannot reject the hypothesis that labor demand is consistent with intertemporal utility maximization under uncertainty however small and large communities exhibit different behavior the employment decisions of small communities are consistent with the model while those of large communities are not

unemployment and crime is there a connection a panel of swedish counties over the years 1988 1999 is used to study the effects of unemployment on property crime rates the period under study is characterized by turbulence in the labor market the variation in unemployment rates was unprecedented in the latter part of the century hence the data provide a unique opportunity to examine unemployment effects according to the theory of economics of crime increased unemployment rates lead to higher property crime rates a fixed effects model is estimated to investigate this hypothesis the model includes time and county specific effects and a number of economic and socio demographic variables to control for unobservables and covariates the results show that unemployment had a positive and significant effect on some property crimes burglary car theft and bike theft

immigration regional conditions and crime evidence from an allocation policy in germany after the collapse of the soviet union more than 3 million people with german ancestors immigrated to germany under a special law granting immediate citizenship exploiting the exogenous allocation of ethnic german immigrants by german authorities across regions upon arrival we find that immigration significantly increases crime the crime impact of immigration depends strongly on local labor market conditions with strong impacts in regions with high unemployment similarly we find substantially stronger effects in regions with high preexisting crime levels or large shares of foreigners

an inventory system with two supply modes and capacity constraints abstract this paper analyses a periodic review inventory system with a main and an emergency supply mode where policies of the base stock type are used at both supply channels contrary to previously published models the capacity of the emergency channel is taken into account we examine two alternative ordering policies for that channel an early ordering policy that almost eliminates early stockouts in a replenishment cycle and a late ordering policy that delays the emergency order decision until more demand information has been accumulated approximate cost models are developed and properties of their optimal solutions are derived simulation results indicate that these solutions are near optimal conclusions are drawn about the relative effectiveness of the two emergency ordering policies

prices productivity and wage bargaining in open economies according to the standard union bargaining model unemployment benefits should have big effects on wages but product market prices and productivity should play no role in the wage bargain we formulate an alternative strategic bargaining model where labour and product market conditions together determine wages a wage equation is derived and estimated on aggregate data for four nordic countries wages are found to depend not only on unemployment and the replacement ratio but also on productivity international prices and exchange rates there is evidence of considerable nominal wage rigidity exchange rate changes have large and persistent effects on competitiveness

duration dependence versus unobserved heterogeneity in treatment effects swedish labor market training and the transition rate to employment summary the effect of a treatment on the hazard rate of a duration outcome may depend on the elapsed time since treatment in addition treatment effects may be heterogeneous across agents the former gives rise to duration dependence of the treatment effect whereas unobserved heterogeneity gives rise to spurious duration dependence of the observable hazard rate we develop a model allowing for duration dependence and unobserved heterogeneity in the treatment effect the model incorporates a timing of events model and allows for selectivity on unobservables we prove identification exploiting variation in the timing of treatment and outcome in the application we analyze the effects of the swedish vocational employment training program on the individual transition rate from unemployment to work we demonstrate the appropriateness of the approach by studying the enrollment process the data cover the population and include multiple unemployment spells for many individuals the results indicate a large significantly positive effect on exit to work shortly after exiting the program the effect at the individual level diminishes after some weeks when taking account of the time spent in the program the effect on the mean unemployment duration is small copyright 2012 john wiley sons ltd

the information content of losses abstract this study hypothesizes that because shareholders have a liquidation option losses are not expected to perpetuate they are thus less informative than profits about the firm s future prospects the results are consistent with the hypothesis they also show that the documented increase in the earnings response coefficent as the cumulation period increases appears to be due exclusively to the effect of losses the liquidation option effect extends to profitable cases where earnings are low enough to make the option attractive alternating explanations for the low informativeness of losses such as mean reversal of earnings are not supported by the tests

management by the numbers a formal approach to deriving informational and distributional properties of unmanaged earnings we explore the theoretical relation between earnings and market returns as well as the properties of earnings frequency distributions under the assumption that managers use unbiased accounting information to sequentially decide on real options their firms have and report generated earnings truthfully with the market pricing the firm based on those reported earnings we generate benchmarks against which empirically observed earnings returns relations and aggregate earnings distributions can be evaluated this parsimonious model shows a coherent set of results reported losses are less persistent than reported gains decision making diminishes the s shaped market response to earnings and earnings relate to returns asymmetrically in the way documented by basu 1997 furthermore the implied frequency distribution of aggregate earnings is neither symmetric nor necessarily single peaked instead it may exhibit a kink at zero and look similar to the plots reported by burgstahler and dichev 1997 however within our model none of these phenomena are due to reporting noise bias or some undesirable strategic managerial behavior they are the natural consequences of using past earnings as the basis for value increasing managerial decision making that in turn generates the future earnings on which future decisions will be based

