stabilization adjustment and the poor abstract this paper attempts to survey the recent literature on the impact of stabilization and adjustment programs upon the poor and to consider some of the key issues in the context of a particular equity oriented low income country tanzania after looking at some of the approaches of earlier studies this paper analyzes the effects of restructuring policies macroeconomic restraint and strategic policy change the author then reviews available evidence on the recent experience of tanzania with external shock efforts at stabilization and relations with the imf in conclusion the author argues that in order to better understand their impact on poverty we need more detailed analyses of specific countries experience with different kinds of macroeconomic imbalance and different short to medium term policy responses however he does indicate with some certainty that when equivalent external blows impact upon very low income countries there must be a presumption that other things being equal including the distribution of income the proportion of households and people pushed over the line into absolute poverty will be greater than in middle income countries the international community should provide external finance to aid these low income countries in limiting the negative impact on the poorest

labour demand and job to job movement the relationship between labour demand and job to job movement is investigated both theoretically and empirically at the macro level it concentrates on the role of the employment regime hiring do nothing or firing and the hiring and firing costs the exact upper bounds of the marginal hiring costs of an employed worker are derived for which job mobility between two firms yields a positive aggregate relationship between job to job movement and employment the relationship is estimated as a cointegration model for the netherlands it appears that the inclusion of the job to job mobility rate may provide a substantial improvement of the estimated labour demand equation

regulatory reform and productivity growth in the uk s public utilities the reforms in the regulation of the uk nationalised industries over the last decade are examined and the extent to which they have been successful in achieving one of their declared aims that of increasing the efficiency of the enterprises operations is considered to achieve this the productivity performance of nine of the largest enterprises over the last twenty years was analysed the results show that the rate of productivity growth has been significantly higher during the 1980s compared with the preceeding decade it is concluded that a large part of the observed upturn in productivity is a result of changes in efficiency

does privatization remove restrictive working practices evidence from uk establishments this study investigates the links between privatization and changes in working practices using data from the uk 1990 workplace employees relations survey privatization raises the probability of an establishment of experiencing reduced job demarcation and or increased flexibility in the use of the workforce by managers after exploration no clear association is found between ownership and the level of restrictive working practices

privatization deregulation and capital accumulation author affiliation gerhard glomm department of economics indiana university wylie hall room 105 bloomington in 47405 usa gglomm indiana edufabio mendez department of economics walton college of business room 402 university of arkansas fayetteville ar 72701 usa fmendez uark edu corresponding author acknowledgment we are grateful to b ravikumar rowena pecchenino jeffrey wooldridge felix rioja stefan krause and seminar participants from the economics department at emory university for useful observations we are also grateful to cristian opazo and javier reyes for their assistance and to the editor and two anonymous referees for helpful comments 1 introductionsince the early 1980s many countries have privatized and deregulated intermediate goods industries such as gas electricity or telecommunications that had traditionally been run by public monopolies the european union eu for example has adopted aggressive policies toward the elimination of monopolies in the telecommunication market and conducted a general privatization program whose sales receipts amounted to more than 3 of gdp between 1985 and 1995 constantinou and lagoudakis 1996 parker 1998 in other regions of the world countries like australia chile brazil argentina and the united states have implemented similar policies vickers and yarrow 1991 winston 1993 van der vlies 1996 while there is a large literature studying the microeconomic effects of privatization and deregulation the long run macroeconomic effects of such types of reforms have been subject to relatively less scrutiny in this paper we use a model of capital accumulation in order to investigate the long run effects of privatization and deregulation this paper complements a small literature that includes parente and prescott 1999 2000 schmitz 2001 and herrendorf and teixeira 2004 parente and prescott 1999 2000 and herrendorf and teixeira 2004 study the impact of monopoly rights on long run levels of income and find that the effect is large the latter authors find for example that monopoly rights can reduce aggregate income in the long run by a factor of seven schmitz 2001 uses a two sector model to calculate the impact of government production of investment goods on long run levels of labor productivity he finds that government production can lower labor productivity levels in the long run by about 30 our approach differs from herrendorf and teixeira 2004 who infer the extent of monopoly power from differentials in the relative prices of nontradeables instead we take the approach that monopoly power is likely to arise and exist in the public production of intermediate goods such as public utilities or telecommunication and that the size of these sectors relative to the rest of the economy can be directly estimated see world bank 1995 our approach also differs from schmitz 2001 in a fundamental way because he abstracts completely from the issue of monopoly rights in his model the only difference between the public and private production is that the government is endowed with a less productive technology than the private sector the long run income gains from privatization and deregulation in our paper are similar in magnitude to those found in schmitz 2001 in our base case calculation the long run income gain of changing from a public sector monopoly to a competitive market with private firms is 18 these welfare gains can be larger when there has been relatively low governmental investment in the public sector capital and when the elasticity of substitution between the intermediate input and physical capital is small like schmitz 2001 we view our results as less pertinent for rich economies like the united states where public sector involvement in intermediate good production is relatively small rather we view the results of our model as being applicable mostly to least developed countries ldcs such as egypt where governments typically play a large role in intermediate goods production

approximate surrogate production functions the cambridge debate showed that an aggregation of capital is not possible in general a recent investigation has found one example for reswitching and several for reverse capital deepening but the paradoxes appear to be infrequent the paper provides a theoretical justification of this result and shows how wage curves of input output matrices with small non dominant eigenvalues become quasi linear with some numeraires large random systems lead to the genesis of such states approximate surrogate production functions then seem possible a family of economic systems with constant capital composition allows construction of a surrogate production function copyright oxford university press

