entry cost the tobin tax and noise trading in the foreign exchange market two types of policy have been proposed to eliminate noise trading in the foreign exchange market increasing the entry cost or imposing a tobin tax type of transaction tax in this paper we endogenize entry decisions of both informed traders and noise traders and show that these policies may be ineffective in reducing exchange rate volatility this is because these policies will discourage the entry of all traders so they may not change the relative ratio of traders or they may affect informed traders disproportionately more which increases the relative ratio of noise traders and exchange rate volatility deux types de politiques ont ete proposees pour eliminer le bruit transactionnel qui empeche le prix d etre parfaitement revelateur dans le marche des changes accroitre le cout a l entree ou imposer une taxe a la tobin sur les transactions dans ce texte on endogenise les decisions a l entree a la fois des operateurs informes et des autres qui n ont pas d information significative et on montre que ces politiques sont ineffectives pour reduire la volatilite du taux de change c est que ces politiques decouragent l entree de tous les operateurs en consequence elles peuvent ne pas changer le ratio des deux types d operateurs ou peuvent meme affecter les operateurs informes davantage ce qui accroit l importance relative des moins informes et donc la volatilite du taux de change

occupational choice and the process of development this paper models economic development as a process of institutional transformation by focusing on the interplay between agents occupational decisions and the distribution of wealth because of capital market imperfections poor agents choose working for a wage over self employment and wealthy agents become entrepreneurs who monitor workers only with sufficient inequality however will there be employment contracts otherwise there is either subsistence or self employment thus in static equilibrium the occupational structure depends on distribution since the latter is itself endogenous we demonstrate the robustness of this result by extending the model dynamically and studying examples in which initial wealth distributions have long run effects in one case the economy develops either widespread cottage industry self employment or factory production employment contracts depending on the initial distribution in the other example it develops into prosperity or stagnation

unionization and input flexibility in u s manufacturing 1973 1996 input flexibility as measured by the ability of firms to vary input demand in the face of changes in input prices is an important dimension of labor market flexibility using a new dataset the authors analyze the impact of unionization on input flexibility in u s manufacturing from 1973 to 1996 a period in which production was arguably becoming more flexible due to deep changes in the u s industrial relations system and in the broad macroeconomic environment the authors quantify the effects of unionization on input flexibility by estimating elasticities of substitution between a broad range of labor and non labor inputs controlling for unionization the pattern that emerges is more complex than that suggested by other research in particular low unionization apparently is associated with greater flexibility in the use of labor inputs but less flexibility in the use of non labor inputs

the dynamic cost and persistence of asset inequality in an agrarian economy abstract a growing literature suggests that asset inequality can be economically costly in the presence of agency costs that constrain labor and capital markets unclear in this literature is whether asset markets and optimal individual accumulation of self finance capacity suffice to eliminate costly inequality over time this paper uses numerical dynamic programming methods to explore this question with a model of an initially inegalitarian agrarian economy while an egalitarian asset distribution emerges over time the process involves sufficiently great productivity losses along the way that a redistributive policy could improve on the market s performance by both equity and efficiency criteria

spatial patterns of private sector and public sector non agricultural jobs in rural northeast thailand lohmann c and liefner i spatial patterns of private sector and public sector non agricultural jobs in rural northeast thailand regional studies published evidence from developing countries shows that in rural areas participation in non agricultural wage employment rises with proximity to urban centres while earnings do not this paper explores the reasons for this phenomenon analysing the job characteristics of rural workers in detail the data set consists of 900 jobs the results show that public jobs are over represented in rural remote regions driving up the mean wage of this type of region when considering private sector employment only spatial wage and income differentials do exist showing that workers in remote areas are economically more disadvantaged than workers in peri urban areas

the role of transaction costs for financial volatility evidence from the paris bourse this paper analyzes the causal linkage between transaction costs and financial volatility under two methodological improvements over the existing literature first we use panel data in which exogenous transaction cost differences in the french stock market are induced by price level dependent minimum price variation rules tick size rules unlike in previous studies based on one time regulatory tick size changes like the u s decimalization we can separately identify and control for marketwide volatility changes second we avoid the pitfalls of biased volatility measurement across regimes by using the range as a tick size robust volatility metric panel regressions controlling for marketwide volatility effects show at high levels of statistical significance that the hourly range volatility of individual stocks increases by more than 30 for a 20 exogenous increase in transaction costs due to tick size variations in the french trading system in the light of this evidence higher transaction costs in general and security transaction taxes in particular should be considered as volatility increasing jel f3 g1 g14