accounting information capital investment decisions and equity valuation theory and empirical implications this paper develops a theoretical model to reexamine the roles of earnings and book value for equity valuation and to explore cross sectional differences in the properties of the valuation function ohlson 1995 and feltham and ohlson 1995 1996 show that assuming the clean surplus relation and a specific linear information dynamic equity value can be represented as a linear function of earnings and book value however recent empirical evidence indicates linear valuation functions do not fully capture the effects of earnings and book value on equity value for instance burgstahler and dichev 1997 find the valuation impact of either earnings or book value depends on the levels of these two variables and the valuation function is convex not linear similarly hayn 1995 and collins pincus and xie 1999 report that the valuation effect of earnings is asymmetric between positive and negative earnings also as collins pincus and xie 1999 show the relative and the incremental importance of earnings versus book value in explaining equity

globalization and taxation challenges to the swedish welfare state many have argued that the increased international mobility of both capital and labor witnessed in recent years will force advanced capitalist democracies to cut taxes and thus ultimately roll bac

do wage subsidies increase employment in subsidized firms this paper examines whether subsidized jobs have contributed to employment in subsidized firms or have merely substituted for non subsidized ones the data set is an unbalanced panel of some 31 000 firms that are followed annually between 1995 and 2002 the analysis is based on difference in differences which is adjusted by regression and matching methods the results indicate that wage subsidies stimulate employment and that the magnitude of the effect is as aimed i also found that subsidies have no sizeable effects on non subsidized firms

the rise of the modern welfare state ideology institutions and income security analysis and evidence in the 25 year period between 1960 and 1985 there was a great expansion of welfare state programs throughout the west the fraction of gdp accounted for by social expenditures doubled in much of europe and grew by 40 50 in many other oecd nations after 1985 growth in social insurance programs slowed relative to other parts of the economy this paper explores the extent to which institutions and ideological shifts may have accounted for the period of rapid growth for differences in the extent of that growth and for the subsequent reduction in the growth rates of social insurance programs

information distortion in a supply chain the bullwhip effect this article originally appeared in management science april 1997 volume 43 number 4 pp 546 558 published by the institute of management sciences consider a series of companies in a supply chain each of whom orders from its immediate upstream member in this setting inbound orders from a downstream member serve as a valuable informational input to upstream production and inventory decisions this paper claims that the information transferred in the form of orders tends to be distorted and can misguide upstream members in their inventory and production decisions in particular the variance of orders may be larger than that of sales and distortion tends to increase as one moves upstream a phenomenon termed bullwhip effect this paper analyzes four sources of the bullwhip effect demand signal processing rationing game order batching and price variations actions that can be taken to mitigate the detrimental impact of this distortion are also discussed

the assessment economic policy and social democracy the economic objectives of recent governments of the left were full employment reducing inequality and enhancing economic performance and democratic control by measures of planning and socialization the economic inheritance was difficult stagnant investment high unemployment in a number of cases and inflation higher than that of competitors the generalized productivity slow down slow growth and the drive to reduce inflation represented an unfavourable context the supply side interventions atrophied were abandoned or reversed employment performance was poor overall and sometime s disastrous some extensions of the welfare state were achieved and major increases in inequality were avoided but this record was hardly exceptional globalization is often blamed for such disappointments here the emphasis is on the inherent difficulties of the social democratic project containing distributional conflict other than by unemployment sustaining support for redistribution when living standards are stagnating and con straining business while relying on it to maintain high investment

examining the link between crime and unemployment a time series analysis for canada we use national and regional canadian data to analyse the relationship between economic activity as reflected by the unemployment rate and crime rates given potential aggregation bias we disaggregate the crime data and look at the relationship between six different types of crimes rates and unemployment rate we also disaggregate the data by region we employ an error correction model in our analysis to test for short run and long run dynamics we find no evidence of long run relationship between crime and unemployment when we look at both disaggregation by type of crime and disaggregation by region lack of evidence of a long run relationship indicates we have no evidence of the motivation hypothesis for selected types of property crimes we find some evidence of a significant negative short run relationship between crime and unemployment lending support to the opportunity hypothesis inclusion of control variables in the panel analysis does not alter the findings qualitatively or quantitatively

