from shadow to green linking environmental fiscal reforms and the informal economy in the past few decades many papers have analysed in some depth different environmental tax reforms and the double dividend hypothesis i e the possibility of improving not only the environment but also the economy through the reduction of distortions in the tax system recently more stress has been placed on testing empirically what effects a reduction in labour taxes may have on unemployment when accompanied by a carbon or other environmental tax however such studies have not modelled the effects of the presence of a shadow economy even though informal markets account for a significant and growing part of gdp in many developed economies this paper analyses this link using an applied general equilibrium model for the case of spain which has one of the highest unemployment rates in the world and one of the biggest informal economies of any wealthy country we conclude that our analysis strengthens the case for an environmental tax reform in spain if revenues from a co2 tax are recycled via a labour tax reduction

judicial productivity delay and efficiency a directional distance function ddf approach abstract the aim of this paper is twofold on the one hand it provides a contribution to the debate on judicial efficiency by conducting an applied research on the italian tax judiciary thanks to a database covering the activities of the italian tax courts over a 3 year period 2009 2011 on the other hand it also contributes to the methodological debate as it compares results obtained with data envelopment analysis dea and directional distance function ddf two related non parametric techniques which allow evaluating the efficiency of each observation as the radial distance from the efficient frontier defined by the best observations while dea has already been used to assess the mere technical efficiency of judicial systems the ddf offers a valuable additional contribution since it makes it possible to minimize the social cost of production of adjudication in the measurement this feature makes it particularly attractive in those sectors in which production externalities may arise such as judicial delays in the case investigated here additionally the paper first applies the bootstrap to the ddf procedure in order to provide more robust estimates and to compare them with the dea results

does family income matter for schooling outcomes using adoptees as a natural experiment one would expect that family income is an important positive factor in children s school attainment however evidence is often tainted by the lack of control for parental ability since at least a portion of ability is transferred genetically to children this paper uses a sample of adopted children and offers genetically unbiased estimates we further correct for biases arising from unobserved parenting qualities and from parents differentiation between their own birth and adopted children family income still has a significant effect it implies that high ability children in low income families face binding credit constraints that society may wish to relieve

global warming policy a public finance perspective in the last few years a substantial volume of research has considered the design of taxes to slow greenhouse gas emissions as well as the economic effects of such policies in this paper i summarize the insights that have emerged from this work i begin by explaining that while efficiency considerations create a presumption for using coordinated international policies to alter greenhouse gas emissions the prospects for such action are bleak then i focus on the public finance of carbon taxes at the national level considering the design of such taxes as well as their incidence across and within nations next i focus on greenhouse gas emission policies that could be enacted in less developed countries such as the elimination of fossil fuel subsidies and other policies to slow deforestation finally i suggest several promising directions for future study

the role of collateral in credit markets with imperfect information abstract the paper analyzes the structure of credit market equilibrium under imperfect information collateralization and credit rationing are compared as alternative means to cope with problems of adverse selection and moral hazard it is shown that lenders may use collateral as a self selection and incentive mechanism rationing occurs only if the borrowers collaterizable wealth is too small to allow perfect sorting or to create sufficiently strong incentives whenever there is rationing in an equilibrium some borrowers are charged the maximum amount of collateral

intergenerational linkages in consumption behavior consumption is partly a social activity yet most studies of consumer behavior treat households in isolation we investigate familial relationships in consumption patterns using a sample of parents and their children from the panel study of income dynamics we nd a positive and statistically signi cant parent speci c eect on children s consumption even after controlling for the eect of parental income and we nd similar eects for sibling pairs child consumption responds negatively to large post retirement shortfalls in consumption of the parents this behavior holds up even after allowing for the possibility of smaller parent to child transfers made necessary by the parental consumption shortfalls these results suggest that although income is an important source of the intergenerational correlation parental choices and experiences also aect consumption behavior of the children

financial intermediation capital composition and income stagnation the case of europe abstract we look into the role of financial intermediation in inducing the european financial crisis of 2008 by exploring the effects of overall lending and the allocation of credit to specific categories of borrowers namely households vs firms we find that for the eu26 during the period 1995 2008 excessive household leverage through mortgage lending exerted a crowding out effect on availability of credit to support innovation and productive investment the crowding out effect ultimately translated into a gdp growth that was decoupled from real household income in this article we explain that shifting credit towards mortgages and away from corporate projects is consistent with rational behaviour based on historical trends aimed at minimizing short term risk for each individual bank nevertheless as a whole the sum of individual risk reducing attitudes generated a long term systemic risk

general equilibrium impact of an energy saving policy in the public sector we analyse a disregarded environmental policy instrument a switch in government expenditure away from energy or other natural resources and toward a composite good which includes energy saving expenditure we first develop two variants of an analytical general equilibrium model a composite good is produced with constant returns to scale and energy is imported or produced domestically with diminishing returns yielding a differential rent to its owners the government purchases energy and composite goods from private firms such a policy unambiguously increases employment it also raises private consumption and welfare under two conditions i it is not too costly and ii the initial share of the resource is smaller in public spending than in private consumption or the difference is small enough we then run numerically a model featuring both importation and domestic production of energy oil gas and electricity for the oecd as a whole simulations show that employment welfare and private consumption rise we provide magnitudes for different parameter values