the effect of advance notification of plant closings on unemployment using data from the 1984 displaced worker survey the authors model the determinants of time without work following job displacement for a large sample of workers laid off because of plant shutdowns between 1979 and 1984 the major focus of the paper is on the role of advance notification in mitigating unemployment the estimating procedure accommodates right censored observations stemming from continuing or open ended spells of unemployment advance notification is found to have significantly reduced the duration of unemployment of those notified workers who did not draw unemployment insurance benefits and in particular of those who left the plant prior to termination advance notice had much less effect on the time without work of notified workers whose spell length of unemployment was long enough for them to collect unemployment insurance benefits

labor migration and earnings differences the case of rural china this article presents empirical evidence supporting the hypothesis that the decision of chinese rural people to migrate is affected by noneconomic forces using the 1820 rural household survey from sichuan province migration behavior and earnings are analyzed logistic probability models show that the decision to migrate is driven largely by the availability of rural non farm employment opportunities however if jobs are available in the province even at lower wages rural people will choose to stay rather than to migrate the major deterrent to migration is the lack of safety during transportation and in destination cities as well as forced separation from families moreover rural migrants are denied the legal right to reside permanently in cities furthermore findings reveal that although labor productivity in migrant activities is higher than it is in local non farm sectors the economic cost of migration in china is so high as to significantly limit reallocation one implication of this study is that without artificial barriers to labor migration the number of migratory workers would be higher since the important objective of the chinese government is to control rural to urban migration it is likely that restrictive migration policies will continue however putting aside the issue of social justice the economic efficiency loss under the chinese system should not be ignored

models as economies the distinction between actual economies and stylized general equilibrium models is no t sharp general equilibrium models with such key elements as uncerta inty spatial separation private information limited communication and limited commitment provide a catalogue that one can use to inter pret actual economies further a general equilibrium model can provi de a framework one can use to trace out the logic of some premise for joint economy wide phenomena a web to tie together seemingly unrel ated observations also in tolerating wide variations in environment s general equilibrium models provide laboratories one can use to con duct relatively inexpensive policy experiments copyright 1987 by royal economic society

examining managerial displacement the research reported used a longitudinal analysis to compare the displacement experience of managers with that of other employees and to examine the factors associated with managerial job loss jo

hot money in bank credit flows to emerging markets during the banking globalization era this paper investigates the relative importance of hot money in bank credit and portfolio flows from the us to 18 emerging markets over the period 1988 2012 we deploy state space models a la kalman filter to identify the unobserved hot money as the temporary component of each type of flow the analysis reveals that the importance of hot money relative to the permanent component in bank credit flows has significantly increased during the 2000s relative to the 1990s this finding is robust to controlling for the influence of push and pull factors in the two unobserved components the evidence supports indirectly the view that global banks have played an important role in the transmission of the global financial crisis to emerging markets and endorses the use of regulations to manage international capital flows

access to capital and agrarian production organisation there are two problems both universal that entrepreneurs in any economy must contend with firstly an agent generally has access only to a limited amount of working capital secondly workers hired by an agent are subject to moral hazard and this necessitates their supervision this paper models for an agrarian economy the constraints imposed on entrepreneurs activities by these two problems and endogenously determines the various organisational forms of production as well as the allocation of resources that will obtain with a simple model we endeavour to explain a diverse set of empirical observations pertaining to the less developed countries in terms of the general processes that determine the distribution of income among the various agents and the hierarchical relationships that develop among them agricultural production typically involves a period of several months between the time the inputs are purchased and the time the output is marketed access to working capital and hence to the credit market thus plays an important role in a farmer s production decisions the distribution of access to credit in turn tends to be an important determinant of income distribution in poor agrarian economies credit is invariably rationed according to the ability to offer collateral the amount of working capital a farmer can mobilise therefore depends on the amount of land he owns which is often a good proxy for his overall wealth and thus his ability to offer collateral further since hired hands have a propensity to shirk they need to be supervised and therefore the