closed loop supply chains what reverse logistics factors influence performance this paper analyses the inventory and order flow dynamics in closed loop supply chains clscs in this kind of supply chains the reverse flow of materials entering the system for recycling purposes complicates the way in which inventories should be managed and replenishment policies should be designed specifically we analyse the relationships between some reverse logistics factors remanufacturing lead time return rate of recycled products reverse order policy and number of supply chain tiers on the order and inventory variance amplification we firstly perform a systematic literature review of the related studies secondly by adopting a difference equation math approach and design of experiment we perform a robust what if analysis of a clsc under a variety of operational and market conditions results show that ceteris paribus clsc outperforms a forward supply chain both in mono echelon and multi echelon structures and under both stationary and turbulent market demands furthermore reducing remanufacturing lead time and promoting information transparency may be crucial to improve clsc dynamics finally we use the research findings to provide interesting managerial consideration about how to reduce unnecessary operational members costs

the bullwhip effect progress trends and directions the bullwhip effect refers to the phenomenon where order variability increases as the orders move upstream in the supply chain this paper provides a review of the bullwhip literature which adopts empirical experimental and analytical methodologies early econometric evidence of bullwhip is highlighted findings from empirical and experimental research are compared with analytical and simulation results assumptions and approximations for modelling the bullwhip effect in terms of demand forecast delay replenishment policy and coordination strategy are considered we identify recent research trends and future research directions concerned with supply chain structure product type price competition and sustainability

striking at the roots of crime the impact of welfare spending on crime during the great depression abstractduring the great depression contemporaries worried that people hit by hard times would resort to crime president franklin roosevelt argued that the massive government relief efforts struck at the roots of crime by providing subsistence income to needy families after constructing a panel data set for 81 large american cities for the years 1930 40 we estimate the effect of relief spending by all levels of government on crime rates the analysis suggests that a 10 percent increase in relief spending during the 1930s reduced property crime by roughly 1 5 percent by limiting the amount of relief recipients free time work relief may have been more effective than direct relief in reducing crime more generally our results indicate that social insurance which tends to be understudied in economic analyses of crime should be more explicitly and more carefully incorporated into the analysis of temporal and spatial variations in criminal activity

identifying the effect of unemployment on crime abstract in this paper we analyze the relationship between unemployment and crime using u s state data we estimate the effect of unemployment on the rates of seven felony offenses we control extensively for state level demographic and economic factors and estimate specifications that include state specific time trends state effects and year effects in addition we use prime defense contracts and a state specific measure of exposure to oil shocks as instruments for unemployment rates we find significantly positive effects of unemployment on property crime rates that are stable across model specifications our estimates suggest that a substantial portion of the decline in property crime rates during the 1990s is attributable to the decline in the unemployment rate the evidence for violent crime is considerably weaker however a closer analysis of the violent crime of rape yields some evidence that the employment prospects of males are weakly related to state rape rates

crime and unemployment in turbulent times we use the exceptional variation in municipality level unemployment in sweden during the 1990s to identify the effect of unemployment on crime our findings are as follows i there is a statistically and economically significant effect of general unemployment on the incidence of burglary auto theft and drug possession ii we find no evidence for the popular view that youth unemployment matters for crime iii prime aged unemployment is robustly correlated with main categories of youthful crimes a finding consistent with the idea that unstable life conditions of parents have adverse spillover effects on the life choices of their children jel j00 k4