the origins of intergenerational associations lessons from swedish adoption data we use unique swedish data with information on adopted children s biological and adoptive parents to estimate intergenerational mobility associations in earnings and education we argue that the impact from biological parents captures broad prebirth factors including genes and prenatal environment and the impact from adoptive parents represents broad postbirth factors such as childhood environment we find that both pre and postbirth factors contribute to intergenerational earnings and education transmissions and that prebirth factors are more important for mother s education and less important for father s income we also find some evidence for a positive interaction effect between postbirth environment and prebirth factors

can a carbon permit system reduce spanish unemployment this paper analyses the impact of carbon policy on unemployment in spain and whether recycling the public revenues earned from permit auctions can alleviate this problem while spain s deviation from the european union s intermediate emission goals is more serious than most other member countries unemployment in spain is also well above average for the european union we use a computable general equilibrium model that includes unemployment in the markets for unskilled and skilled labour we find that introducing carbon permits does not aggravate spanish unemployment in fact if supplied with revenue recycling schemes unemployment rates may actually fall contrary to other european studies we find that the best option is to reduce payroll taxes on relatively skilled types of labour this reform is successful in both increasing labour demand and dampening the supply response to rising wages however while all of the recycling schemes generate dividends in terms of aggregate welfare none entirely offsets the abatement costs

growth and employment the scope of a european initiative this paper is an abridged version of a policy initiative paper prepared with a dozen colleagues in louvain la neuve and paris we propose a set of policies to cope with europe s persistent unemployment including two medium term programs a drastic reduction of the indirect cost of unskilled labour and an ambitious stimulation of targeted investments the bottom line is that policies addressing meaninfully europe s unemployment problem must be pursued on a bolder scale than currently contemplated

can good governance lower bank intermediation costs this paper argues that better governance practices can reduce the costs risks and uncertainty of financial intermediation our sample covers 100 high middle and low income countries during 1996

law enforcement and firm financing theory and evidence this paper investigates the economic effects on firms policies of differences in law enforcement we find that in judicial districts where trials are longer bank financing is more costly and firms are smaller however we do not find any significant relation between law enforcement and firms leverage ratio we rationalize our results within a two region dynamic general equilibrium model with asymmetric information and collateralized credit contracts we find that a stronger enforcement of creditors rights not only improves credit conditions partial equilibrium effect but also fosters individual capital accumulation general equilibrium effect in line with this theoretical prediction we find a positive relation between individual savings and quality of legal enforcement

environmental taxation and unemployment some evidence on the double dividend hypothesis in europe abstract the employment double dividend hypothesis suggests that an appropriately designed fiscal reform in which emission charges are used to subsidize employers social security contributions may realize at least two relevant policy goals a better quality of the environment and at the same time an increase in employment levels this paper uses a newly developed econometric general equilibrium model for the european union as well as for each member country and presents simulation results up to the year 2010 of the effects of a european carbon tax the revenues from which are recycled to reduce employers social security contributions the results show that recycling carbon tax revenues may provide an employment double dividend only in the short run

increasing public investment in europe some practical considerations abstract the study emphasises the joint importance of investment and efficiency of investment indicated by its rate of return for economic growth in particular the role of public investment is analysed it is shown that the differing quality of investment has played a significant role in the different economic growth experiences of the eu japan and the us it is argued that to increase growth in the eu it may not be necessary to increase the investment rate long term growth could also be restored by a sufficiently strong increase of the efficiency of investment

institutional failure or market failure we investigate the effect of the power of creditors property rights protection and institutional quality on bank profits using a panel of 498 banks from 46 countries results show that better institutions and stronger property rights protection reduce bank profits while stronger power of creditors drives up bank profits significantly results imply that better institutions and enhanced property rights protection lead to greater flow of credit allowing firms and investors to undertake more profitable ventures by extension stronger creditor rights erect steeper barriers to external finance for firms and investors national indicators of economic freedoms may be more important to lowering the spread than strict creditor rights seemingly credit markets fail when economic institutions fail or when governments intervene into these markets in ways that impede the safety and soundness of financial transactions and private contracting

does judicial efficiency lower the cost of credit the authors investigate the effect of judicial efficiency on banks lending spreads for a large cross section of countries they measure bank interest rate spreads for 106 countries at an aggregate level and for 32 countries at the level of individual banks the authors find that after controlling for a number of other country characteristics judicial efficiency in addition to inflation is the main driver of interest rate spreads across countries this suggests that in addition to improving the overall macroeconomic climate in a country judicial reforms through a better enforcement of legal contracts are critical to lowering the cost of financial intermediation for households and firms