climbing the development ladder economic development and the evolution of occupations in rural china we study how occupations evolve across space and time during the development of an economy using a data set on more than 200 villages from 8 provinces in china we examine the main occupations that have characterised china s labour markets since the economic reforms our findings reveal a systematic evolutionary pattern of occupational emergence the evolution of occupations proceeds from traditional and fairly simple forms of subsistence agriculture to modern more complex manufacturing and service firms our findings suggest that rural development in china is being built by a process that can be described by the climbing of a development ladder with each step up the ladder denoting the economy s transition into a more complex occupational regime

the peasant family in the transition from maoist to lewisian rural industrialisation rural industrialisation in china in the post maoist era involves the social transformation of the peasant population into a new class which is partially detached from agriculture and employed in diverse non state enterprises ranging from family run businesses to village and township run enterprises the peasant family internalises this transformation as it reallocates labour and capital into new industrial and tertiary sectors while maintaining agricultural production as a first and last means for labour absorption and subsistence since it is peasant families not the chinese state or the collective that now wholly undertake the burden of supporting the sizeable labour surplus their managerial autonomy tends to result in an energetic effort at economic rationalisation mainly through sectoral diversification of family income sources statistical analysis shows that the adoption of household production responsibility systems in agriculture while ambiguous in its effects on agricultural productivity w

did lower unionization in the united states result in more flexible industries do unions really impede manufacturers output flexibility if so in what ways the authors propose a methodology for quantifying george stigler s concept of output flexibility and for decomposing the effects of unionization on average cost differences between union and non union plants using a recently compiled data set on u s three digit manufacturing industries from 1973 to 1996 they adapt this methodology to simulate the effects of unionization on flexibility and average costs for average size plants simulation results indicate that higher unionization was associated with higher average costs and lower flexibility than low unionization higher average costs appear to have been primarily due to higher fixed costs such as higher benefits

tobin tax and trading volume tightening a reassessment this article extends the previous literature on the tobin tax and financial transaction tax we investigate the linkages between trading volumes and transaction costs using both a linear and a nonlinear methodology in stark contrast with previous studies we consider the possibility that our model may exhibit threshold effects or regime dependency by estimating a markov switching ms model this paper is the first contribution to specify the trading volume of the forex through different low and high volatility regimes our empirical investigation looks at the eur usd currency market our results show evidence of nonlinear patterns for trading volumes and transaction costs on the forex the tobin tax would not have a monotonic impact on trading activity across market conditions however the change in elasticity between low and high volatility regimes is slight 0 17 versus 0 21 we may suggest that the low variance regime might be the fundamentalist regime and the high variance regime lower tobin tax elasticity might be the chartist regime this study is a first step towards understanding which categories of agents dominate the market under the various market regimes and how they would react to the introduction of a tax this means our results are consistent with tobin s underlying thinking 1974 1978 1996 since a tax would penalize chartists more than fundamentalists it could reduce exchange rate volatility

capital market imperfections international credit markets and nonconvergence abstract we consider a two country growth model with international capital markets these markets fund capital investment in both countries and operate subject to a costly state verification csv problem investors in each country require some external finance but also provide internal finance which mitigates the csv problem when two identical except for their initial capital stocks economies are closed they necessarily convergemonotonicallyto the same steady state output level unrestricted international financial tradeprecludesotherwise identical economies from converging and poor countries are necessarily net lenders to rich countries oscillation in real activity and international capital flows can occur journal of economic literatureclassification numbers e00 f00 f34 g14

on the effectiveness of capital controls the experience of colombia during the 1990s abstract this paper analyzes the effectiveness of capital controls in colombia the evidence presented points towards a relative inability of the measures adopted to reduce the level of capital inflows nonetheless the evidence suggests that non remunerated deposits have been successful in inducing a recomposition of foreign liabilities in favor of long term maturities it is likely that this is a positive result as it has made the country less vulnerable to a reversal in capital flows in this sense controls may be viewed as an effective way of internalizing the negative externality imposed by short term maturities

transaction taxes and the behavior of the swedish stock market abstract this paper studies the effects of transaction taxes on the behavior of swedish equity returns during the 1980 1987 period sweden provides an excellent laboratory style setting for such a study as taxes were imposed for political purposes rather than to alter the behavior of the stock market volatility did not decline in response to the introduction of taxes although stock price levels and turnover did large proportions of trading activity migrated overseas to london when the tax rate was increased to 2 in 1986

revenge of the managers labor cost cutting and the paradoxical resurgence of managerialism in the shareholder value era 1984 to 2001 institutional changes associated with the rise of shareholder value capitalism have had seemingly contradictory effects on managers and managerialism in the united states economy financial critiqu

