The main reason for the negative comovements, according to Baxter (1995), is that in the models of one-good with the internationally mobile capital, there is a strong tendency to move capital to the most productive location in response to persistent productivity shocks. The movement of capital to the more productive country leads to a rise in labor returns there accompanied by a fall in labor returns in the other country. Because of the substitution eﬀect, labor input in diﬀerent country is negatively correlated unless the cross-country correlation of the innovations to country-speciﬁc productivity shocks is very high.
Schmidt (1993) analyzes the effects of the changes in the age composition of Western Germany on the incidence of unemployment in different sex-age groups (also Zimmermann 1991). The German wage setting process appears to be characterized by the presence of a strong union movement that hampers flexible wage adjustments. Thus, age structure variations can be expected to lead to fluctuations in age-specific unemployment rates. In general, this intu- ition is confirmed by the estimates presented by the author. However, a strong positive relationship between the size of a cohort and its relative unemploy- ment experience can only be established formally for a few sex-age groups. The stylized model of a monopoly union maximizing the wage bill is only a point of departure for a deeper analysis of the bargaining process, though. Consequently, the question of how alterations of the population age structure influence the bargaining process and its outcomes is more intricate. Spe- cifically, it might well be that larger cohorts can exert an influence which miti- gates the adverse effects of generational crowding. A theoretical model which embodies such a political economy consideration is left to further research. Yet it is already clear that any empirical analysis should take account of the possibility that in a corporatist wage setting cohort size might influence em- ployment rates and economic prosperity negatively as well as positively.
Furthermore, national culture is a multi-dimensional phenomenon (Hofstede, 2001; House et al., 2004) . The GLOBE study identified nine cultural dimensions across 62 societies. Drawing on the distinction between traditionalism and modernity (Gusfield, 1967; Hill, 2000; Inglehart & Baker, 2000) , we argue that some specific cultural dimensions in the GLOBE study, which are relevant for entrepreneurship in theory, can be classified into the categories of traditionalistic culture and modernistic culture, respectively. Traditionalistic cultures emphasize the value of traditional family and the parent-child ties; moreover, economic behavior tends to emphasize cooperation and team work (in-group collectivism). People in traditionalistic culture can obtain plenty of social and emotional support from their extended family and in-group social circle, and interpersonal relationship are built on trust (humane orientation). Additionally, traditionalistic cultures emphasize the value of deference to authority as well as to a centralized economic system (power distance). On the other hand, modernistic cultures emphasize individual freedom, personal achievement, self-expression, subjective well-being and quality of life. The economic behavior associated with modernistic culture often entails large scale operation and profit maximization (performance orientation). People in modernistic cultures are not only conscientiously managing their time in order to utilize it efficiently, but they also emphasize the presence and the future (Hill, 2000) (future orientation). Finally, the uncertainties associated with a decentralized economic system combined with a differentiated division of labor and complex industrial environment entail measures to make the environment more predictable in modernistic cultures (Triandis, 1994)
It is unusual to have data that span an individual’s childhood (period 1) and adulthood (period 2), making it difficult to obtain structural estimates of a dynamic model. The analysis here is limited by the single cross-section of data used for each country. Separate equations are estimated for boys and girls in each country, giving four sets of estimates. All reported standard errors are robust (see White 1980, for example) and adjusted to permit observations within clusters (primary sampling units) to be correlated (see Deaton 1997, for example). The dependent variable is hours of child work on the family farm. As there is considerable variation in hours, this measure is preferable to the participation measure used in most previous research. Since many children do not participate in farm work, the Tobit estimator is used. 12 If data on all rural households are used, a dummy for land ownership has such enormous explanatory power that all other regressors are completely insignificant. Since land ownership is a very significant determinant of child labor in rural areas of both countries, the models are run on the subsample of households that own or operate a family farm. These households constitute 46 percent of households in Pakistan and 90 percent of households in Ghana. Farm size is then included among the regressors, and dummy variables are used for type of land tenancy.