the employment effects of low wage subsidies abstract low wage subsidies are often proposed as a solution to the unemployment problem among the low skilled but the empirical evidence on their effects is still scarce this paper examines the employment effects of a finnish payroll tax subsidy scheme which is targeted at the employers of older full time low wage workers the system s clear eligibility criteria open up an opportunity for a reliable estimation of the causal impacts of the subsidy scheme our results indicate that the subsidy system had no effect on the employment rate or wages of the eligible groups but it increased slightly working hours among those already at work

personal bankruptcy and credit supply and demand this paper examines how personal bankruptcy and bankruptcy exemptions affect the supply and demand for credit while generous state level bankruptcy exemptions are probably viewed by most policy makers as benefiting less well off borrowers our results using data from the 1983 survey of consumer finances suggest that they increase the amount of credit held by high asset households and reduce the availability and amount of credit to low asset households conditioning on observable characteristics thus bankruptcy exemptions redistribute credit toward borrowers with high assets interest rates on automobile loans for low asset households also appear to be higher in high exemption states

an interview with edmond malinvaud this article contains an interview with edmond malinvaud professor malinvaud describes the origins of his interest in economics teachers who had a major influence on his development as an economist his visit to the cowles commission in 1950 the substance of his research and the contributions he made as a policy maker among the interesting tidbits in the interview is that professor malinvaud s popular textbooks in microeconomic theory macroeconomics and econometrics were a direct outgrowth of courses he taught at insee i am not good at speaking he said when not constrained by a written text

repossession and the democratization of credit we exploit a 2004 credit reform in brazil that simplified the sale of repossessed cars used as collateral for auto loans we show that the reform expanded credit to riskier self employed borrowers who purchased newer more expensive cars the legal change has led to larger loans with lower spreads and longer maturities although the credit reform improved riskier borrowers access to credit it also led to increased incidences of delinquency and default our results shed light on the consequences of a credit reform and highlight the crucial role that collateral and repossession play in the liberalization and democratization of credit

recycling energy taxes impacts on a disaggregated labour market abstract this paper analyses the impacts of energy taxes whose revenue is recycled to reduce gross wages and increase employment the main novel feature of this paper is the attempt to assess the effectiveness of this fiscal reform by using a labour market model in which both skilled and unskilled workers are used in the production process this segmentation enables us to compare a policy which aims at reducing unskilled workers wages as in the original delors white book with a policy in which the environmental fiscal revenue is used to reduce the gross wage of all workers moreover two policy scenarios will be considered a non co operative one in which each country determines the optimal domestic energy tax to achieve a given employment target and a co operative one in which the energy taxes are harmonised to equalise marginal abatement costs in the eu and in which the employment target is set for the eu our results show that i an employment double dividend can be achieved in the short run only even if a trade off between environment and employment always exists ii the effect on employment is larger when the fiscal revenue is recycled into all workers gross wages rather than into unskilled workers only iii a co operative policy leads to even larger benefits in terms of employment provided that an adequate redistribution of fiscal revenues is adopted by eu countries

regression toward mediocrity in economic stature this paper provides estimates of the correlation in lifetime earnings between fathers and sons intergenerational data from the national longitudinal survey are used earlier studies conducted for the united states report elasticities of children s earnings with respect to parent s earnings of 0 2 or less suggesting extensive integenerational mobility these estimates however are biased downward by error contaminated measures of lifetime economic status estimates presented in this paper correct for the problem of measurement error and find the intergenerational correlation in income to be on the order of 0 4 this suggests considerably less intergenerational mobility than previously believed jel j62

intergenerational income mobility in the united states social scientists and policy analysts have long expressed concern about the extent of intergenerational income mobility in the united states but remarkably little empirical evidence is available the few existing estimates of the intergenerational correlation in income have been biased downward by measurement error unrepresentative samples or both new estimates based on intergenerational data from the panel study of income dynamics imply that the intergenerational correlation in long run income is at least 0 4 indicating dramatically less mobility than suggested by earlier research copyright 1992 by american economic association

from institutions to financial development and growth what are the links this paper presents an integrated overview of the literature linking institutions financial development and economic growth from the large body of research on institutional development the paper first selects those contributions that make it possible to study the role of institutional arrangements in ameliorating worsening the information frictions and transaction costs that characterize the development of financial markets the paper then investigates the theoretical mechanisms by which these specific frictions affect economic growth and presents the stock of empirical evidence quantifying the impact of institutions on growth through financial development

the online shadow of offline signals which sellers get contacted in online b2b marketplaces this article extends the understanding of what impels buyers to contact particular sellers in online business to business b2b marketplaces which are typically characterized by sparse social structures and concomitant limitations in observing social cues integrating an institutional perspective with signaling theory our core argument is that offline seller characteristics that are visible online in particular geographic location and legal status convey credible signals of seller behavior because they provide buyers with information on sellers local institutional quality and the institutionally induced obligations and controls acting on sellers using unique data from a large italian online b2b marketplace between the fourth quarter of 1999 and july 2001 we find that both sellers local institutional quality and their legal statuses affect a buyer s likelihood of contacting a seller moreover consistent with the idea that a buyer s own local institutional quality generates a relevant reference point against which sellers are evaluated we find that a buyer is progressively more likely to contact sellers the higher their local institutional quality relative to the buyer jointly our findings imply that in online b2b marketplaces signals conveyed by sellers geographic locations and legal statuses may constitute substantive sources of competitive heterogeneity and market segmentation