trade execution costs and market quality after decimalization this study assesses trade execution costs and market quality for nyse and nasdaq stocks before and after the 2001 change to decimal pricing several theoretical predictions are confirmed quoted bid ask spreads declined substantially on each market with the largest declines for heavily traded stocks the percentage of shares receiving price improvement increased on the nyse but not on nasdaq however those trades completed at prices within or outside the quotes were improved or disimproved by smaller amounts after decimalization and trades completed outside the quotes saw the largest reductions in trade execution costs as a class effective bid ask spreads as a percentage of share price arguably the most relevant measure of execution costs for smaller trades averaged 0 33 on a volume weighted basis after decimalization for both nyse and nasdaq stocks there is no evidence of systematic intraday reversals of quote changes on either market as would be expected if decimalization had damaged liquidity supply

are grains of sand in the wheels of international finance sufficient to do the job when boulders are often required this paper criticises the effectiveness of a tobin tax in acting as a deterrent to short run round trip speculation on exchange rate movements it is demonstrated that given the usual magnitude of a proposed tobin tax the deterrent to short term speculation will be negligible and in all likelihood smaller than the deterrent to real trade flows and arbitrage activities finally an alternative proposal for preventing currency speculations while creating incentives for global full employment based on keynes s 1940s writings is proposed

the catalytic effect of lending by the international financial institutions for many less developed countries ldcs and countries in transition cits external financing is frequently an effective constraint on economic growth and development capital inflows may be used to overcome shortages of domestic saving thereby permitting higher levels of investment as well as shortages of foreign exchange thereby permitting larger quantities of imports

migration and incomes in source communities a new economics of migration perspective from china the objective of this paper is to understand the effects of china s migration on source communities and to discuss their policy implications we draw from new economics of labor migration nelm theory to understand how migration and migrant remittances can relax or tighten market constraints in china s rural economy using simultaneous equation econometric techniques and household survey data from china we estimate net sectorspecific effects of migration on rural household income focusing on farm production and self employment our econometric findings indicate that the loss of labor to migration has a negative effect on household cropping income in source areas however we provide evidence that remittances sent home by migrants positively compensate for this lost labor effect contributing to household incomes directly and indirectly by stimulating crop and possibly self employment production this finding offers evidence in support of the nelm hypothesis that remittances loosen constraints on production in the imperfect market environments characterizing rural areas in less developed countries taking into account both the multiple effects of migration and the change in household size participating in migration increases household per capita income between 14 and 30 percent migration and incomes in source communities a new economics of migration perspective from china china is experiencing the largest peacetime flow of labor out of agriculture ever witnessed in world history solinger 1999 rozelle et al 1999 despite the rapid expansion of labor migration china s work force is still disproportionately employed in agriculture compared to other countries at similar levels of per capita gdp taylor and martin 2001 hence as china s economy continues to expand the flow of labor to urban areas will continue and even accelerate johnson 1999 the massive flow of labor away from farms has intensified research interest in china s migration in recent years however as in the broader literature on migration in less developed countries most recent studies on china s migration have focused on determining the size and composition of the labor flow macroeconomic implications of increased migration and the effects of migration on urban areas zhao 1999 yang 1999 1997 less emphasis has been placed on researching the effects of migration on the rural communities that migrants leave even though evidence shows that the rural household in the village of origin is typically the central concern of all those involved in migration both those who leave and those who stay behind exceptions include wang and zuo 1999 bai 2001 moreover the recent increase in migration has left policy makers particularly concerned regarding the way source communities will be affected moa 1999 they are concerned that as labor flows away from farms food production and crop income will decline potentially threatening china s food security furthermore policy makers are concerned about the increasing gap between urban and rural household incomes if migration exacerbates this gap some fear that as it grows rural residents eventually will flood cities ill equipped to absorb them others fear that discontent over a rising urban rural income gap could even spill over into political unrest yang 1999 because china s markets and other modern economic institutions are still relatively undeveloped migration may play a pivotal role in creating or overcoming constraints caused by the lack of well functioning markets and or institutions knight and song 1999 benjamin and brandt 2000 the new economics of labor migration nelm literature analyzes migration as a household decision rather than as an individual decision stark 1991 the nelm hypothesizes that rural households facing imperfect market environments decide