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

uncertainty resolution and the theory of depreciation measurement this paper examines how a firm s depreciation policy influences the relation between the resulting accounting numbers and the market value of the firm s equity traditional financial accounting theory conceptualizes depreciation measurement as a cost allocation procedure that matches an investment s cost with the flow of benefits it produces as has long been recognized in a setting with certain future cash flows and zero net present value npv investments investment costs can be allocated using standard present value techniques to yield at each date book values equal to market values and accounting earnings equal to economic earnings 2 the resulting book value and accounting earnings numbers are such that for all periods the book rate of return equals the cost of

destocking the bullwhip effect and the credit crisis empirical modeling of supply chain dynamics in this paper we analyze the strong sales dip observed in the manufacturing industry at the end of 2008 following the bankruptcy of lehman brothers and the subsequent collapse of the financial world we suggest that firms desire to retain liquidity during these times prompted a reaction characterized by the reduction of working capital which materialized as a synchronized reduction in target inventory levels across industries we hypothesize that such a reaction effectively acted as an endogenous shock to supply chains ultimately resulting in the bullwhip effect kind of demand dynamics observed to test this proposition we develop a system dynamics model that explicitly takes into account structural operational and behavioral parameters of supply chains aggregated at an echelon level we calibrate the model for use in 4 different business units of a major chemical company in the netherlands all situated 4 5 levels upstream from consumer demands in their respective supply chains we show that the model gives a very good historical fit of the sales developments during the period following the lehman collapse we test the model s robustness to behavioral parameter estimation errors through sensitivity analysis and the de stocking hypothesis against an alternative model finally we observe that the empirical data is aligned with experimental observations regarding human behavioral mechanisms concerning target adjustment times

the welfare state in transition reforming the swedish model acknowledgments introduction richard b freeman robert topel birgitta swedenborg 1 generating equality and eliminating poverty the swedish way anders bjorklund richard b freeman 2 public employment taxes and the welfare state in sweden sherwin rosen 3 tax policy in sweden erik norrman charles e mclure jr 4 wage policy and restructuring the swedish labor market since 1960 per anders edin robert topel 5 the effects of sweden s welfare state on labor supply incentives thomas aronsson james r walker 6 an evaluation of the swedish active labor market policy new and received wisdom anders forslund alan b krueger 7 taxes and subsidies in swedish unemployment lars ljungqvist thomas j sargent 8 the social costs of regulation and lack of competition in sweden a summary stefan folster sam peltzman 9 industrial policy employer size and economic performance in sweden steven j davis magnus henrekson 10 a heckscher ohlin view of sweden competing in the global marketplace edward e leamer per lundborg contributors author index subject index

capacity restrictions and supply chain performance modelling and analysing load dependent lead times abstract several studies have reported that capacitated supply chains may benefit from an improved dynamic performance as compared to unconstrained ones this occurs as a consequence of the capacity limit acting as a production smoothing filter in this research the relationship between capacity restrictions and the operational performance of supply chains is investigated from a novel perspective i e we assume that the influence of capacity constraints on lead times depends on the supply chain s responsiveness under these circumstances the experiments show that there is a negative effect of capacity constraints on supply chain performance both in terms of process efficiency internal and customer satisfaction external nonetheless the magnitude of this impact greatly depends on the responsiveness of the firm market conditions and adopted policies for inventory management more specifically the combination of tight capacity restrictions and low responsiveness significantly contributes to decrease supply chain performance which may be very damaging for the dynamic behavior of the system in this sense efficient capacity planning proves to be essential to prevent the supply chain from entering into a vicious circle

crime in europe and the united states dissecting the reversal of misfortunes contrary to common perceptions today both property and violent crimes with the exception of homicides are more widespread in europe than in the united states while the opposite was true thirty years ago we label this fact as the reversal of misfortunes we investigate what accounts for the reversal by studying the causal impact of demographic changes incarceration abortion unemployment and immigration on crime for this we use time series data 1970 2008 from seven european countries and the united states we find that the demographic structure of the population and the incarceration rate are important determinants of crime our results suggest that a tougher incarceration policy may be an effective way to contrast crime in europe our analysis does not provide information on how incarceration policy should be made tougher nor does it provide an answer to the question whether such a policy would also be efficient from a cost benefit point of view we leave this to future research paolo buonanno francesco drago roberto galbiati and giulio zanella

good jobs and recidivism i estimate the impact of employment opportunities on recidivism among 1 7 million offenders released from a california prison between 1993 and 2008 the institutional structure of the california criminal justice system as well as location skill and industry specific job accession data provide a unique framework for identifying a causal effect of job availability on criminal behaviour i find that increases in construction and manufacturing opportunities at the time of release are associated with significant reductions in recidivism other types of opportunities including those characterised by lower wages that are typically accessible to individuals with criminal records do not influence recidivism