the tradeoff between wages and employment in trade union objectives this paper demonstrates that contrary to a widely held opinion the determination of the goals of unions is fully amenable to empirical analysis a characterization of the wage and employment setting process in unionized markets is adopted and its qualitative implications examined the first order condition for this model is fitted to time series data on the newspaper industry from ten cities the international typographical union s objective function reveals very restricted opportunities for substituting wages for employment in response to a change in the slope of the employer s labor demand function larger union locals place greater emphasis on wages versus employment than smaller union locals

dynamic wage employment bargaining with employment adjustment costs this paper looks at the consequences of introducing employment adjustment costs into two standard models of trade unions the right to manage model and the efficient bargain model the authors look at how unions affect both the speed of adjustment to equilibrium and the long run equilibrium they examine the consequences of the model for the estimation of dynamic labor demand equations and for the testing of trade union models copyright 1989 by royal economic society

incumbent employees resistance to implementing privatization policy abstract the recent anti privatization trend in latin america france and south africa is a reminder that employees resist privatization because pre privatization firms tend to be over manned and to pay excessive wages we study the effect of employees resistance on the successful implementation of privatization in a stylized model in which the government interacts with employees of an unknown type the analysis clarifies some of the difficulties associated with the implementation process furthermore although common sense dictates that the government negotiates with the employees before finding an outside buyer we show that sometimes it is better off contacting an investor first

exchange market pressure in paraguay 1963 88 monetary disequilibrium versus global and regional dependency the relevance of the monetary approach to exchange market pressure for paraguay s small open economy is compared to that of two competing keynesian structural approaches which emphasize respectively global and regional dependency effects estimation results for the three models including formal comparisons using nonnested hypothesis tests and forecast accuracy staistics suggest that the explanatory power of the monetary model is dominated by that of the regional dependency model with the global dependency model having an intermediate degree of applicability this result is intuitive given the extreme dependency of the paraguayan economy on argentina and brazil

nationalization vs regulation of monopolies abstract this paper compares the effects of government ownership and regulation under private ownership on the production decisions of a monopoly firm it analyzes an optimal mechanism design problem in which the owners of the firm either the government or shareholders contract with a manager who has private information about the firm s cost function and takes an unobservable action that affects the firm s costs the model predicts that the privately owned regulated firm will use relatively more capital and the publicly owned firm will use relatively more labor than the second best efficient solution to the private information problem

an empirical investigation of paradoxes reswitching and reverse capital deepening in capital theory this paper examines the empirical relevance of the capital controversy the price model of sraffa and the dual models of the price and quantity systems of von neumann become the basis of the investigation in the course of the controversy it proved easy to construct theoretical examples which contradicted the fundamental neoclassical hypothesis of an inverse capital demand function this paper presents empirical examples for the first time thiry two input output tables from the oecd database serve as data as a result one envelope is found which involves reswitching reverse substitution of labour or reverse capital deepening are observed in about 3 65 of tested cases they involve at least two switchpoints copyright 2006 oxford university press

short run employment functions when the speed of adjustment depends on the unemployment rate a bstratacross industry and country comparisons have found the speed of adjustment in short run employment functions to be positively related to the rate of unemployment the present paper develops a time series model in which the reaction coefficient varies with unemployment and estimates it for the manufacturing sectors of the eight oecd countries for which suitable data are available the new model is non linear and is estimated using full information maximum likelihood procedures application of the log likelihood ratio test finds that the new vanable reaction coefficient model is superior to the fixed reaction coefficient model for the united states canada australia austria ireland and the united kingdom

privatization liberalization wages and employment theory and evidence for the uk most agency based privatization models are of the owner manager relation and ignore the labour market yet in the 1980s there were profound changes in public sector and privatized firms to wages and employment we develop a bargaining model of the manager workforce relation that explains employment and wages when firms are privatized government objectives become more commercial and markets are liberalised using data on 14 uk companies 1972 1988 that were publicly owned in 1972 we find a employment fell following the change to more commercial objectives b wages were only slightly affected by this but fell if the firm lost market power

pay and employment determination in britain what are labour contracts really like the recent growth of unemployment in western economies has prompted new research on the workings of the labour market there has been much interest in particular in the questions what determines the level of real pay and why is it apparently so insensitive to changes in aggregate demand and unemployment european economists now find it hard to take seriously the notion still taught to many undergraduate that wages are determined by the intersection of demand and supply curves roughly half of all british employees belong to trade unions a much higher percentage have their pay fixed by some kind of collective bargain in this country it is negotiations not impersonal com petitive markets which decide what most of us will be paid the difficult problem is that of how to understand this process or to put it differently of how to think up the right model of the world

the impact on technical efficiency of the uk privatization programme the level of technical efficiency in nine organizations privatized in the uk in the 1980s is assessed technical efficiency is measured for a number of years before and after privatization using data envelopment analysis this non parametric method allows efficiency to be measured without having to specify either the form of the production function or the weights for the different inputs and outputs used nevertheless inputs and outputs have to be specified and some assumption has to be made about production conditions consequently three models are estimated the first assumes constant returns to scale the second allows for variable returns and the third adds environmental variables for technological change and the business cycle to the input output set the nine organizations studied yield mixed results in some cases there is clear evidence of an improvement in technical efficiency in others there is no discernible impact of ownership on performance

