Economics Commons^™

Gains From Sharing: Sticky Norms, Endogenous Preferences, And The Economics Of Shareable Goods, Anders Fremstad

Economics Department Working Paper Series

There are often “gains from sharing” underutilized goods with others. People routinely share tools, media, gear, electronics, toys, space, and vehicles with relatives, friends, and neighbors, and the internet is opening up new opportunities to share them with strangers. Drawing on the work of James Buchanan, Elinor Ostrom, and Yochai Benkler, I develop an economic framework of decentralized sharing. My analysis challenges the implications of simple economic models, which ignore the role of sticky norms and endogenous preferences and, therefore, suggest that people are always sharing at efficient levels. I argue that the online platforms may gradually transform norms and …

Re-Distribution, Aggregate Demand, And Growth In An Open Economy: The Crucial Interaction Of Portfolio Considerations And External Account Constraints, Arslan Razmi

Economics Department Working Paper Series

A large body of literature inspired by the seminal contribution of Marglin and Bhaduri (1988) has debated the distributional determinants of demand and growth. A general conclusion has been that open economy considerations weaken the potential for a wage-led growth regime. How- ever, this literature has largely ignored asset portfolio considerations and the stock and flow interactions that result from the feedback from savings to wealth and from wealth to the current account. This paper develops a theoretical framework that speci.es a fuller system of (instantaneous) flow equilibria embedded in a medium-run framework with stable steady state stocks of real …

Bjp’S Demographic Dividend In The 2014 General Elections: An Empirical Analysis, Deepankar Basu, Kartik Misra

Economics Department Working Paper Series

The Bharatiya Janata Party (BJP) swept the 2014 General Elections in India and emerged as a single party with absolute majority, a result not witnessed since 1984. Not only did it win a majority of seats, it also managed to increase its vote share in almost all states between 2009 and 2014. Using state-level data, we show that BJP’s extraordinary poll results relied crucially on attracting young, especially first time, electors.

Determinants And Impact Of Subcontracting: Evidence From India's Informal Manufacturing Sector, Amit Basole, Deepankar Basu, Rajesh Bhattacharya

Economics Department Working Paper Series

There are two divergent perspectives on the impact of subcontracting on firms in the informal

sector. According to the benign view, formal sector firms prefer linkages with relatively modern firms in the informal sector, and subcontracting enables capital accumulation and technological

improvement in the latter. According to the exploitation view, formal sector firms extract surplus from stagnant, asset-poor informal sector firms that use cheap family labour in home-based production. However, direct, firm-level evidence on the determinants and impact of subcontracting is thus far lacking in the literature. We apply a modified Heckman selection model to Indian National Sample Survey data …

Social Hierarchies And Public Distribution Of Food In Rural India, Deepankar Basu, Debarshi Das

Economics Department Working Paper Series

In this paper, we develop a simple model that shows that consumption of PDS food grains is significantly different between rich and poor households in states where the PDS functions relatively well; in places where the PDS is non-functional, the difference is not significant. Using household-level data from three recent thick rounds of the consumption expenditure survey (2004-2005, 2009-2010 and 2011-2012), we find evidence in support of the predictions from the model. This suggests that one way to make the PDS functional is to make it more accessible to poor and underprivileged households.

Real Wages And Labor-Saving Technical Change: Evidence From A Panel Of Manufacturing Industries In Mature And Labor-Surplus Economies, Joao Paulo A. De Souza

Economics Department Working Paper Series

This paper uses panel cointegration and error correction models to unveil the direction of long-run causality between the real product wage and labor productivity at the industry level. I use two datasets of manufacturing industries: the EU-Klems dataset covering 11 industries in 19 developed economies, and the Unido Industrial Statistics Database covering 22 industries in 30 developed and developing economies. In both datasets, I find evidence of cointegration between the two variables, as well as evidence of two-way, long-run Granger causality. These findings are consistent with theories of directed technical change, which claim that a rise in labor costs sparks …

Labor Market Reform And Wage Inequality In Korea, Hyeon-Kyeong Kim, Peter Skott

Economics Department Working Paper Series

Temporary workers make up a sizeable part of the labor force in many countries and typically receive wages that are significantly lower than their permanent counterparts. This paper uses an efficiency wage model to explain the wage gap between temporary and permanent workers. High-performing temporary workers may gain promotion to permanent status, and a high wage to permanent workers therefore serves a dual purpose: it affects the effort of both permanent and temporary workers. Applying the model to the Korean experience, we discuss the effects of the labor market reforms in 1998 on inequality.