the uncertain foundations of the welfare state abstract the welfare state is often portrayed as provider of insurance against uncertainties in knight s 1921 sense of the term which would be refused or underinsured on private markets this image conflicts with the standard economic model of risk exchange founded on the subjective interpretation of probability which predicts that all individual uncertainties will be insured by private markets our aim in this paper is to explain why this prediction fails and building on contributions to decision theory that take seriously the idea of knightian uncertainty to show why social insurance may be justified

capital subsidies versus labor subsidies a trade off between capital and employment this paper investigates regime switching in the response of u s output to a monetary policy action we find substantial statistically significant time variation in this response that corresponds to high response and low response regimes we then investigate whether the timing of the regime shifts are consistent with three particular manifestations of asymmetry by modeling the transition probabilities governing the switching process as functions of state variables we find strong evidence that policy actions taken during recessions have larger effects than those taken during expansions we find less evidence of asymmetry related to the direction or size of the policy action

credit reporting relationship banking and loan repayment how does information sharing between lenders affect borrowers repayment behavior we show in a laboratory credit market that information sharing increases repayment rates as borrowers anticipate that a good credit record improves their access to credit this incentive effect of information sharing is substantial when repayment is not third party enforceable and lending is dominated by one shot transactions if however repeat interaction between borrowers and lenders is feasible the incentive effect of credit reporting is negligible as bilateral banking relationships discipline borrowers information sharing nevertheless affects market outcome by weakening lenders ability to extract rents from relationships copyright 2007 the ohio state university

can fiscal redistribution undo skill biased technical change evidence from the french experience the inequality of labor earnings among working age individuals has gone up in all western countries during the past 25years either through rising wage inequality us uk or through rising unemployment continental europe policy regimes did matter a great deal however as far as the inequality of disposable income is concerned in a country like france transfers to the unemployed were sufficiently massive to prevent income inequality from rising this paper argues that the way fiscal redistribution has managed to counteract skill biased technical change in countries like france is somewhat paradoxical the same distributive stability could have been obtained at a lower cost by following a job subsidies strategy rather than an income maintenance strategy simply because it is always less costly to have people at work producing something we explore several potential explanations for this paradox 1999 published by elsevier science

the role of social capital in financial development to identify the effect of social capital on financial development we exploit social capital differences within italy in high social capital areas households are more likely to use checks invest less in cash and more in stock have higher access to institutional credit and make less use of informal credit the effect of social capital is stronger where legal enforcement is weaker and among less educated people these results are not driven by omitted environmental variables since we show that the behavior of movers is still affected by the level of social capital of the province where they were born

asymmetric valuations and the role of collateral in loan agreements loan contracts with provision for collateral are of two general types in one the collateral may be an existing asset of the borrowing firm which is pledged to a lender in the event of default in this case collateral does not increase the assets that the borrower would lose if there is default since all the borrower s assets are attachable therefore the expected marginal cost to the borrower of providing an additional unit of collateral includes principally transactions costs associated with the collateral l this describes the usual type of commercial loan arrangement with the collateral being either equipment real estate accounts receivable or inventories in the other type of loan contract the collateral is an additional asset that is given up by the borrower if there is default that is in addition to the usual assets that are available to its lenders the borrower assigns as collateral to a creditor an asset that would normally not be legally attachable this arrangement is more common in small business loans that are secured by a personal asset e g a house of the entrepreneur likewise debt issued by a legally separate subsidiary may be secured by an asset of the parent firrn in these cases the expected marginal cost to the borrower the owner manager of the small firm or the parent corporation in the latter example of providing an additional unit of collateral

a more complete conceptual framework for sme finance abstract we propose a more complete conceptual framework for analysis of sme credit availability issues in this framework lending technologies are the key conduit through which government policies and national financial structures affect credit availability we emphasize a causal chain from policy to financial structures which affect the feasibility and profitability of different lending technologies these technologies in turn have important effects on sme credit availability financial structures include the presence of different financial institution types and the conditions under which they operate lending technologies include several transactions technologies plus relationship lending we argue that the framework implicit in most of the literature is oversimplified neglects key elements of the chain and often yields misleading conclusions a common oversimplification is the treatment of transactions technologies as a homogeneous group unsuitable for serving informationally opaque smes and a frequent misleading conclusion is that large institutions are disadvantaged in lending to opaque smes

estimates of the economic returns to schooling from a new sample of twins this paper uses a new survey to contrast the wages of genetically identical twins with different schooling levels multiple measurements of schooling levels were also collected to assess the effect of reporting error on the estimated economic returns to schooling the data indicate that omitted ability variables do not bias the estimated return to schooling upward but that measurement error does bias it downward adjustment for measurement error indicates that an additional year of schooling increases wages by 12 to 16 percent a higher estimate of the economic returns to schooling than has been previously found copyright 1994 by american economic association