economic crisis adjustment and living standards in mexico 1982 85 abstract this paper presents an estimate of the impact of economic crisis and adjustment on the living standards of the mexican population between 1982 and 1985 the analysis is based on information on wage and nonwage incomes unemployment functional income distribution changes in public expenditures and social indicators the specific questions addressed are what happened to agricultural and nonagricultural wage and nonwage incomes how did unemployment and the composition of employment change what was the impact of fiscal cuts on social expenditures and food subsidies were social services affected by declining resources did social indicators worsen in addition households strategies in response to declining incomes are briefly discussed finally conjectures are made regarding which population groups were hurt most by the crisis the results indicate that the crisis and adjustment process left mexico with a relatively impoverished middle class and with rising poverty

effects of public ownership over firms size and overstaffing problems a model is presented to analyse the impact ofownership over the problem of excess of employmentgenerally found in public firms a government has toprovide a service or build an infrastructure underuncertainty about the valuation of the project byconsumers three possible ownership schemes areconsidered for the provision of this service astate owned firm a private firm with a completecontingent contract or a private firm with anincomplete contract in all three schemes the agentthat chooses the size of the project is always thegovernment without any asymmetries of information even though multiple solutions are feasible and nodefinitive conclusion is found to be valid for allstates of nature an evaluation of outcomes shows thata private firm tends to underprovide infrastructure orservices more often while under public ownership thefirm is typically larger if incomplete contracting isadded to the private firm case the model exhibitssolutions in which outcomes could be socially worsethan those obtained by a public firm only changes inthe voting behaviour of workers and contracting costsare required in this model to derive these results thus the paper provides an example that ownershipper se may have an effect on the size andefficiency of firms even under symmetric informationconditions an extreme that has been generally deniedin the literature on public firms and privatisation

the assessment productivity and competitiveness in british manufacturing this issue of the oxford review examines productivity and competitiveness in british manufac turing the simplest and most widely used measure of productivity is output per head from this definition sprout at once the horns of a dilemma for an economy facing unemployment on the present scale for a given rate of expansion of output the higher the rate of productivity growth the greater the decline in employment or at least the smaller its growth on the other hand in an economy open to international competition a high rate of productivity growth relative to that of other countries is the long term key to achieving the favourable international competitive po sition necessary to sustain growth and a low level of unemployment

labor adjustment costs in a destination country the case of mexico abstract rodrik rodrik d 1997 has globalization gone too far institute for international economics washington dc argues that firms use the threat of moving to low cost generally developing markets to make employment more flexible at home although a large literature documents significant adjustment costs in developed countries we know little about their size and importance in developing countries that receive capital we employ monthly mexican data from the gatt nafta period to estimate adjustment costs in mexico we consider adjustment costs for production and non production workers and allow for asymmetry while patterns of adjustment costs are similar as in developed countries adjustment costs in mexico are generally an order of magnitude smaller

external shocks structural change and economic growth in mexico 1979 2007 summary this article finds that shocks to net financial inflows world oil prices the us growth rate and the lagged real exchange rate explain most of the fluctuations in mexico s annual growth since 1979 the article also estimates how the effects of these external constraints have changed since mexico s liberalization policies of the late 1980s and the formation of nafta in 1994 estimates of an investment function and other tests show that growth drives investment but not conversely in the short run investment is driven mainly by oil prices and the accelerator effect foreign direct investment has no significant impact 2008 elsevier ltd all rights reserved

what has 20 years of public private pay gap literature told us eastern european transitioning vs developed economies this paper surveys the literature on public private sector pay differentials based on 20 years of research in transitioning countries of eastern europe ee and compares the results with estimates obtained from developed market economies the majority of empirical studies from ee economies found evidence of public sector pay penalties during the period of economic transition from a communist to market based economy in developed economies however the average differential is usually around zero or positive the public sector pay inequality reducing effect relative to the private sector is greater in transitioning economies than in developed economies nevertheless there is evidence that the sign of the public sector pay gap as well as the relative public sector pay distribution change with the progress of economic transition towards those usually observed in developed economies different pay setting arrangements between private and public sectors and competition for workers seem to be major arguments for the existence of systematic pay differences between the two sectors

inflation stationarity during latin american inflation insights from unit root and structural break analysis inflation stationarity has important theoretical and policy implications yet most of the literature has focused on low inflation countries this article investigates inflation stationarity in brazil argentina chile mexico and bolivia during a hyperinflationary period from 1980 to 2004 we test for structural breaks in inflation discuss the breaks in terms of changes in monetary regimes and test if accounting for these structural breaks changes the nonstationarity results for those nations that fail the traditional augmented dickey fuller adf test for inflation all five are found to have inflation rates that are i 0 once the structural breaks analysis is incorporated into our unit root tests