the evolution of top incomes in an egalitarian society sweden 1903 2004 this study presents new homogenous series of top income shares in sweden over the period 1903 2004 we find that starting from levels of inequality approximately equal to those in other western countries at the time the income share of the swedish top decile drops sharply over the first eighty years of the twentieth century most of the decrease takes place before the expansion of the welfare state and by 1950 swedish top income shares were already lower than in other countries the fall is almost entirely due to a dramatic drop in the top percentile explained mostly by decreases in capital income while the lower half of the top decile consisting mainly of wage earners experiences virtually no change over this period in the past decades top income shares evolve very differently depending on whether capital gains are included or not when included sweden s experience resembles that in the u s and the u k with sharp increases in top incomes excluding capital gains sweden looks more like the continental european countries where top income shares have remained relatively constant a possible interpretation of our results is that sweden over the past 20 years has become a country where it is more important to make the right financial investments than to earn a lot to become rich

eurosclerosis and the sclerosis of objectivity on the role of values among economic policy experts schumpeter once observed that frequently economists not content with their scientific task yield to the call of public duty and to their desire to serve their country and their age by acting as policy experts and policy advocates schumpeter i949 p 346 this raises the issue discussed by gunnar myrdal i958 p 4 of whether social scientists can be practical and at the same time objective what is the relation between wanting to understand and wanting to change society how can the search for true knowledge be combined with moral and political valuations myrdal s questions point to serious but rarely discussed issues of objectivity and values when economists and other social scientists become involved in the making of public policy often in areas of conflict between major interest groups in western societies see also myrdal i 929 i 958 blaug i 992 ch 5 1 in everyday life the roles of the policy expert and the policy advocate tend to merge this mixing can be understood in terms of sen s distinction between b sic values supposed to apply under all conceivable circumstances and nonbasic values expected to hold only under specified factual circumstances sen i970 p 59 policymaking is typically concerned with non basic values economists can change the goals and choices of policymakers by changing their views of what the facts are by acting as policy advisors many brilliant economists have undoubtedly done excellent service to their countries and their times in this context names such as that of john maynard keynes come to many people s mind however it has also been noted that economic policy advisers frequently rely on anecdotal evidence and misleading statistics stigler i965 rivlin i986 krugman i994 like bad weather this situation has typically been accepted as a necessary evil from the point of view of scientific progress as well as the democratic process however the intellectual responsibility of academic policy experts must be increased with only the threat of losing intellectual credibility as a potential sanction from time to time they should therefore be required to

crime inequality and unemployment in england and wales a model of crime is developed based on principles from the existing literature with some original insight the implications of the model are that income inequality and unemployment are important explanatory variables for crimes motivated by economic gain but do not offer much explanatory power for other types of crime panel data of uk regions over the years from 2002 to 2007 are then used to test these predictions the empirical results strongly support the hypothesis that crime is an economic phenomenon

model unvertainty political learning and institutions a broader view on mancur olson s theory of institutional sclerosis in his rise and decline of nations mancur olson argues that politically stable countries suffer from declining growth rates caused by the growing influence of distributional coalitions that accumulate over time the empirical literature supports the notion of a negative relationship between a country s duration of political stability and its growth rates but finds only weak support for a negative influence of distributional coalitions on growth this paper sketches a simple model of party competition under model uncertainty which may explain this mixed empirical picture it shows that politically stable democracies are less well equipped to adjust to shifts in their economic environment than democracies with a shorter history of political stability in a further step the paper relates the major theme of this theory and olson s theory to the more recent literature on institutions and growth directions for further research are discussed

investment dynamics and earnings return properties a structural approach we propose the standard neoclassical model of investment under uncertainty with short run adjustment frictions as a benchmark for earnings return patterns absent accounting influences we show that our proposed benchmark generates a wide range of earnings return patterns documented in accounting research notably our model generates a concave earnings return relation similar to that of basu 1997 and predicts that the earnings return concavity increases with the volatility of firms underlying shock processes and decreases with the level of firms investments we find strong empirical support for these predictions overall our evidence suggests that our proposed benchmark is useful for understanding the joint dynamics of variables of interest to accounting research e g earnings returns investment market to book absent accounting influences a necessary precondition for inferring the effects of accounting from these dynamics