do people respond to tax incentives an analysis of the italian reform of the deductibility of home mortgage interests abstract before 1992 mortgage interests in italy were fully tax deductible up to 3500 euro 7000 for two cosigners in 1992 1994 the government implemented a series of tax reforms whose ultimate effect was to eliminate the relation between the after tax mortgage rate and the marginal tax rate using data from the 1989 2002 survey of household income and wealth we test if the elimination of incentives has affected the sensitivity of the decision to borrow and the amount borrowed with respect to the marginal tax rate regression analysis and difference in differences estimates indicate that tax considerations have not affected the demand for mortgage debt neither at the extensive nor intensive margin these results are consistent with lack of financial information and credit rationing during the sample period

courts and banks effects of judicial enforcement on credit markets the cost of enforcing contracts is a key determinant of market performance we document this point with reference to the credit market in a model of opportunistic debtors and inefficient courts according to the model improvements in judicial efficiency should reduce credit constraints and increase lending with an ambiguous effect on interest rates that depends on banking competition and on the type of judicial reform these predictions are supported by panel data on italian provinces in provinces with longer trials or large backlogs of pending trials credit is less widely available

informal sector and economic development the credit supply channel i introduction a popular idea in policy circles holds that granting potential entrepreneurs access to formal credit markets by improving public institutions and specific regulations is an important condition for economic development in particular reforms allowing economic agents to formalize and therefore gain better access to formal credit markets should naturally lead them to invest more and increase their productivity ultimately the benefits of higher overall growth would ensue such reforms typically include strengthening property rights on land and housing and reducing burdensome registration procedures 1 this article examines in a general equilibrium framework the chain of causality behind that line of thinking it does so by modeling individual agents decisions to become formal in relation to their access to a credit market plagued by moral hazard and examining the effect of these decisions on the size of the formal sector and the level of output the main insight is that while better property rights and less burdensome regulations under certain conditions may facilitate agents access to formal loans such reforms interact with the characteristics of the credit market and its environment in ways that crucially shape the ultimate magnitude of the effect on formality and output in a nutshell the modeling strategy relies on an overlapping generations model where economic agents when young undertake productive projects deciding whether to work in the formal or informal sector these decisions depend on the trade off between the costs of entry and the benefits of accessing the formal credit market which itself is a function of the quality of enforcement and property rights that allow for efficient loan recovery by lenders entrepreneurs save part of their profits for future consumption and these savings constitute the next period s supply of credit in the economy in this context the equilibrium interest rate that results from the interaction between the supply of lendable funds and the demand for credit is a key variable in determining the equilibrium level of formality indeed lower entry costs and better contract enforcement unambiguously imply a larger formal sector a higher demand for credit and higher output as long as an infinitely elastic supply of funds is available at the prevailing interest rate e g an open economy with no barriers to international capital flows and a competitive banking sector however absent these conditions an increase in demand resulting from a higher rate of formality increases the interest rate which weakens the links among reform formality and output finally we present empirical evidence related to the implications of our model we find that countries with lower entry costs or a higher quality of enforcement tend to have larger credit markets and smaller informal sectors and that this relationship is stronger when the banking sector is more competitive and the economy is more open to international capital flows using industry level measures of financial dependence and controlling for country fixed effects we show that the results on credit supply also hold in a cross and within industry setting a related literature the argument above is composed of two parts first is the link between better regulations and access to credit at the individual level which results in increased incentives to enter formality and second is the link between these individual decisions and output or growth it is relatively well understood how light registration procedures and strong property rights interact to provide the necessary conditions to access the credit market as de soto 1990 showed in the case of peru and further documented by djankov et al 2002 for 85 countries firms first face significant entry costs in the form of registration and license fees to be able to operate formally

how large are the effects from changes in family environment a study of korean american adoptees i analyze a new set of data on korean american adoptees who were quasi randomly assigned to adoptive families i find large effects on adoptees education income and health from assignment to parents with more education and from assignment to smaller families parental education and family size are significantly more correlated with adoptee outcomes than are parental income or neighborhood characteristics outcomes such as drinking smoking and the selectivity of college attended are more determined by nurture than is educational attainment using the standard behavioral genetics variance decomposition i find that shared family environment explains 14 percent of the variation in educational attainment 35 percent ofthe variation in college selectivity and 33 percent of the variation in drinking behavior

the inter generational link in income mobility evidence from adoptions abstract estimates of the inter generational link in income mobility are often contaminated by the correlation of genetic ability with measures of parental income we introduce the use of adoption data to sever this correlation finding that the inter generational link is attenuated substantially