unemployment in britain male unemployment in britain has risen from around 2 per cent in the 1950s to around 17 per cent in 1985 see figure 1 the figures are for male unemployment because there is no consistent series for women 1 even more remarkably unemployment has fallen in only three years out of the last twenty 1973 1978 and 1979 to account for this we need a model that explains both changes in the natural or non accelerating inflation rate of unemployment nairu and deviations from it we use a three equation supply side model centred on the labour market this has two main features the first concerns the determination of employment in the short run the labour demand function that we use cuts through the fruitless debate now raging especially in europe as to whether current unemployment is classical or keynesian according to the classical view employment is too high because real wages are too high according to the keynesian view real wages are not binding and unemployment is high because the product market does not clear with prices too high relative to nominal demand the whole debate is set in the framework of perfect competition yet in perfect competition prices are set by impersonal forces and it is not clear what could possibly stop prices clearing the market it is much more reasonable to think of prices as being set by imperfectly competitive firms existing prices being the best they can think of given the demand they face in this context firms demand for labour will depend on both the real product wage and the level of real aggregate demand this is the demand function we estimate and it conforms both to common sense and to the data however this does not imply that employment can be made to grow without limit by pumping up real demand for in the medium term when price surprises are eliminated our model determines three variables employment real wages and real demand on the basis of three equations an employment equation a price equation and a wage equation thus in the medium term there is a natural level of employment and corresponding to this a natural level of real aggregate demand the second key feature of our model concerns the medium term determination of unemployment in the medium term the planned mark up of wages over prices in wage settlements must be consistent with the mark up of prices over wage costs in employers pricing behaviour for if wage setters try to set real product wages higher than is consistent with employers pricing behaviour this generates ever increasing inflation thus the key to understanding unemployment in the medium term is the behaviour of wage setters if events occur that push them towards too high real wages then unemployment has to rise to offset these influences we shall call these influences wage pressure variables or push factors and they are clearly crucial in understanding unemployment the variables here include the social security system employment protection

the british electricity experiment the privatization of the electricity supply industry esi in britain which began 1990 is in itself an unremarkable event much of the esi is privately owned in several european countries and in the united states and the u k privatization program has embraced utilities since 1984 when british telecom was privatized the thing that is remarkable about recent policy toward the industry is the radical nature of the regulatory reform accompanying privatization a vertically integrated administered generation and transmission structure was replaced overnight on march 31 1990 by one that is deintegrated and market based generation and transmission have been separated and there has been an attempt to establish competition in generation a number of countries have been moving gradually in the direction of encouraging competition but nowhere else have such dramatic changes been implemented so quickly

malmquist indices of productivity change in the uk gas industry before and after privatization the uk government s privatization programme was justified in terms of potential efficiency gains this paper concentrates on measures of technical efficiency in the regions of the uk natural gas industry before and after privatization and the associated regulatory changes it uses non parametric frontier analysis and malmquist indices to show that the rate of productivity growth increased significantly after privatization however the differences in technical efficiency amongst regions remain suggesting that failure to break up the industry has sacrificed potential gains from direct competition or indirect competition through yardstick regulation

employment and wage effects of privatisation evidence from hungary romania russia and ukraine we use longitudinal methods and universal panel data on 30 000 initially state owned manufacturing firms in four transition economies to estimate the impacts of privatization on employment and wages the results in all four countries consistently reject job losses and they never imply large wage cuts from privatization to either foreign or domestic owners the domestic privatization estimates are close to zero for employment while for wages they are negative but small in magnitude estimated foreign privatization effects are nearly always positive and sometimes large for both outcome variables we find that the negligible consequences of domestic privatization result from effects on scale productivity and costs that are large but offsetting in hungary and romania and from small effects of all types in russia and ukraine the positive employment outcome of foreign ownership results from a substantial scaleexpansion effect that dominates the productivity improvement effect and the positive wage outcome from productivity improvement dominating the cost reduction effect

inefficiency public enterprise and privatisation there is a general perception based upon casual observation and some systematic empirica study that public enterprises are inefllcient this paper takes this to be true and is concerned with the problem of providing a rigorous analysis and explanation of this inefficiency 2 privatisation which in the u k at least has received its primary impetus from political and ideological motivarions 3 has also been supported by some economists4 because it is seen as a way of correcting these ine ciencies to test this argument the analysis of public enterprise ine ciency will be extended in this paper to the issue of privatisation the analysis is an application of the theory of agency s and in particular makes extensive use of the model of the adverse selection or incentive compatability problem 6 privatisation is regarded essentially as a change in the structure of this principal agent model briefly the adverse selection agency model deals with the situation in which an agent is supposed to take decisions on behalf of a principal but has his own objectives which may lead him to act in his own as opposed to the principal s interests if the principal possessed all the information held by the agent such conflict would not be possible however in the adverse selection model the agent possesses some private info ation which is not available to the principal the agent will report a message concerning this for example see the papers by btis and by p man and pestieau ctsewherc in this volume it may be useful to distinguish between short run inetliciency in the sense of wasteful use of variable inputs especially labour and long run inefficiency in the sense of great planning disasters major inefficiencies in investment planning for interesting discussion of the latter possibly more important type of inefficiency see henderson 1977 jthc aims of widening the base of share ownership among households and of rolling back the frontiers of the public sector as well as the short term political advantage of disguising part of government borrowings as the sale of shares in privatised companies have all been relevant

when failure becomes success class and the debate over stabilization and adjustment abstract this article criticizes the current debate over stabilization and adjustment and develops an alternative class analytic approach first the respective theories and policy recommendations of neoclassical and structuralist economist are analyzed then the article considers the recent experiences of argentina brazil and peru where orthodox and heterodox policies have been attempted and subsequently declared failures finally it is shown that those failures with respect to employment inflation and the balance of payments become successes to the extent that they involve increasing exploitation and otherwise strengthening the class aspects of capitalism