cumulative effects of labor market distortions in a developing country abstract this paper considers a small open economy with an input output industrial structure that creates vertical linkages and multiple equilibria an imperfect labor market is introduced by assuming unionized labor it is shown that a deregulation of the labor market may trigger a large discontinuous expansion of industrial output as reduced wage costs start a circular cumulative process in which expansions of the up and downstream industries promote each other centralization of collective bargaining may however also be conducive to industrialization

a role model for the conduct of fiscal policy experiences from sweden abstract sweden was hit by a severe macroeconomic crisis in the early 1990s gdp fell for three consecutive years in 1991 1993 unemployment increased by 9 percentage points banks had to be nationalized and public budget deficits exceeded 10 percent of gdp the recovery was however quick gdp growth was around four percent in 1994 1995 and budget deficits had been eliminated by 1998 growth remained high in the subsequent decade and the government debt ratio was reduced by almost 50 percent of gdp this paper describes and analyzes the swedish crisis and the policy measures implemented in response to the crisis policy measures include abandoning the fixed exchange rate fiscal austerity a new stricter fiscal framework and several structural reforms in the 1990s these policies were appropriate for handling the swedish crisis but the swedish experiences have limited applicability for the current debt crisis in particular because currency depreciation in combination with strong growth on export markets was a key ingredient in the swedish recovery implementing fiscal austerity would have been more complicated absent this export led growth moreover the new fiscal framework has most likely contributed to strengthening public finances but i demonstrate that budget surpluses and high gdp growth only explain around a third of the reduction in the public debt ratio after 1997

economic growth and welfare state a case study of sweden in this article we analyse the relation between the dynamics of economic growth and the welfare state using the swedish experience as a case study we defend three theses concerning the swedish experience that the deep economic crisis of 1990 93 constituted the definite breaking point for the accumulation pattern in force since the 1950s and in crisis since the mid 1970s that the new accumulation pattern eroded the long standing symbiotic relationships between economic growth and the welfare state and that the welfare state has suffered retrenchments and qualitative changes of great importance which can be fundamentally explained by the transformations in the accumulation pattern we conclude that the changes introduced in sweden have continued to subordinate the welfare state s main goals giving priority to the new accumulation pattern

crime during the business cycle urban rural differences abstractdespite the abundant literature on how crime evolves over the business cycle no consensus has arisen whether crime increases or decreases during recessions the literature provides both po

an examination of the dynamic behaviour of local governments using gmm bootstrapping methods an examination of the dynamic behavior of local governments using gmm bootstrapping methods

sweden s relative economic performance lagging behind or staying on top the purpose of this papers is confined to illuminating the aspect has sewedish economic growth been slow relative to other industrialised countries in recent decades i e is sweden lagging behind this abstract was borrowed from another version of this item

the swedish experiment the deterioration of the economic performance in sweden from about 1970 was to some extent the result of a number of exogenous shocks and unnecessary policy mistakes it was however also related to basic changes in the economic and social system in sweden in the late 1960s and early 1970 when government spending taxes and regulations started to expand dramatically it is also argued in the paper that problematic political economic and social mechanisms had become embedded in the long term dynamics of the system itself these various experiences are the background for recent reforms and retreats of the swedish experiment

the bullwhip effect in capacitated supply chains with consideration for product life cycle aspects abstract this paper presents an analysis of the bullwhip effect and net stock amplification in a three echelon supply chain considering step changes in the production rates during a product s life cycle demand the analysis is focused around highly complex and engineered products e g automobiles that have relatively long production life cycles and require significant capital investment in manufacturing using a simulation approach we analyze three stages of the product life cycle including low volumes during product introduction peak demand and eventual decline toward the end of the life cycle parts of the simulation model have been adopted by a major north american automotive oem as part of a scenario analysis tool for strategic supply network design and analysis the simulation results show that performance of a system as a whole deteriorates when there is a step change in the life cycle demand while restriction in production capacity does not significantly impact the bullwhip effect it increases the net stock amplification significantly for the supply chain setting under consideration furthermore a number of important managerial insights are presented based on sensitivity analysis of interaction effect of capacity constraints with other supply chain parameters

market wages and youth crime to study the problem of widespread youth crime i analyze a timeallocation model in which consumers face parametric wages and diminishing marginal returns to crime the theory motivates an econometric model that i estimate using data from the national longitudinal survey of youth my estimates suggest that youth behavior is responsive to price incentives and that falling real wages may have been an important determinant of rising youth crime during the 1970s and 1980s moreover wage differentials explain a substantial component of both the racial differential in criminal participation and the age distribution of crime