Overall, the lack of a cross-country analysis severely limits the ability to clarify whether the housing emancipation of young adults upon parents’ retirement can be attributed to liquidity problems faced by parents, as suggested by Manacorda and Moretti (2006), or to the receipt of a sizeable retirement allowance, as noted by Battistin et al. (2009). Thus, there is the need for empirical work to test which of the channels dominates in practice. I contribute to previous studies by taking advantage of a European dataset to test and discuss the relative weight of these two competing hypotheses and shed some light into the mechanism. To address problems of reverse causation, I estimate a bivariate discrete hazard model with shared frailty (Abbring and van den Berg 2003; 2005) for the impact of pater- nal retirement on the timing of children’s nest-leaving. Furthermore, to provide random variation in the timing of paternal retirement, I strengthen my identification strategy by employing changes in eligibility rules for early retirement benefits that were implemented across European countries and during the period 1961 to 2007 as an exclusion restriction. To the best of my knowledge, this is the first paper that makes use of this exogenous source of variation to children’s living arrangements to assess whether and to what extent pater- nal retirement caused their children to leave the nest. Compared to the linear IV strategy, the hazard specification provides a more appropriate statistical framework for modeling time-to-event/survival outcomes and accounting for right-censoring, thereby allowing me to overcome certain limitations faced by previous IV studies. The bivariate hazard model finally offers greater flexibility in handling nonlinear baseline hazards and nonlinear effects of covariates and provides a novel approach to identifying treatment effects by modeling unobserved heterogeneity explicitly through bivariate specification.
The response of women's labor supply to divorce risk and to changes in divorce law have already received attention in the literature. Johnson and Skinner (1986) find that married women increase their labor supply prior to a divorce, and argue that the increase results from the anticipation of divorce, rather than precipitating the divorce. Papps (2006) finds similar results. Cross-sectional results often show a positive association between divorce law reform and women's labor supply, while longitudinal results are more mixed. 5 Genadek, Stock and Stoddard (2007) argue that differing results could be explained by heterogeneous impacts of divorce law changes, if women have different costs of bargaining and divorce. They find that divorce law reform increases the labor supply of married mothers, especially those with young children, relative to other women. If young women made different labor supply choices as a result of a changing divorce-law environment, it is quite likely that their career paths were affected throughout their working lives. The long-term lens of this paper allows an evaluation of the
The framework is similar to that used by a number of researchers to explore factors accounting for increasing wage inequality. These researchers typically transform equations for determining the quantity of a firm=s revenue into an equation where labor=s share in revenues is a function of both final goods prices and changing factor inputs. Intuitively, the share of payments to workers in either a firm=s total revenues or in National Income will depend on product prices as well as the quantity of capital or labor available. Most previous analyses have assumed that product and factor markets are perfectly competitive. In our model, we will relax that assumption, introducing the possibility that firms make excess profits. We will then allow the rents to be divided between firms and employees on the basis of bargaining strength. This approach will differ from previous work by Borjas and Ramey (1995), who examine the link between rising wage inequality and falling industry rents. They assume that the fraction of rents allocated between workers and owners is constant; what changes is the extent of rents as global conditions become more competitive. Most previous analyses, including Borjas and Ramey (1995) and Abowd and Lemieux (1993), assume that bargaining power is fixed; in this paper, bargaining power is the parameter which is endogeneously determined. The framework also differs from Rodrik (1997) and Slaughter (1996), who argue that rising labor demand elasticities could shift the incidence of nonwage costs, costs associated with the implementation of labor standards, and government taxes towards labor. In the framework below, the fraction of rents going to workers will vary with bargaining strength, which in turn will vary with global market conditions. Of course, it is possible that the increasingly competitive conditions for low-wage workers reflect both the impact of globalization on falling prices (which reduces the amount of the rents available to previously protected sectors) as well as the share going to labor. This framework could incorporate both effects.
alternative explanation for this variation: differences in cultural factors across home country groups, such as tastes regarding family structure and women’s roles in market versus home work. To examine this hypothesis, I first re-estimate equation (1), unadjusted and adjusted for personal characteristics, first dropping the home country dummy variables (both in levels and interactions), and then replacing them by home country LFPR of men and women (both in levels and interactions). Unlike the full dummy controls specification, which does not impose any restrictions on the home countryeffects, this specification, referred to as the “home country LFPR controls” specification, imposes the requirement that the home countryeffects are linear in the home country LFPR. I then use the results from the home country controls specification to predict unadjusted, X-adjusted, and X,Z-adjusted gender gaps in LFPR. Finally, I calculate the unadjusted, X-adjusted, and X,Z-adjusted WSDs from the home
In the arena of economic analysis, the wealth of a nation is getting more and more attention to be a better indicator to evaluate the status of an economy. This paper had studied the aggregate household wealth of different nations of the world, 106 countries, for the year 2009-2018. During these years, only two countries of the world, China and the USA, have managed to increase their wealth tremendously over the last decade while others experienced a slow pace in the growth of wealth. To satisfy the query of how efficient these countries were in maximizing their wealth, a stochastic frontier approach (SFA) has been used to predict the technical efficiency dependent variable and then generalized methods of moments (GMM) and other models have been used to find out the determinants of this efficiency. The study had come up with the result that land, labor, and capital mainly contributed to the output of wealth maximization while past year level of efficiency, export, and import played the main roles in determining the wealth maximizing efficiency status of a nation. It is found that there is a negative relationship between past-year efficiency with current years and the more a country imports, the less efficient the country is while the more it exports, the more efficient the country is in maximizing wealth.