employment in the british coal industry a test of the labour demand model the authors test the conventional model of labor demand against the alternative that bargaining takes place over both wages and employme nt for a time series cross section data set covering the british coal industry they note the difficulty of identifying the contract curve under the alternative hypothesis and suggest the use of variables affecting the union and management status quo points as instruments for the endogenous wage they find that outside variables such as benefits and manufacturing wages are important in determining the level of employment thus rejecting the labor demand model copyright 1988 by royal economic society

economic stabilization and structural transformation lessons from the chilean experience 1973 87 abstract this paper evaluates the experience of economic reforms and stabilization efforts in chile during 1973 87 the paper presents a brief historical background and then reviews the main goals policy tools and results of the economic program implemented since the military government came to power in september 1973 the paper discusses in detail the stabilization and structural transformation aspects of the economic program including the privatization of the economy and the trade and financial liberalization the main conclusion is that despite a healthy improvement in the economic situation during 1985 87 the future of the chilean economy remains uncertain and vulnerable to external shocks the paper concludes by summarizing the main policy lessons of the chilean experience

sustainable development an introduction abstract the methodologies and key results of the papers in this special issue are summarized with emphasis on the limits to growth that developing and postsocialist economies are likely to face over the coming 5 to 10 years

firing costs employment fluctuations and average employment an examination of germany west germany s employment promotion act of 1985 facilitated the use of fixed term contracts and increased the number of dismissals above which the employer is required to establish a social plan involving severance payments i assess the effect of this reduction in firing costs on movements in employment using monthly data on a panel of detailed manufacturing industries for 1977 92 i also examine the effect of introducing flexible hours of work in certain industries beginning in 1985 i find that employment adjustment was unaffected by the lower firing costs but slowed by the greater working hours flexibility

the own wage elasticity of labor demand a meta regression analysis firms labor demand responses to wage changes are of key interest in empirical research and policy analysis however despite extensive research estimates of labor demand elasticities remain subject to considerable heterogeneity in this paper we conduct a comprehensive meta regression analysis to re assess the empirical literature on labor demand elasticities building on 942 elasticity estimates from 105 different studies we identify sources of variation in the absolute value of this elasticity heterogeneity due to the theoretical and empirical specification of the labor demand model different datasets used or sectors and countries considered explains more than 80 of the variation in the estimates we further find substantial evidence for the presence of publication selection bias as estimates of the own wage elasticity of labor demand are upwardly inflated

resource based industry in boom downswing and liberalization mexico abstract mexico s oil windfall was advantageously later and smaller than that of most oil exporters but it was still absorbed too quickly inflation accelerated the exchange rate appreciated and diversification into competitive non oil tradeables like resource based industry rbi was retarded too much rbi investment was channelled through state enterprises whose performance deteriorated it relied heavily on the protected domestic market which fell short of projections excess capacity and inadequate revenues then made rbi vulnerable as mexico rapidly liberalized its economy in the late 1980s

macroeconomic volatility investment anemia and environmental struggles in the philippines abstract while its sacrifice of resource endowments is comparable to that of other developing countries the philippines does not have the strong record in capital accumulation and structural change of its asian neighbors a crisis prone macroeconomy traceable to a heavy dependence on volatile external finance and short sighted macroeconomic management explains the feeble rate of accumulation environmental losses can be traced both to extensive factors economic and population growth and intensive factors unequal distribution and access to market resources in the concluding section this paper examines the feasibility of an alternative macroeconomic stance which invests in environmental regeneration and accepts a lower and steadier national economic growth rate

tests of alternative wage employment bargaining models with an application to the uk aggregate labour market abstract in this paper we propose a test that discriminates among alternative models of bargaining for wages and employment the test rests on a theoretical framework which encompasses both the labour demand and the efficient bargain models of wage and employment determination it is based on testing the cross equation restrictions implied for the coefficients of union power variables in reduced form wage and employment equations the test is illustrated for the layard and nickell model of the aggregate uk labour market for which it is found that one can reject both the labour demand model and the hypothesis that wage employment bargains are efficient in favour of a generalised model of inefficient bargaining for wages and employment

a new specification for aggregate employment in the u k this paper derives and estimates a new specification for aggregate employment on u k data which is to be preferred to existing alternatives on grounds of its empirical performance and theoretical consistency it provides new estimates of key parameters both the wage elasticity of labour demand and lags in employment adjustment are found to be significantly lower than existing estimates

the political economy of benefits and costs a neoclassical approach to distributive politics this essay offers a rational political explanation for the notorious inefficiency of pork barrel projects with an optimization model of legislative behavior and legislative institutions the model emphasizes the economically arbitrary from a welfare point of view importance of the geographic incidence of benefits and costs owing to the geographic basis for political representation we explore the implications of a legislator s objective function and derive conditions under which a representative legislature will select an omnibus of projects each of which exceeds the efficient scale

the real wage employment relationship in the united states this article examines the real wage employment relationship in the united states in the light of the diversity of results in the literature it demonstrates that when the relationship is correctly specified in the sense that due allowance is made for technical progress and capital accumulation and the appropriate value added deflator is used for the wage then a negative relationship may be observed in the data an incorrect specification however is as likely to lead to a positive relationship as a negative one