the effect of education on crime evidence from prison inmates arrests and self reports we estimate the effect of high school graduation on participation in criminal activity accounting for endogeneity of schooling we begin by analyzing the effect of high school graduation on incarceration using census data instrumental variable estimates using changes in state compulsory attendance laws as an instrument for high school graduation uncover a significant reduction in incarceration for both blacks and whites when estimating the impact of high school graduation only ols and iv estimators estimate different weighted sums of the impact of each schooling progression on the probability of incarceration we clarify the relationship between ols and iv estimates and show that the weights placed on the impact of each schooling progression can explain differences in the estimates overall the estimates suggest that completing high school reduces the probability of incarceration by about 76 percentage points for whites and 3 4 percentage points for blacks we corroborate these findings using fbi data on arrests that distinguish among different types of crimes the biggest impacts of graduation are associated with murder assault and motor vehicle theft we also examine the effect of drop out on self reported crime in the nlsy and find that our estimates for imprisonment and arrest are caused by changes in criminal behavior and not educational differences in the probability of arrest or incarceration conditional on crime we estimate that the externality of education is about 14 26 of the private return to schooling suggesting that a significant part of the social return to education comes in the form of externalities from crime reduction

understanding swedish social democracy victims of success the economic policies of swedish social democrats were not the product of one centralized authority but rather a series of initiatives influenced by many political actors and inspired by egalitarian preferences we focus on three policy areas first the welfare state is a central achievement of social democracy although its expansion is over it has cemented social democracy s position in power and is still popular among the electorate second the labour market model is in crisis the centralized rehn meidner model is not working coordination of wage bargaining has turned out to be difficult and the trade unions radical politics of the 1970s alienated swedish employers from social concertation finally macroeconomic management has had to struggle with inflationary pressures and the overheating of the late 1980s and the subsequent deflationary shock led to a sharp increase in unemployment in the 1990s many of these problems are related to social democracy s internal strains copyright 1998 by oxford university press

the dynamics of government abstract we model income redistribution with dynamic distortions as determined by rational voting without commitment among individuals of different types and income realizations we find that redistribution is too persistent relative to that chosen by a planner with commitment the difference is larger the lower is the political influence of young agents the lower is the altruistic concern for future generations and the lower is risk aversion furthermore there tends to be too much redistribution in the political equilibrium finally smooth preference aggregation as under probabilistic voting produces less persistence and does not admit multiple equilibria which occur under majority voting aggregation

did policy activism work abstract how macroeconomic policy activism influences business cycles remains a major unresolved question this paper compares the degree of cyclical stability in industrialized countries over three periods 1870 1913 1922 1937 and 1950 1979 two of which were little affected by demand management while the third saw a large degree of policy involvement the evidence shows that the 1950 1979 years were unprecedently stable neither problems of data reliability nor the influence of the world cycle nor the smaller role of agriculture appear to be responsible for this the major reason seems to be the greater influence of government which operated via automatic and discretionary policies and by changing expectations

the effects of labor markets and income inequality on crime evidence from panel data we estimate a model of crime using panel data for the u s we focus on the role of labor markets income distribution and demographics on property crime we find strong evidence that favorable labor market conditions have a significant negative effect on property crime we further test this result using sector specific wages and find that crime is most elastic with respect to wages in sectors that use low skilled labor we also find that income inequality has no significant effect on crime and that the proportion of young males in the population has a significant positive effect on crime

mitigating the bullwhip effect by ordering policies and forecasting methods abstract the bullwhip effect in which order variability increases as one moves up the supply chain has been observed in a range of industries modeled by several authors and various remedies suggested this paper provides a simulation of the effect of improved forecasting methods and finds that holt s and brown s methods substantially mitigate the bullwhip effect across a range of performance metrics the end result is to identify ordering policies that perform particularly well in combination with these forecasting methods and indicate how they can be implemented in practice

rising earnings inequality in sweden the role of composition and prices the rise in cross sectional earnings inequality in sweden between 1990 and 2002 is decomposed into changes in market prices of observable characteristics changes in the composition of the labor force across demographic groups and industries and changes in unobservables the swedish experience is then compared with that in the united states in both countries the rise in earnings inequality is a consequence of rising upper tail dispersion contrary to the u s experience where the rise is largely driven by changing market prices of observables and increased residual dispersion shifts in the swedish labor force composition have contributed positively to the rise in the p90 p50 gap the rise in the swedish p99 p90 gap however is entirely accounted for by changes in prices and residual dispersion

