The B.E. Journal of Economic Analysis & Policy

Published by De Gruyter

Volume 17 Issue 2 -

April 2017

Issue of The B.E. Journal of Economic Analysis & Policy

Contents
Journal Overview

Research Articles

Publicly Available April 29, 2017

Economic Conditions at School Leaving and Sleep Patterns Across the Life Course

Johanna Catherine Maclean, Terrence D. Hill

Article number: 20160142

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Abstract

We use data drawn from the National Longitudinal Survey of Youth 1979 Cohort to study the effects of leaving school in an economic downturn on sleep quality and quantity. We account for the potential endogeneity of economic conditions at school leaving using instrumental variables based on birth year and early state of residence. We find that men who leave school in an economic downturn initially experience lower quality sleep, but these men are able to experience improved sleep quality over time. Women who leave school in an economic downturn experience better sleep quality, although the effect emerges over time. We find that leaving school in an economic downturn increases sleep quantity among men and women. We document heterogeneity by work type.

Publicly Available March 8, 2017

Retirement Decisions in Recessionary Times: Evidence from Spain

Catalina Amuedo-Dorantes, Cristina Borra

Article number: 20160201

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Abstract

The recession that started in the United States in December 2007 has had a significant impact on the Spanish economy through a large increase of the unemployment rate and the bursting of the housing and financial bubbles. We explore how the crisis and changes in the labor, housing, and financial markets might have impacted retirement patterns of Spanish men and women nearing retirement age. We find that the recession primarily reduced women’s retirement likelihood by 27%. The effect, which was associated with the labor market deterioration, as captured by higher unemployment rates, was circumscribed to women already at work, who chose to stay at work longer. In contrast, for the most part, men’s retirement likelihood did not change with the labor, housing, and financial market fluctuations. Overall, the findings suggest that working women might have prolonged their working lives to make up for lost household income.

Publicly Available March 18, 2017

The Legal Grounds of Irregular Migration: A Global Game Approach

Claire Naiditch, Radu Vranceanu

Article number: 20150259

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Abstract

This paper analyses the relationship between regular and irregular migration taking into account the migration network effect and the network creation mechanism. We assume that migrants can obtain a high payoff only if a critical mass of migrants is reached in the destination country. If candidates to migration receive biased signals about the economic situation of the destination country, the migrants’ decision problem can be analyzed as a standard global game. Tying the quota of regular migrants to the economic performance of countries might create large discontinuities in immigration flows, with some countries attracting the bulk of irregular migrants and the other being shunned by the migrants.

Publicly Available May 9, 2017

Banks Restructuring Sonata: How Capital Injection Triggered Labor Force Rejuvenation in Japanese Banks

Takeshi Osada, Kazuki Onji, David Vera

Article number: 20160059

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Abstract

Divergent interests of bank managers and financial regulators potentially compromise the efficacy of bank rescue operations. This study empirically investigates the agency problem encountered in a capital injection program implemented in Japan. We hypothesize that the operations requirement to reduce workforce lead banks to overstate the extent of downsizing by reassigning older workers to bank subsidiaries. We implement a difference-in-differences analysis using a panel of Japanese banks from 1990 to 2010. We also employ propensity score matching to control for sample selection bias. The result shows that injected banks exhibit workforce rejuvenation relative to non-injected banks. Among injected banks, the average employee age falls by approximately 1 year, which is equivalent to a reduction of approximately seventy 65-year-old workers. On an unconsolidated basis, the number of employees in injected banks decreases as a response to the injection. However, on a consolidated basis, which accounts for subsidiary employment, the number of employees does not decrease. Our finding suggests that the Japanese practice of lifetime employment (LTE) survived, albeit in a limited form, among restructured banks.