intertemporal rules with variable speed of adjustment an application to u k manufacturing employment this paper presents a procedure to estimate intertemporal dynamic decision rules where adjustment costs are assumed to be variable the estimation is based on the euler equation for purposes of illustration the authors concentrate on an employment function for the u k manufacturing sector where they find very significant effects of some variables that influence adjustment costs finally they point out an empirical result that has interesting implications when evaluating tests of efficient bargain models copyright 1989 by royal economic society

external shocks and growth prospects the case of brazil 1973 1989 this is a study of the factors underlying the current account deficits experienced by brazil since the mid 1970s it also explores the country s economic prospects through 1989 with the help of a simple macro simulations model the current account deficit is identically equal to the excess of domestic spending over national income provided that net external financing is available this excess may increase for a number of reasons prominent among them is an expansion of real domestic spending associated with increases either of real consumption expenditures or of real domestic capital formation even if domestic absorption is invariant the external deficit may worsen because of inadequate domestic pricing policies these may make it impossible for local firms to compete with cheaper foreign products thus forcing a contraction of national income and employment a temporary reduction of gnp below its potential value may also be caused by domestic supply shocks of a climatic or other nature however other factors can also cause a deterioration of the current account in this context this study investigates the factors underlying the evolution of the external accounts of brazil since the mid 1970s following an approach suggested in the dell report and elaborated by balassa the reasons for a deterioration of the current account are divided into three groups external shocks burden of accumulated debt and domestic policy actions the first group comprises terms of trade international interest rates and world recession the second includes the accumulated effect of past shocks and domestic policy actions finally the third group encompasses the variables supposedly under the control of local policy makers domestic absorption and the economy s tradability

pure joint production and international trade a note this paper applies the principles of the neo ricardian or sraffian theory of international trade to certain joint production systems it is shown that in contrast with single product systems i there is not always a pattern of international specialisation which would entail the increase of the real wage rate in both economies and ii the law of comparative advantage has no general validity furthermore not only the existence of such a pattern of specialisation but also the validity of this law depend on the values of the variables of distribution of income the analysis is wholly based on two of the numerical examples formulated by bidard in 1997 and further generalised in an elementary way only when this is considered necessary copyright 2004 oxford university press

total factor productivity growth technological progress and technical efficiency change dimensions of productivity change in yugoslavia 1965 1978 this article total factor productivity growth technological progress and technical efficiency change dimensions of productivity change in yugoslavia 1965 78 was reprinted with permission from the december 1982 issue of the economic journal this article proposes a methodology that decomposes total factor productivity change into two distinct elements technological progress and changes in technical efficiency technological progress is defined as the change in the best practice production frontier all other productivity change is attributed to technical efficiency change the article provides a theoretical framework for decomposing total factor productivity growth as well as a specification and estimation of the deterministic frontier production function it employs a programming technique to estimate a flexible functional form of the production frontier the paper then applies this technique to empirical data from yugoslavia of the period from 1965 to 1978 it concludes that for yugoslavia improvements to technical efficiency comprise the dominant contribution to total factor productivity change this agrees with accumulating evidence that in many developing economies productivity gain due to technological mastery of imported technology is substantial

using cost observation to regulate firms the paper emphasizes the use of accounting data in regulatory or procurement contracts when the supplier 1 has superior information about the cost of the project and 2 invests in cost reduction the main result states that under risk neutrality the supplier announces an expected cost and is given an incentive contract linear in cost overruns this optimal contract moves toward a fixed price contract as the announced cost decreases an investment choice is then introduced and the use of a rate of return regulation is studied

employment adjustment in uk manufacturing this analysis differs from previous studies of labor demand in its explicit inclusion of the costs to the firm of adju sting its workforce these costs include institutional factors such a s employment protection legislation and unions and market factors su ch as the degree of slack in the labor market two questions are addr essed what is the quantitative impact of these forces and does their inclusion improve the fit of a labor demand function the results sh owed these factors to have a strong influence on the rate of hiring f iring and to improve significantly on conventional labor demand funct ions copyright 1988 by royal economic society

external shocks and fiscal deficits in a monetary model of international reserve determination honduras 1960 83 results from single equation estimation of a standard monetary model suggest that central bank credit growth in excess of growth of money demand was the main source of international reserve losses in honduras during the 1960 83 period further 3 sls estimates suggest that increases in central bank credit growth were largely in response to rising external interest rates and decreases in the income terms of trade in addition income growth hence growth of money demand shows a strong positive response to the income terms of trade the fiscal deficit is found to have an insignificant impact on central bank credit growth

do public ownership and lack of competition matter for wages and employment evidence from personnel records of a privatized firm do public sector firm ownership and lack of competition matter for wages and employment to address this question we consider a large public sector company that is privatized using personnel records we find employment contract liberalization to generate relative wage losses for older high tenure low skilled part time workers permanent residents and women employment reductions mostly affect the same groups experiencing a wage decline overall wage liberalization leads to an increase in wage inequality of between 6 and 9 which if applied to the whole public sector would lead to a 52 to 76 closure of the inequality gap between the private and public sectors in europe our results suggest that differences between public and private sector wage structures found in descriptive studies are to a large extent causal rather than the result of selection into these sectors and that public sector employment and career path regulations limit a firm s ability to maintain a competitive workforce