The results for the 1980’s can be compared with the results for the 1990’s to check whether the change in tax-benefit linkages generated by the social security reform affected the effects of payroll taxes on shifting and employment. As discussed above, the social security reform weakened the tax-benefit linkage due to the introduction of minimum pensions. At the same time, the movement from a PAYG system to a fully-funded system probably strengthened the tax-benefit linkage. The results suggest that shifting increased after the introduction of the reform, suggesting the movement to a fully-funded system was probably more important than the introduction of minimum pensions. Moreover, greater shifting could also be explained by an increase in labor demand elasticities during this period. As indicated above, Fajnzylber and Maloney (2000) indeed find evidence that labor demand elasticities increased for blue collar workers in Colombia after trade was liberalized in 1991. Consistent with more shifting, the results also suggest less disemployment after the introduction of the trade and social security reforms in the 1990’s.
address its public debt problem and, at the same time, reduces (labor and capital) income tax rates to mitigate the short-term recessionary effects of these spending cuts, while, once its public debt has been reduced in the later phase, it uses the fiscal space created to further cut capital taxes. In other words, regarding the early phase of pain, Italy’s public debt should be brought down by cuts in government consumption spending only (and not by cuts in govern- ment investment and transfer payments or by rises in various taxes), while, regarding the later phase of fiscal gain, the anticipation of cuts in capital taxes in the future, once debt consoli- dation has been achieved, plays a key role even in the short term. Use of public consumption spending is also recommended in Germany, where the policy aim is just cyclical stabilization. It is also interesting to report that, to the extent that policy reactions are chosen cooperatively, the higher the say of Germany in policy setting, the stronger the fiscal consolidation in Italy should be during the early period of pain. Again, all this holds with optimized feedback policy rules.
Data on all oil-related variables are obtained from the Energy Information Adminis- tration (EIA) and the International Energy Agency (IEA). The oil price variable we use is the nominal refiner acquisition cost of imported crude oil, which is considered to be the best proxy for the free market global price of imported crude oil in the literature. The world economic activity indicator is taken from BP (2009) and PVR (2009), and is calcu- lated as a weighted average of industrial production of a large set of individual countries, including for instance China and India. Euro area data is collected from the Area Wide Model (AWM) dataset, see Fagan et al. (2001), and US real GDP, consumer prices and the nominal interest rate are retrieved from respectively US Bureau of Economic Analysis (BEA), US Bureau of labor Statistics (BLS) and from the Federal Reserve Economic Data (FRED) dataset. Data of the other individual countries are obtained from the OECD Main Economic Indicators (OECD MEI) database and the exchange rate data of all coun- tries included are the Bank for International Settlements (BIS) nominal eﬀective exchange rate indices.
Since the purpose of our study is to analyze the effects of exogenous changes in the immigrant workforce, the measure of the immigrant labour supply should be as free as possible from measurement error that would otherwise attenuate our estimates, a problem also highlighted recently by Aydemir and Borjas (2011) and Manacorda et al. (2012). Attenuation bias is ruled out by definition in the Danish data, where we can use the entire population. It is also no concern in Germany, where both the sample size and the sampling methodology rules out that immigrants – in the definition we apply here – are under-represented. Although smaller than the German and Danish samples, the LFS is the largest UK data source available to researchers which provides information on wages and employment spells for natives and immigrants. 9 Because of its smaller size, there may be concerns that UK estimates suffer from attenuation bias as a result of measurement error in the proportion of foreigners in a labour market cell. However, our estimate of the size of the likely bias (see Aydemir and Borjas, Eq. 8) is under 2%, largely because the cell sizes we use are still relatively large.