Publicly Available March 31, 2017

Origins of Adulthood Personality: The Role of Adverse Childhood Experiences

Jason M. Fletcher, Stefanie Schurer

Article number: 20150212

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Abstract

We test whether adverse childhood experiences – exposure to parental maltreatment and its indirect effect on health – are associated with age 30 personality traits. We use rich longitudinal data from a large, representative cohort of young US Americans and exploit the differences across siblings to control for the confounding influences of shared environmental and genetic factors. We find that maltreatment experiences are significantly and robustly associated with neuroticism, conscientiousness, and openness to experience, but not with agreeableness and extraversion. High levels of neuroticism are linked to sexual abuse and neglect; low levels of conscientiousness and openness to experience are linked to parental neglect. The estimated associations are significantly reduced in magnitude when controlling for physical or mental health, suggesting that adolescent health could be one important pathway via which maltreatment affects adulthood personality. Maltreatment experiences, in combination with their health effects, explain a significant fraction of the relationship between adulthood conscientiousness and earnings or human capital. Our findings provide a possible explanation for why personality traits are important predictors of adulthood labor market outcomes.

Publicly Available March 29, 2017

Monopolistic Competition and Exclusive Quality

Esteban Ortiz-Ospina

Article number: 20160036

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Abstract

In this paper I adapt a classic model of monopolistic competition where products are differentiated by quality, in order to study a market in which high-quality products can only be enjoyed by users with sufficient ability. Casting the model in the context of higher education – where selective colleges pledge quality by excluding low-ability students –, I show that there are two equilibrium market segmentations: one in which highly selective colleges serve high-income high-ability students, and another in which highly selective colleges are cheaper than the less selective competitors that cater to low-ability high-income students. I provide an example to illustrate the welfare implications of these two market configurations.

Publicly Available May 9, 2017

Technology Diffusion and Trade Liberalization

Hamid Beladi, Reza Oladi

Article number: 20160075

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Abstract

We consider a developing economy where multinational corporations compete with foreign and local firms in a monopolistically competitive market. The focus of our paper is on consequences of a policy mix of tariffs and foreign direct investment (FDI) tax in a developing economy. We assume all firms are technologically heterogeneous and that foreign firms are technologically superior to local firms. Central to our model is the assumption that FDI activities by multinational corporations would lead to diffusion of technology in the developing economy. We show the existence of a non-trivial equilibrium where most technologically advanced foreign firms emerge as multinationals, engage in FDI activities and this in turn leads to the diffusion of technology. We also show that trade liberalization without liberalization of foreign investment may lead to the protection of most technological backward local firms in the developing economy and such liberalization can reduce the welfare of a representative consumer.

Letters

Publicly Available March 8, 2017

Information Acquisition and Disclosure of Environmental Risk

Aditi Sengupta

Article number: 20170043

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Abstract

Firms often invest resources in acquiring scientific evidence to evaluate the actual (more accurate) risk (i.e., the probability of occurrence) of any potential environmental hazards that might result from their own production processes and use this information in taking optimal preventive measures. In a symmetric duopoly where the acquired information about environmental risk is observed privately by the firms, I show that requiring firms to publicly report this information increases the strategic incentive of firms to invest in information acquisition. However, the net expected environmental damage of an investing firm is lower if there is no public disclosure.

Publicly Available March 29, 2017

Fiscal Decentralization and Public Spending: Evidence from Heteroscedasticity-Based Identification

Helmut Herwartz, Bernd Theilen

Article number: 20160339

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Abstract

We analyse the instantaneous relation between public spending and expenditure decentralization by means of a novel identification scheme suggested in Lewbel (2012). Our cointegration, error-correction approach indicates that expenditure decentralization impacts negatively on total public spending and most of its subcategories.

About this journal

Objective
The B.E. Journal of Economic Analysis & Policy (BEJEAP) welcomes submissions that employ microeconomics to analyze issues in organizational economics, consumer behavior, and public policy. Articles submitted to BEJEAP can come in two formats: research papers and letters. Authors should bring to their analysis whatever microeconomic theoretical, experimental or econometric tools are helpful. We publish both empirical work and applied theory (though not more abstract forms of applied theory), and our aim is to disseminate papers that have practical implications for public policy, organizational or individual decision making.

Topics

Design of organizations and institutions
Industrial organization
Health economics
Public finance
Labour Economics
Economics of education, family, development, law, or the environment
Effects of domestic and international policy

Article formats
Research Papers, Letters

> Information on submission process