portfolio capital flows hot or cold a distinction is often made between short term and long term capital flows the former are deemed unstable hot money and the latter are deemed stable cold money using time series analysis of balance of payments data for five industrial and five developing countries we find that in most cases the labels short term and long term do not provide any information about the time series properties of the flow in particular long term flows are often as volatile as short term flows and the time it takes for an unexpected shock to a flow to die out is similar across flows long term flows are also at least as unpredictable as short term flows and knowledge of the type of flow does not improve the ability to forecast the aggregate capital account copyright 1995 by oxford university press

how widespread are nonlinear crowding out effects the response of private transfers to income in four developing countries this article investigates the relationship between household income and private transfers received in developing countries if private transfers are unresponsive to household income there is less likelihood of expansions in public social security crowding out private transfers most literature finds that private transfers are unresponsive but this may be because responses have been obscured by the methods that ignore nonlinearities threshold regression techniques find such nonlinearity in the philippines and scope for serious crowding out with 30 80 of private transfers potentially displaced for low income households cox et al 2004 to see if these nonlinear effects occur more widely semiparametric and threshold regression methods are used to model private transfers in four developing countries china indonesia papua new guinea and vietnam the results reported in this article suggest that nonlinear crowding out effects are not important features of transfer behaviour in these countries the

migration remittances and agricultural productivity in china in our paper we have used the new economics of labor migration framework to trace the complex linkages that exist among migration remittances and agricultural productivity in china constraints in the operation of on farm labor and capital or insurance markets or institutions provide households with a motivation to migrate and distort on farm operations when labor leaves in our household sample the net impact of migration and remittances on maize production is negative excerpt

economic development and structural change the role of the service sector this paper provides evidence on patterns of structural change during development examining in particular how cross section studies can accommodate the recent evidence on de industralisation in many developed countries it is argued that functional forms used previously are now inappropriate and new functional forms are proposed it is found using these functional forms that empirical evidence supports the existence of clear patterns of structural change across developed and developing countries

the composition of international capital flows risk sharing through foreign direct investment abstract evidence on international capital flows suggests that foreign direct investment fdi is less volatile than other financial flows to explain this finding i model international capital flows under the assumptions of imperfect enforcement of financial contracts and inalienability of fdi imperfect enforcement of contracts leads to endogenous financing constraints and the pricing of default risk inalienability implies that it is not as advantageous to expropriate fdi relative to other flows these features combine to give a risk sharing advantage to fdi over other capital flows this risk sharing advantage of fdi translates into a lower default premium and lower sensitivity to changes in a country s financing constraint the model offers the new implication that financially constrained countries should borrow relatively more through fdi this is because fdi is harder to expropriate and not because fdi is more productive or less volatile using several creditworthiness and country risk ratings to measure financing constraints i present new evidence linking fdi and financing constraints moreover numerical simulations of the model generate stronger serial correlation for fdi than for other flows into developing countries this corroborates the view that non fdi flows are more short term and more likely to change direction

how you downsize is who you downsize biased formalization accountability and managerial diversity scholars and pundits argue that women and minorities are more likely to lose their jobs in downsizing because of segregation or outright discrimination in contrast this article explores how the f

the falsification of four popular hypotheses about the asian crisis various claims have been made about the causes of the asian crisis and its spread here we use data on the behaviour of capital flows during the crisis to test the strong forms of four such hypotheses that portfolio investors and hedge funds played a dominant role in initiating and or spreading the crisis that moral hazard kept efficient markets from predicting the crisis and finally the common lender hypothesis of kaminsky and reinhart in the process we also test implications of the calvo mendoza model of rational investor ignorance all are falsified as monocausal explanations for example portfolio investments that could not have been subject to substantial moral hazard continued to flow into asia until very shortly before the crisis likewise banks were a much larger source of capital outflows during the crisis than were portfolio investors while falsified in their strongest forms several of these hypotheses in less strong forms should play a role in a more nuanced analysis it is necessary to move past simple single factor approaches in order to produce a more complete synthetic explanation of this episode

public versus private ownership of firms evidence from rural china why are many of china s successful rural enterprises publically owned by local communities using a set of provincial data we find that the share of community public firms township village enterprises or tves relative to private enterprises is higher where the central government s influence is greater the community government s power is stronger and the level of market development is lower we also find that tves help achieve the community government s goals of increasing government revenue rural nonfarm employment and rural income however tves do not increase rural income given the levels of nonfarm employment and local public goods provision indicating possible inefficiency as compared with private enterprises