the environmental consequences of stagnation in nicaragua abstract a decade of war and revolution under the sandinistas caused macroeconomic chaos but may have been indirectly beneficial to the environment now the country is a ward of the international financial community with foreign debt at almost six times gdp and few policy options the chamorro government elected in 1990 has reduced the role of government and restored the price system as the principal means of resource allocation and income distribution a three gap model is used to show that environmental deterioration is likely to accelerate as a result of pursuing neoliberal policies the analysis is based on a distinction between intensive and extensive environmental decay

trade patterns in developing countries 1964 82 this paper presents a regression analysis of import and export shares of gdp for 14 commodity and service categories in 55 developing countries over the period 1964 82 explanatory variables include gnp per capita population domestic capacity utilization the effective exchange rate and oecd real gnp for exports among other findings it is shown that countries trade patterns are not closely related to their growth performance and that developing countries on average run surpluses of exports over non capital goods imports on merchandise trade the current commodity surplus is required to offset imports of capital goods and a structural deficit on factor and non factor service trade

estimating cost functions in regulated industries characterized by asymmetric information abstract in this paper a structural model is developed to estimate a cost function that includes both an adverse selection and a moral hazard variable it is shown how traditional cost function estimates may produced biased results if moral hazard is present this gives an alternative reason to feinstein and wolak the econometric implications of incentive compatible regulation in g f rhodes ed advances in econometrics vol 9 159 204 jai press greenwich ct 1991 of why scale economics may be overestimated in regulated industries parameter estimates from our model can be used to design an optimal contract or any other regulatory mechanism we illustrate our approach using data from the norwegian bus transport industry

price and productivity change following deregulation the u s experience no real world market is likely to be perfectly contestable anymore than it is to be perfectly competitive yet like its predecessor the contestability benchmark proves highly useful as a framework for evaluating policies and outcomes under the contestability framework entry and price regulation is deemed inappropriate in industries which do not have system wide natural monopoly characteristics on this criterion brokerage airline trucking long distance telephone and terminal equipment should not be regulated true these industries may be characterised by some elements of scale economy such as economies of vehicle size so that at some level city pair routes only a few firms may serve but industry performance need not suffer in such an unregulated environment impediments to entry and exit not concentration or scale of operations may be the primary source of prices that are not welfare optimal even in the presence of natural monopoly characteristics it is important to isolate those markets which are not yet structurally competitive as in the case of coal shipments over which the railroads are judged to possess market dominance or in local telephone service it can be argued that the latter should continue to be overseen by regulators while markets which are controlled by competitive forces deriving from actual or potential competition or taking other indirect but effective forms should be free from traditional regulation thus unlike privatisation policy in the united kingdom described in the companion article by kay and thompson i985 us deregulatory policy can be construed as having a coherent rationale the nature and extent of deregulation match remarkably well with the policy prescription of the theory this paper analyses the consequences that have emerged under deregulation in terms of the following behavioural properties predicted by multi product competition and contestability theory a variety of products will emerge each of which will yield zero economic profit the revenues from any subset of the products must exceed the incremental costs of those products so that no cross subsidy can exist prices for each product will equal or exceed marginal costs and an equilibrium market structure will minimise costs for the industry see baumol

employment determination in british industry investigations using micro data this paper derives and then estimates a model of employment where unions and firms bargain over wages and possibly employment and efficiency wage considerations may be important it illustrates the difficulties associated in interpreting many existing attempts to discriminate between alternative models the results based on over 200 u k firms suggest that employment is negatively related to the firm s own wage and the change in the own wage relative to outside opportunities the latter may be an efficiency wage effect various financial factors are also seen to have a significant effect on employment

using propensity matching estimators to evaluate the impact of privatization on wages whether the transfer of ownership rights to the private sector leads to a decline or increase in wage growth is theoretically ambiguous given that the outcome depends on the uncertain interaction between firms and workers using propensity matching techniques this article investigates the effects of privatization on wages in the portuguese banking industry the empirical results obtained from quadros de pessoal for the period between 1989 and 1997 generally show a negative positive short run long run effect of privatization on relative wage growth for both men and women retained in the privatized firms moreover the results show that the most educated and experienced oldest workers as well as those in the high skill occupational categories were more likely to experience a negative wage effect

industrial policy reform in six large newly industrializing countries the resource curse thesis abstract all six large newly industrializing countries nics in this study favored an autarkic industrial policy aip in the 1950s aip required however the rapid build up of heavy and chemical industry hci which caused foreign exchange shortages if the hci matured slowly this is because the import and subsidy demands of the growing protected hci sector became too burdensome for the competitive primary sector whose rents shrank in relative importance as the economic structure evolved the two least well endowed nics abandoned aip early in favor of a competitive industrial policy cip which relied on labor intensive exports to earn foreign exchange and resulted in rapid economic growth in contrast the resource bonus of the four best endowed nics sustained aip longer but the longer aip lasted the harder it became to reform and the slow maturing hci sector adversely affected economic growth in this way the resource bonus became a curse rather than a blessing

estimating and decomposing productivity growth of the electricity generation industry in malaysia a stochastic frontier analysis this study examines the total factor productivity tfp growth of the malaysian electricity generation industry over the 1998 to 2005 period the stochastic frontier analysis sfa approach is used to measure tfp change and decompose tfp growth into efficiency change and technical progress we find that it achieved average annual tfp growth of 2 34 with technical change contributing the most to the tfp growth over the eight year period we hence hypothesise that the new power plants with their newer capital embodied technologies commencing during the sample period are likely to be the main reason for this strong technical change in addition it is also noted that this estimate for the malaysian electricity generation industry is larger than the estimate obtained for the electricity sector as a whole where we obtain 1 34 per year for a comparable period