The Liberal Ethics Of Non- Interference And The Pareto Principle, Marco Mariotti, Roberto Veneziani

Economics Department Working Paper Series

We analyze the liberal ethics of noninterference applied to social choice. A liberal principle capturing non-interfering views of society and inspired by John Stuart Mills conception of liberty, is examined. The principle captures the idea that society should not penalize agents after changes in their situation that do not affect others. An impossibility for liberal approaches is highlighted: every social decision rule that satisfies unanimity and a general principle of noninterference must be dictatorial. This raises some important issues for liberal approaches in social choice and political philosophy.

Natural Implementation With Partially-Honest Agents In Economic Environments With Free-Disposal, Michele Lombardi, Naoki Yoshihara

Economics Department Working Paper Series

We study Nash implementation by natural price-quantity mechanisms in pure exchange economies with free-disposal (Saijo et al., 1996, 1999) where agents have weak/strong intrinsic preferences for honesty (Dutta and Sen, 2012). Firstly, the Walrasian rule is shown to be non-implementable where all agents have weak (but not strong) intrinsic preferences for honesty. Secondly, the class of efficient allocation rules that are implementable is identified provided that at least one agent has strong intrinsic preferences for honesty. Lastly, the Walrasian rule is shown to belong to that class.

One Million Miles To Go: Taking The Axiomatic Road To Defining Exploitation, Roberto Veneziani, Naoki Yoshihara

Economics Department Working Paper Series

Exploitation, profits, axiomatic analysis

Growth Complementarity Between Agriculture And Industry: Evidence From A Panel Of Developing Countries, Joao Paulo De Souza

Economics Department Working Paper Series

Abstract: Using dynamic panel models with data for 62 developing countries, this paper examines whether growth in agriculture elicits growth in manufacturing. For identification, I use population-weighted, average temperature as an instrument for growth in agriculture. I identify large short-run effects: An increase in growth in agriculture by one percentage point is estimated to raise contemporaneous growth in manufacturing by between 0.47 and 0.56 percentage points. The baseline models also imply sizable long-run effects of permanent increases in growth in agriculture. Extensions of the empirical model suggest that growth in agriculture benefits the manufacturing sector by improving its domestic terms …

A Progressive Report On Marxian Economic Theory: On The Controversies In Exploitation Theory Since Okishio (1963), Naoki Yoshihara

Economics Department Working Paper Series

This report explores the development of exploitation theory in mathematical Marxian economics by reviewing the main controversies surrounding the definition of exploitation since the contribution of Okishio (1963). The report first examines the robustness and economic implications of the debates on the Fundamental Marxian Theorem, developed mainly in the 1970s and 1980s, followed by the property relation theory of exploitation by Roemer (1982). Then, the more recent exploitation theory proposed by Vrousalis (2013) and Wright (2000) is introduced, before examining its economic implications using a simple economic model. Finally, the report introduces and comments on recent axiomatic studies of exploitation …

Travel And Recreation: The Economics Of "We Like It Here!", Norma P. Nickerson

Institute for Tourism and Recreation Research Publications

Outlook for 2014 and Review of 2013.

When Should Bankruptcy Be An Option (For People, Places Or Things)?, David A. Skeel Jr.

All Faculty Scholarship

When many people think about bankruptcy, they have a simple left-to-right spectrum of possibilities in mind. The spectrum starts with personal bankruptcy, moves next to corporations and other businesses, and then to municipalities, states, and finally countries. We assume that bankruptcy makes the most sense for individuals; that it makes a great deal of sense for corporations; that it is plausible but a little more suspect for cities; that it would be quite odd for states; and that bankruptcy is unimaginable for a country.