capital structure decisions during a firm s life cycle the study reported here examines the financing choices of small and medium sized firms i e those most vulnerable to information and incentive problems through the lens of the business life cycle we argue that the controversy in the empirical literature regarding the determinants of capital structure decisions is based on a failure to take into account the different degrees of information opacity and consequently firms characteristics and needs at specific stages of their life cycles the results show that in a bank oriented country firms tend to adopt specific financing strategies and a different hierarchy of financial decision making as they progress through the phases of their business life cycle contrary to conventional wisdom debt is shown to be fundamental to business activities in the early stages representing the first choice by contrast in the maturity stage firms re balance their capital structure gradually substituting debt for internal capital and for firms that have consolidated their business the pecking order theory shows a high degree of application this financial life cycle pattern seems to be homogeneous for different industries and consistent over time

green fiscal reform and employment a survey in the european debate an increase in employment is generally regarded as an important extra dividend in addition to improved environmental quality from environmental taxes the scope of this paper is to evaluate going through the existing empirical literature if and to what degree this result could be achieved through a green fiscal reform a further goal of this paper is to assess which taxes are more efficient in terms of employment creation when they are utilized for recycling back to the economy the revenue flowing from environmental taxes this kind of exercise is largely different from the theoretical analysis of the double dividend issue a large quantity of literature has grown during the recent years according to this approach but this version of the double dividend theory will be disregarded in this paper

optimal redistributive taxation in a search equilibrium model this paper characterizes optimal non linear income taxation in an economy with a continuum of unobservable productivity levels and endogenous involuntary unemployment due to frictions in the labour markets redistributive taxation distorts labour demand and wages compared to their efficient values gross wages unemployment and participation are lower average tax rates are increasing marginal tax rates are positive even at the top finally numerical simulations suggest that redistribution is much more important in our setting than in a comparable mirrlees type setting

enlarging the contracting space collateral menus access to credit and economic activity recent reforms across eastern european countries have given more flexibility and information to parties to engage in secured debt transactions the menu of assets legally accepted as collateral was enlarged to include movable assets e g machinery and equipment generalized difference in differences tests show that firms operating more movable assets borrowed more as a result those firms also invested more hired more and became more efficient and profitable following the changes in the contracting environment the financial deepening we document triggered important reallocation effects firms affected by the reforms increased their share of fixed assets and employment in the economy

ownership structure governance and innovation abstract this paper tests the impact of firms ownership structure on innovation in a context featuring pronounced ownership concentration and conflicts between large and minority shareholders using data for 20 000 italian manufacturers and accounting for the possible endogeneity of ownership levels we find that ownership concentration negatively affects innovation especially by reducing r d effort conflicts between large and minority shareholders appear to be a determinant of this effect moreover risk aversion induced by lack of diversification exacerbates large shareholders reluctance to innovate family owners support innovation more than financial institutions but the benefits of financial institutions increase with their equity stakes

collateral and rationing sorting equilibria in monopolistic and competitive credit markets the authors examine how market structure affects credit allocation under universal risk neutrality and asymmetric information about borrowers they consider both monopolistic and perf ectly competitive banks and examine the role of collateral in each ca se when a bank is a monopolist on the loan side they find collatera l is never used and asymmetric information results in reduced bank le nding under perfect competition collateral has a useful sorting rol e moreover rationing is possible even with collateral availability and perfectly elastic deposit supply in this setting the authors sh ow co signers are valuable social welfare properties of the monopoly and competitive equilibria are also compared copyright 1987 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

long term trends in the world economy the gender dimension abstract this paper considers the implications of long term trends in the international economy for the relative employment and income of men and women in developed and developing countries we find that given a persistent gender division of labor mass unemployment in the north is due to different forces operating on men and women the rate of growth of men s jobs has fallen because of deindustrialization but men have not withdrawn from the labor force at a comparable rate women have been entering the labor force in feminized jobs at a faster rate than they have been created in the south women have largely taken traditionally feminized jobs in the labor intensive export oriented growing manufacturing sectors in latin america entry has been largely in the service sector men have been losing jobs in agriculture and domestic manufacturing the paper proposes that the optimal solution to the mass unemployment problem in the north as well as in the south and the apparent competition for jobs between the north and the south and between men and women lies in achieving a trend increase in the growth rate of oecd and world aggregate demand and output but such a trend rise in the long term rate of growth of demand would only be possible if there were new cooperative institutional arrangements within and between countries in such arrangements women need to have an important independent role

reflections on the double dividend debate we survey the history of carbon taxation the range of market based instruments mbis of environmental control and the state of the double dividend debate in order to suggest directions for future research into mbis returning mbi revenues as lower distortionary taxes rather than as lump sums raises aggregate welfare but we favour mbis which raise little or no revenue for reasons of political acceptability to interest groups at the same time the overall case for any environmental improvement is weaker because of general equilibrium interactions with prior distortionary taxes research seems most necessary on quantifying the efficiency benefits of market control of heterogeneous polluters the benefits of environmental improvement the tax interaction effect and the various information costs of an mbi all on a case by case basis for different pollutants and places