No explicit hypotheses on effects of individual characteristics on immi- grants’ health are formulated and tested in this study. However, we did include a number of individual characteristics in the analyses, to shed more light on the mechanisms underlying the origin, destination, and community effects that we hypothesized. Information on immigrants’ educational level and employment status was included to examine whether origin, destination, and community effects on immigrants’ health can be attributed to material deprivation and success in the labor market and the educational system. The level of urbanization was accounted for to exam- ine whether effects are explained by an ‘‘urban health penalty’’ for migrants (Lorant, Van Oyen, and Thomas, 2008). We controlled for immigrants’ individual religious affiliation, to adequately separate the effect from originating from an Islamic country from the influence of individual religious involvement. To assess whether effects are because of differences between immigrant groups in the availability of individual social ties, we accounted for immigrants’ individual social engagement, marital status and the presence of children in the household. By including immigrants’ length of stay in the destination country, we are able to examine whether the healthy migrant effect in Hypothesis 9 is explained by the fact that the health advantage of migrants wears off in the course of time because of acculturation. We included perceived discrimination by immigrants to examine whether this mediates the effect of anti-immigrant attitudes on health. Finally, gender and age were controlled for to account for differences in the demographic composition of immigrant groups.
The literature suggests that agents’ awareness of changes in these two types of wealth may differ (Dvornak and Kohler 2003, Case et al. 2005). There is no consensus among authors about which type of wealth is more “trackable” (that is, easier to measure accurately). Some argue that it may be easier to find information on current financial wealth than on current real estate wealth, as houses are less homogenous and are less frequently traded than shares (Dvornak and Kohler, 2003). Thus, an increase in financial wealth may lead to a larger increase in consumption than an equivalent increase in housing wealth. In contrast, it has been suggested that from 1989 to 1995 in the U.S. there seemed to be a trend away from direct ownership of corporate stock and toward ownership through financial intermediaries (Poterba and Samwick 1995). Those who own stock indirectly might be less aware of the current value of their portfolio than direct stock owners. Additionally, an estimate of the value of one’s current housing wealth could be derived by using information on sale prices of comparable houses in one’s neighborhood.
After analyzing the wealtheffects separately for each country, we are now at a position where we can gauge the average effects by examining the mean group estimates. This estimator has been applied in Dvornak and Kohler (2007), Edison and Sløk (2002), Slacalek (2009), to name a few. In essence, it is equivalent to pooling the data and imposing the identical-slopes restriction for all countries. 8 We show the results in Table 2. For all countries as a whole, the initial consumption response to a 10% housing price shock is 2.79%, in contrast to the (statistically insignificant) 1 . 31% to a 10% stock market value shock. Still, by the end of two years, the stock wealth e ff ect overshadows the housing, consistent with the pattern for the majority of countries observed above, even though these mean group estimates are not statistically significant after 8 quarters. We divide the eight countries into two groups: Anglo-Saxon countries (Australia, Canada, U.K., and U.S.) versus Continental Europe countries (Belgium, Finland, Sweden, and Switzerland). The rationale is that the former group has a more robust housing and stock market system than the latter. From Table 2 we observe that the wealtheffects on consumption for the former group are generally greater than those for the latter group.
the U.S. and Spain. 2 The comparison of these two countries is relevant for several reasons. First, the U.S. and Spain are both characterized by a welfare model typically catalogued as rather weak compared to that found in Nordic countries (Esping-Andersen, 2002). The measurement of vulnerability using wealth holdings especially is interesting in this context given the greater importance of assets as insurance mechanism in a low social protection situation. In any case, the U.S. and Spain present important di¤erences that may condi- tion the relationship between household income and wealth. Indeed, Bover (2008) shows that Spain and the U.S. exhibit important di¤erences in the demographic structure and the household formation process, with Spain showing a larger share of young people liv- ing with their parents, which has important e¤ects on the saving behavior and the stock of wealth accumulated over the life cycle. Also, Spain and the U.S. present important di¤erences regarding the portfolio composition, with Spanish households showing a larger preference for housing wealth, while …nancial assets are relatively more important in the U.S.(Bover et al. 2005). Lastly, the generosity of the tax and bene…t systems and the regulation of the labor market di¤ers signi…cantly in these two countries, with the U.S. usually seen as the prototype of a liberal market economy, whereas Spain presents a highly regulated labor market with a larger unemployment protection from the welfare state.