foreign debt balance of payments and growth prospects the case of the republic of korea 1965 1988 the rapid buildup in the external debt of the developing countries since 1973 has created serious economic and political difficulties that could frustrate the development efforts of these countries and threaten the international financial system in terms of outstanding debt the republic of korea ranks fourth among third world borrowers and has experienced a noticeable deterioration in its debt servicing capacity yet at the same time it is widely recognized that the country has successfully adjusted to a series of adverse external developments since 1973 and in the process has maintained growth momentum while avoiding the financial difficulties other countries now face the exceptional performance of its economy in recent years supports this assessment the purpose of this study is twofoid the first is to analyze korea s experience with debt accumulation and management over the past two decades with a view to identifying some of the factors that may explain its successful debt management the second objective is to examine the prospects of the national economy for the 1984 88 period section 2 discusses profiles of the country s external obligations and analyzes several aspects of the outstanding debt pertinent to the discussion section 3 is devoted to a discussion of the evolution and causes of the country s foreign debt accumulation this discussion is followed by a review of its response to external and internal shocks in sections 4 and 5 section 6 examines questions related to the efficiency and optimality of foreign borrowing section 7 investigates the prospects of the national economy for the next five years for this purpose this section highlights some of the target revisions made in 1983 for the remainder of the fifth five year economic and social deveiopment plan 1982 86 and the government s macroeconomic projections through 1988 comparisons are made with simulation exercises under a number of scenarios that generate projections for the economy until 1990 a summary and concluding remarks constitute the final section

managerial talent motivation and self selection into public management the quality of public management is a recurrent concern in many countries calls to attract the economy s best and brightest managers to the public sector abound this paper studies self selection into managerial and non managerial positions in the public and private sector using a model of a perfectly competitive economy where people differ in managerial ability and in public service motivation we find that if demand for public sector output is not too high the equilibrium return to managerial ability is always highest in the private sector as a result relatively many of the more able managers self select into the private sector since this outcome is efficient our analysis implies that attracting a more able managerial workforce to the public sector by increasing remuneration to private sector levels is not cost efficient

mobility costs frictional unemployment and efficiency with imperfect job information flows it is plausible that the distribution of job offerings becomes more attractive when there are more vacancies and more unemployed with word of mouth communication this condition is derived given this condition steady state equilibrium is not efficient with welfare increased by the introduction of unemployment compensation even though all agents are risk neutral in this way workers become more selective in the jobs they accept

privatization and efficiency differentiating ownership effects from political organizational and dynamic effects this paper argues that the private public ownership factor should be differentiated from other factors that also influence the effect of privatization on efficiency this is empirically confirmed in a longitudinal study of 24 spanish firms for which several political and organizational factors are found to influence the estimated effects of privatization on efficiency the analysis of the timing of the effects reveals a strong significance for post privatization years 5 6 negative and 7 8 positive this suggests that the negative effect of these factors is transitional being eventually offset by the positive effects of the change to private ownership 2000 elsevier science b v all rights reserved jel classification l33

bargaining with outside options wages and employment in uk manufacturing 1974 1982 this paper studies the determinants of wages and employment at the firm level the question which is addressed is the extent to which external market pressures are important relative to economic variables which are specific to the firm one can interpret the former set of factors as outsider variables and the latter as reflecting the importance of insider variables the research is therefore a microeconomic investigation on insider versus outsider factors in wage and employment determination it can thus provide some evidence on the role played by the currently incumbent workers in affecting the economic conditions at the workplace see e g lindbeck and snower i986 i988 the issue has recently attracted considerable attention in view of its alleged capability of explaining the high and persistent levels of unemployment in western countries see also blanchard and summers i986 i987 and layard and bean i989 the theoretical model developed in the first part of the paper section i and then tested in the second part sections ii iv is a variant of the efficient bargains model of the labour market modified in accordance to recent developments in non cooperative game theory the classical model of labour bargaining is set out in mcdonald and solow i98i the firm and the union bargain over wages and employment simultaneously and the outcome is thus efficient in the sense of leontief 1946 traditional axiomatic bargaining

labour turnover in uk manufacturing a model of quits is constructed and combined with a labour demand function to produce a model of layoffs these are combined to provide an explanation of separations the main feature of this is the explicit incorporation of the interactions between quits and layoffs a linear approximation and a structural form are estimated on uk manufacturing data for 1965 82 it is shown that the most important determinant of separations is the state of demand in the labour market with some structural factors having a minor role to play

the development trinity how regional integration impacts growth inequality and poverty developing countries today have become more active participants in regional trade agreements this raises questions about how the benefits of integration are distributed and the extent to which lower income countries are able to capture development gains historically such impacts have been difficult to identify with precision this paper seeks to address this gap by empirically analysing the impact of regional integration on development particularly the effects on growth and welfare using both bilateral and regional integration measures we show that the ability to capture gains from integration varies across developing country regional groups with developing asia benefiting on par with developed countries the findings in the paper indicate that trade and trade policy play an important role in reducing inequality and poverty in developing countries it also shows that regionalism can function as a channel to make multilateralism a more adept way of addressing national challenges