public sector employment and the skill premium sweden versus the united states 1970 2012 swedish census data and tax records reveal an astonishing decline in the aggregate skill premium of 30 percent between 1970 and 1990 with only a modest recovery in the next couple of decades in contrast the us skill premium rose by around 24 percent over those four decades a theory that equalizes wages with marginal products can rationalize these disparate outcomes when we replace commonly used measures of total labor supplies by private sector employment the dramatic decline in the skill premium in sweden is the result of an expanding public sector that has disproportionately hired unskilled labor

bullwhip effect measurement and its implications the bullwhip effect or demand information distortion has been a subject of both theoretical and empirical studies in the operations management literature in this paper we develop a simple set of formulas that describe the traditional bullwhip measure as a combined outcome of several important drivers such as finite capacity batch ordering and seasonality our modeling framework is descriptive in nature as it features certain plausible approximations that are commonly employed in practical inventory systems the results are nonetheless compelling and can be used to explain various conflicting observations in previous empirical studies building on the theoretical framework we discuss the managerial implications of the bullwhip measurement we show that the measurement can be completely noninformative about the underlying supply chain cost performance if it is not linked to the operational details such as decision intervals and leadtimes specifically we show that an aggregated measurement over relatively long time periods can mask the operational level bullwhip in addition we show that masking also exists under product or location aggregation in some illustrative cases

have financial statements lost their relevance the authors explore the concern that financial statements no longer have the same relevance to investors that they had in the past they test for value relevance by measuring the total return that could have been earned from prior knowledge of financial statement information and by examining the explanatory power of accounting information on market values and annual market adjusted returns both analyses are applied to a broad sample of exchange listed and nasdaq firms for the 1952 94 period the authors find mixed evidence on value relevance of financial statement reporting during the test period

the economic crisis of the 1990s in finland finland s depression a tale of bad luck and bad policies in the 1990s finland underwent a deep depression as its gdp dropped about 14 and unemployment rose from 3 to almost 20 this is a story of bad luck and bad policies bad luck took the form of external shocks the collapse of trade with the former soviet union in 1991 but also sharp cycles in the oecd area however bad luck is far from being the whole story in the absence of bad policies finland would have experienced a recession not a depression bad policies included a poorly designed financial regulation and mistaken reactions to the onset of the crisis of particular interest is the role of financial factors in triggering the crisis and aggravating the effects of bad policies not only were consumption and investment spending hurt by the credit crunch but there is evidence that the private sector s indebtedness has increased structural unemployment which explains why the recovery is proceeding with few job creations a number of general lessons emerge they concern the deregulation of financial markets the policy reaction to massive capital inflows and the role of employment policies seppo honkapohja and erkki koskela

accrual accounting informational sufficiency and equity valuation this paper studies accrual accounting and equity valuation in the context of a firm that makes repeated and overlapping investments in productive capacity the analysis identifies a particular accrual accounting depreciation rule that is termed replacement cost accounting because the book value of existing capacity assets is set equal to the value that such assets would have if a competitive market were to exist for used assets it is shown that replacement cost accounting aggregates past investment decisions of the firm without a loss of value relevant information the intrinsic value of the firm can then be expressed as a function of current accounting data and certain parameters of the firm s operating environment further it is shown that replacement cost accounting is essentially the only accounting rule with this informational sufficiency property

measuring and avoiding the bullwhip effect a control theoretic approach an important contributory factor to the bullwhip effect i e the variance amplification of order quantities observed in supply chains is the replenishment rule used by supply chain members first the bullwhip effect induced by the use of different forecasting methods in order up to replenishment policies is analysed variance amplification is quantified and we prove that the bullwhip effect is guaranteed in the order up to model irrespective of the forecasting method used thus when production is inflexible and significant costs are incurred by frequently switching production quantities up and down order up to policies may no longer be desirable or even achievable in the second part of the paper a general decision rule is introduced that avoids variance amplification and succeeds in generating smooth ordering patterns even when demand has to be forecasted the methodology is based on control systems engineering and allows important insights to be gained about the dynamic behaviour of replenishment rules