Differences in the distributions of demographic and economic characteristics of households partially explain cross-country variation in wealth distributions but we have shown that a significant share remains unexplained by the household characteristics controlled for in the decomposition analysis. Some related empirical studies also identifying residual countryeffects have sought to identify country level characteristics that can account for this ‘unexplained’ variation. Christelis et al., (2013) conduct a decomposition analysis examining crosscountry variation in wealth participation rates and levels for those aged 50 or over between the US and a number of European countries. They regress the unexplained component (coefficient effects) on a number of macro-level economic variables covering factors likely to affect stock ownership (eg market capitalization to GDP ratio), entrepreneurial activity and home ownership (eg house price index). They find that differences in economic environments captured by these variables explain much of the residual variation in wealth ownership and levels. Sierminska and Doorley (2013) examine differences in wealth ownership rates across a number of European countries, US and Canada. They find that differences in household composition and income explain part of the differences between countries. They regress the unexplained wealth gaps on a set of country- level institutional indicators (such as financial development index, mortgage maturity, economic freedom). They find that wealth ownership is more sensitive to institutional settings among younger households (under 50) than older households and that different institutional settings are related to portfolios decisions. These macro level economic factors
In this paper, we analyse the short-term wealtheffects of large (intra)European takeover bids. We find large announcement effects of 9% for target firms and a cumulative abnormal return that includes the price run-up over the two -month period prior to the announcement date of 23%. However, the share price of the bidding firms reacts positively with a statistically significant announcement effect of only 0.7%. We also show that the status of a takeover bid has a large impact on the short-term wealtheffects of target’s and bidder’s shareholders, with hostile acquisitions triggering substantially larger price reactions than friendly mergers and acquisitions. When a UK target or bidder is involved, the abnormal returns are almost twice as high as bids involving both a Continental European target and bidder. We also find strong evidence that cash offers trigger much larger share price reactions than all-equity offers or combined bids consisting of cash, equity and loan notes. A high market-to-book ratio of the target leads to a higher bid premium, but triggers a negative price reaction for the bidding firm. Also, our results suggest that bidding firms should not diversify by acquiring target firms that do not match their core business. Surprisingly, domestic bids create larger short-term wealtheffects than cross-border mergers and acquisitions. This results remains valid after controlling for the characteristics of the bid and the target firm. We also find that the premiums paid depend on the location of the target. The country dummies we use proxy for institutional differences, such as different corporate governance regimes (ownership concentration, takeover regulation, protection of shareholder rights, and informational transparency). After controlling for the status of the bid (i.e. the higher frequency of hostile acquisitions in the UK), for means of payment, and financial characteristics of the target, we find substantially higher wealtheffects for UK targets. This is also the case (but to a much smaller extent) for German, Austrian and Swiss firms but not for targets in France, the Benelux countries and Southern Europe. In addition, we investigate whether the predominant reason for mergers and acquisitions is synergies, agency problems or managerial hubris. We find a significant positive correlation between the gains for the target shareholder and the total gains from the merger as well as between the gains for the target and those for the bidder. This suggests that synergies are the prime motivation for bids and that targets and bidders tend to share the resulting wealth gains.
Regarding the e¤ect by household types, we …nd important di¤erences among the three poverty groups. In the case of the twice-poor, the larger share of single households under 35 in the U.S. is a key factor to understand the e¤ect of the household structure. Indeed, it is the group of single women and lone-mother households which causes the largest change in the U.S. counterfactual poverty rate. Thus, in the case of income and net worth, the incidence of twice-poor in the U.S. reduces by about 10 percent when either the proportion of women under 25 living alone or the rate of single mothers between 25 and 35 in the U.S. is set equal to that in Spain. This result points out to cross- country di¤erences in the formation of this type of households. Although the female labor participation rate has steadily increased in Spain since the opening of the economy in the 60’s, there still exists a substantial di¤erence in participation rates between Spain and other rich countries, especially in the case of married mothers (Mumford and Parera 2001, Costa 2000). Moreover, despite the general increase in the number of lone-mothers due to divorce and teenage pregnancy observed in most developed countries (Reher, 1998), there exist important cross-country di¤erences in the living arrangements of female headed households. Indeed, in Spain, about 30 percent of lone-mothers co-reside with their own family, while in the U.S. this percentage is about 15 percent (Reher 1998 and London 1998), which would contribute to explain the lower incidence of this households observed in Spain.