In this Article, I argue that the left-to-right spectrum is sensible but mistaken. After defining “bankruptcy,” …

Behavioral Economics And Insurance Law: The Importance Of Equilibrium Analysis, Tom Baker, Peter Siegelman

All Faculty Scholarship

Because choosing insurance requires consumers to assess risks and probabilities, the demand for insurance has proven to be fertile ground for identifying deviations from rational behavior. Consumers often shun the insurance against large losses that they rationally should want (e.g., floods); and they are attracted to insurance against small losses (extended warranties, low deductibles) that no rational individual should purchase. But the welfare consequences of behavioral anomalies in insurance are complex, because consumers’ irrational behavior takes place in a market profoundly shaped by informational asymmetries. Under some conditions, deviations from rational behavior may actually generate insurance market equilibria that produce …

Observing Academic Performance Based On Increased Educational Spending: An Assessment Of The Fedex Center At The University Of Mississippi, Matthew Williams

Honors Theses

In 2007, the FedEx Student-Athlete Academic Support Center, a renovation from the Starnes Center, was completed at the University of Mississippi to provide student- athletes a facility to improve academic performance in the classroom. FedEx donated $2.5 million to the project, covering half of the total expenditure. This private funding presents an opportunity to study how increased spending on education affected performance amongst student athletes in the classroom. Using semester-by-semester GPA of student-athletes and graduation rates from 2003 to 2009, it is possible to identify which students were exposed to the new facilities and thus, able to assess the effect …

The Interaction Between Fdi And Infrastructure Capital In The Development Process, Farrokh Nourzad, David N. Greenwold, Rui Yang

Economics Faculty Research and Publications

This paper focuses on the possible interaction between foreign direct investment (FDI) and the host country’s infrastructure base. Its central hypothesis is that the effect of FDI on per capita real income depends, at least in part, on the size of the recipient country’s infrastructure. This hypothesis is tested in a panel of 46 countries and 5-year averages over the 1980–2000 period using the size of three types of infrastructure capital: telecommunication, power generation, and network of roads or highways. The results indicate that the size of the host country’s infrastructure base helps to improve the marginal effect of FDI …

Meeting The Challenge Of Reconstruction And Development In Fragile States: Lessons From Aceh, Haiti, And South Sudan, Josef Leitmann

International Institute for Infrastructure Resilience and Reconstruction (I3R2) Conference

Reconstruction and development in poor, fragile countries present a double challenge: tackling the issues of poverty and underdevelopment as well as the constraints posed by instability, poor governance, and weak capacity. This context generates a range of problems that include: insecurity, insufficient planning, inadequate implementation capacity, poor financial management, misprocurement, corruption, a volatile fiscal environment, ineffective donor coordination, and negative environmental and social impacts. The paper draws lessons from positive and negative experiences in meeting these challenges in three conflict- and/or disaster-affected cases: Aceh Province, Indonesia (postdisaster reconstruction and postconflict development following the tsunami and earthquakes of 2004), Haiti (postdisaster …

Housing The Workforce Following The Canterbury Earthquakes In New Zealand, Yan Chang-Richards, Suzanne J. Wilkinson, Erica Seville, David Brundson

International Institute for Infrastructure Resilience and Reconstruction (I3R2) Conference

Temporary housing following a large-scale disaster has a positive effect on household welfare and community recovery. Following the 2010 and 2011 Canterbury earthquakes, a shortage of temporary accommodation created barriers for the outside construction workforce to engage in repairs and rebuild in Christchurch. This study investigates the impacts of housing shortages for the overall recovery and the strategies adopted by both households and the workforce in the building industry. Findings suggest that the interplay among the industry strategies and household strategies for securing housing determines the magnitude and scope of economy-wide inflation. One unfortunate consequence of these industry strategies is …

Robust Design Review Conversations, Andy Dong, Massimo Garbuio, Dan Lovallo

Design Thinking Research Symposium

Design reviews and executive conversations at the point of strategic decision-making share an important outcome: they both result in the (nearly) irrevocable allocation of resources to pursue a design concept or strategic option. Our study aims to contribute to the strategic decision-making scholarship by investigating the robustness of these conversations. We define a robust design review conversation as one in which the participants discuss evidence in favor of and against the option and at the same time propose new hypotheses to explain or resolve the evidence in favor of and against the option, hypotheses that can eventually be tested. We …