household debt repayment behaviour what role do institutions play despite the lively policy debate on rising household debt arrears and personal bankruptcy filings there is relatively little empirical evidence on the determinants of households debt repayment behaviour or on the incidence of arrears even less is known about how arrears compare between countries although debt levels are known to vary widely using data from the european community household panel we first show that arrears are frequently associated with subsequent adverse consequences such as future unemployment or bad health second we find that arrears are often precipitated by an adverse shock to the household s income or health but that there are large differences between countries in how households react to these events finally we show that these differences can be partly explained by local financial and judicial institutions as captured by contract enforcement and information sharing indicators in other words we show that while adverse shocks are highly important the extent to which they affect repayment behaviour depends crucially on the penalty for defaulting this finding suggests that although repayment problems often arise from a genuine inability to repay some households seem to behave strategically burcu duygan bump and charles grant

the impact of the judiciary on entrepreneurship evaluation of pakistan s access to justice programme abstract in 2002 the pakistani government implemented a judicial reform that cost 350 million or 0 1 of pakistan s 2002 gdp this reform did not involve increased incentives for judges to improve efficiency but merely provided them with more training nonetheless the reform had dramatic effects on judicial efficiency and consequently on entrepreneurship judges disposed of a quarter more cases and entry rate of new firms increased by half due to the reform using data from the world bank group entrepreneurship database our estimates suggest that this translates into an increase of pakistan s gdp by 0 5

does average size matter court enforcement business demography and firm growth previous literature finds that the quality of judicial enforcement has a positive impact on average firm size but it has not disentangled its effect on the growth of incumbent firms from that on business demography this distinction is crucial as entrants are generally smaller than incumbents but both high entry rates and high firm growth are associated with better economic performance this paper fills this gap finding that judicial efficacy fosters the growth of incumbents and promotes entry in spain the paper also shows for the first time that the specific type of judicial procedure that companies face in case of a conflict rather than the overall functioning of courts is the relevant matter specifically judicial efficacy at the declaratory stage when a debt is verified by a judge has a positive impact on both firm growth and entry while it has no impact at the execution stage when the judge requires its payment

is the welfare state necessarily an obstacle to economic growth abstract the welfare state is widely held to be one of the elements responsible for slower economic growth in europe this paper seeks to clarify the nature of this indictment and to suggest that there is a plausible case for defence of the welfare state

should courts enforce credit contracts strictly the intimate linkages between law and nance are currently the centre of wide rangingempirical investigations this article presents a simple banking model with informationasymmetries concerning borrowers entrepreneurial talent it is shown that improvements inthe enforcement of contract by courts reduce agency problems but can also reduce the bank sincentive to screen borrowers adequately thus worsening credit allocation a stricterenforcement of credit contracts therefore may be socially harmful even if costlessly achieved improvements in accounting standards however always make bank screening of borrowers lesscostly and improve credit allocation and social welfare

long lasting bank relationships and growth of firms a puzzling but consistent result in the empirical literature on banking is that firms with close bank ties do not grow faster than bank independent firms in this paper we reconsider the link between relationship lending and firm growth distinguishing firms by size and expansion contraction conditions the idea is that the beneficial effects of relationship lending on information asymmetries can be compensated by other negative capture risk and externality effects which make relational banks reluctant to support long term growth projects of client firms and that the strength of these compensating effects varies with firm size and health status we explore the influence of long lasting bank relationships on employment and asset growth of a large sample of italian firms the main finding is that relationship lending hampers the efforts of small firms to increase their size while it mitigates the negative growth of troubled medium large enterprises

debt maturity choice of nonpublic italian firms this paper focuses on debt maturity of nonpublic italian firms of small and medium size by international standards and that mainly use bank loans as source of external financing compared to few similar studies the main contributions are that panel estimations allow to control for unobserved firm heterogeneity firms are also permitted to choose simultaneously leverage and debt maturity the evidence is that debt maturity is shorter for companies that are riskier and affected by asymmetric information in areas of the country with poorer legal enforcement in choosing debt maturity lenders lay greater emphasis on indicators of firm information opacity

the effect of state foreclosure laws on loan losses evidence from the mortgage insurance industry this paper analyzes the effect of three major provisions of state foreclosure laws procedure redemption period and provision for deficiency judgment on loan losses as reflected in the claims paid by private mortgage insurers and the fha it also explores the significance of the incentive conflict between the lender and the insurer in terms of the presence or absence of a coinsurance relationship and the existence of a deficiency judgment the results demonstrate that foreclosure laws have a significant effect on loan losses and that the existence of a deficiency judgment affects the incentive conflict between lender and insurer copyright 1990 by ohio state university press

regulations market structure institutions and the cost of financial intermediation this paper examines the impact of bank regulations market structure and national institutions on bank net interest margins and overhead costs using data on over 1400 banks across 72 countries while controlling for bankspecific characteristics the data indicate that tighter regulations on bank entry and bank activities boost the cost of financial intermediation inflation also exerts a robust positive impact on bank margins and overhead costs while concentration is positively associated with net interest margins this relationship breaksdownwhencontrolling for regulatory impediments to competition and inflation furthermore bank regulations become insignificant when controlling for national indicators of economic freedom or property rights protection while these institutional indicators robustly explain cross bank net interest margins and overhead expenditures thus bank regulations cannot be viewed in isolation they reflect broad national approaches to private property and competition

farm foreclosure moratorium legislation a lesson from the past and the calls for legislation to prevent farm foreclosures are not without precedent farm foreclosures were high throughout the 1920 s and 1930 s in large part because farmers had to make mortgage payments fixed in nominal dollars while their earnings were falling in response many state legislatures sought to aid farmers by passing legislation that postponed foreclosure by creditors scholars have given little attention to these various state emergency measures and their impact on creditors and debtors 2 this article is a step toward filling this void the first section contains a general description of the moratorium legislation and hypotheses about the causes of moratorium legislation are proposed and tested in section ii the economic consequences of moratorium legislation are addressed and the hypotheses are formally specified and tested

public finance solutions to the european unemployment problem public finance solutions a tax shift away from low paid labour may fight unemployment unemployment in europe is heavily concentrated among low skilled workers it has therefore been suggested that structural unemployment could be reduced by shifting the tax burden away from low skilled labour and away from the production of consumer services which are intensive in the use of such labour this paper finds that a tax shift away from low paid labour may raise aggregate employment and welfare but only if wage formation is sufficiently responsive to changing tax incentives the analysis also suggests that non negligible employment and welfare gains could be reaped by offering tax concessions or subsidies to those parts of the consumer service sector which compete most directly with low productivity home production and with underground economic activity peter birch sorensen

using elasticities to derive optimal bankruptcy exemptions this article studies the optimal determination of bankruptcy exemptions for risk averse borrowers who use unsecured contracts but have the possibility of defaulting in a large class of economies knowledge of four variables is sufficient to determine whether a bankruptcy exemption level is optimal or should be increased or decreased these variables are 1 the composition of households liabilities 2 the sensitivity of the credit supply schedule to exemption changes 3 the probability of filing for bankruptcy with non exempt assets and 4 the value given by households to a marginal dollar in different states which can be mapped to changes in households consumption i recover empirical estimates of the sufficient statistics using u s data over the period 2008 16 and find that increasing exemption levels improves overall welfare although there is substantial variation in estimated welfare gains across u s states and income quintiles

the collateral channel under imperfect debt enforcement does a country s ability to enforce debt contracts affect the sensitivity of economic activity to collateral values to answer this question we introduce a novel industry specific measure of real asset redeployability the ease with which real assets are transfered to alternative uses as a proxy for collateral liquidation values our measure exploits the heterogeneity of expenditures in new and used capital and the heterogeneity in the composition of real asset holdings across u s industries using a cross industry cross country approach we find that industry size and growth are more sensitive to collateral values in countries with weaker debt enforcement our estimates indicate that the differential effect is sizeable the sensitivity of economic activity to collateral values is not affected by a country s financial development once the quality of debt enforcement is accounted for we then rationalize our empirical findings based on a model of credit under imperfect enforcement and discuss an important implication of our empirical result macroeconomic volatility generated by fluctuations in collateral values is higher in countries with weaker debt enforcement institutions

bankruptcy law and bank financing exploiting the timing of the 2005 2006 italian bankruptcy law reforms we disentangle the effects of reorganization and liquidation in bankruptcy on bank financing and firm investment a 2005 reform introduces reorganization procedures facilitating loan renegotiation the 2006 reform subsequently strengthens creditor rights in liquidation the first reform increases interest rates and reduces investment the second reform reduces interest rates and spurs investment our results highlight the importance of identifying the distinct effects of liquidation and reorganization as these procedures differently address the tension in bankruptcy law between the continuation of viable businesses and the preservation of repayment incentives

institutions and firms adjustments measuring the impact of courts delays on job flows and productivity abstractnot only is labor market rigidity the result of legislative provisions but it is determined by the institutional framework at large we argue that courts delays in settling labor disputes affect the strictness of employment protection legislation by increasing the expected firing costs we exploit the variation in the length of labor trials across italian judicial districts and the fact that the italian legislation regarding firing prescribes different firing regimes for firms above the 15 employee threshold and provide evidence on the impact of courts delays on job reallocation and firms productivity we show that in judicial districts with longer trials the rate of job turnover is significantly lower this occurs through lower rates of job destruction and to a lesser extent job creation we also find a detrimental impact of courts delays on the labor productivity of firms above the 15 employee threshold the effect is stronger in sectors with higher flexibility requirements

court efficiency and procurement performance disputes over penalties for breaching a contract are often resolved in court a simple model illustrates how inefficient courts can sway public buyers from enforcing a penalty for late delivery in order to avoid litigation therefore inducing sellers to delay contract delivery by using a large dataset on italian public procurement we empirically study the effects of court inefficiency on public work performance we find that where courts are inefficient i public works are delivered with longer delays ii delays increase for more valuable contracts iii contracts are more often awarded to larger suppliers and iv a higher share of the payment is postponed after delivery other interpretations receive less support from the data