Business Commons^™

On The Measurement Of Capital-Intensity, David Lim

Prof. David Lim

The problem of the choice of technique in less developed countries has featured prominently in the literature on economic develop- ment I. This paper shows that despite such interest attempts to measure capital-intensity still leave much to be desired and argues that a modified capital-labour ratio, with capital adjusted for utilization and labour to refer to the number of production workers on the biggest shift, is the theoretically most suitable measure of capital-intensity...

Do Foreign Companies Pay Higher Wages Than Their Local Counterparts In Malaysian Manufacturing?, David Lim

Prof. David Lim

This paper shows that foreign companies pay higher wages than their local counterparts in Malaysian manufacturing. Step-wise regression analysis shows that this is due to two factors. The first, and perhaps the more important, is the greater capital intensity of the production processes used by foreign companies. The second is their tendency to pay wages that they consider, or that are considered to be, commensurate with the wages that they pay in their home countries. This may be called the demonstration effect of wage remuneration in less developed countries.

Restructuring Social Security: How Will Retirement Ages Respond?, Gary S. Fields, Olivia S. Mitchell

Gary S Fields

[Excerpt] Budgetary pressures on the Social Security system have increased in recent years, prompting a variety of proposals to restructure the U.S. retirement income program. Most of these proposals ignore the possibility that the retirement patterns of older workers are likely to respond to changes in the incentives to retire. This chapter presents two important pieces of information for policymakers. First, we provide previously unavailable evidence on how changes in the structure of Social Security benefits would alter the economic incentives to retire at different ages. Second, we compute how retirement patterns would change in response to altered incentives to …

Labor Market Analysis Using Sipp, Gary S. Fields, George H. Jakubson

Gary S Fields

This paper examines the potentiality of the Survey of Income and Program Participation (SIPP) for labor market analysis. We consider five areas of analysis: (1) labor force participation, employment, and unemployment; (2) labor market effects of income maintenance programs; (3) earnings; (4) work and retirement of the elderly; and (5) migration. We find that the SIPP is a potentially rich resource for labor market analysis, surpassing much of what is to be found in existing databases. We note some remaining problems and make recommendations for changes.

The Meaning And Measurement Of Income Mobility, Gary S. Fields, Efe A. Ok

Gary S Fields

Income mobility may be seen as arising from two sources: (i) the transfer of income among individuals with total income held constant, and (ii) a change in the total amount of income available. In this paper, we propose several sensible properties defining the concept of income mobility and show that an easily applicable measure of mobility is uniquely implied by these properties. We also show that the resulting measure is additively decomposable into the two sources listed above, namely, mobility due to the transfer of income within a given structure and mobility due to economic growth or contraction. Finally, these …

Rewards For Continued Work: The Economic Incentives For Postponing Retirement, Olivia S. Mitchell, Gary S. Fields

Gary S Fields

This chapter develops empirical measures of the economic incentives for deferred retirement among older workers. Using a new data file on pay and pensions, we construct intertemporal budget sets reflecting income available to workers at alternative retirement ages. The analysis explores how continued labor force attachment is rewarded in terms of net earnings, Social Security benefits, and private pension income.

On-The-Job Search In A Labor Market Model: Ex Ante Choices And Ex Post Outcomes, Gary S. Fields

Gary S Fields

This paper builds a multi-sector labor market model including wage dualism, open unemployment, underemployment, on-the-job search, and expected wage equalization. The innovative feature of this model is the distinction between the ex ante allocation of the labor force among search strategies and the ex post allocation of the labor force among labor market outcomes. Among the findings are: more efficient on-the-job search lowers the equilibrium unemployment rate; in a rational expectations equilibrium, the average rural and urban wages will not be equal; modern sector enlargement may leave labor market conditions in one of the sectors unchanged, even when wages and …

The Effects Of Social Security Reforms On Retirement Ages And Retirement Incomes, Gary S. Fields, Olivia S. Mitchell

Gary S Fields

Recent changes legislated in the U.S. Social Security system have altered the economic incentives to work and retire. Some older workers will respond to these new incentives by retiring at different ages. This paper evaluates the signs and magnitudes of these responses. Four specific changes in the structure of Social Security benefits are examined: raising the normal retirement age, delaying the cost-of-living adjustment, lowering early retirement benefits, and increasing late retirement payments. Behavioral parameters are estimated using an ordered logit model of retirement ages; these are used to predict how retirement behavior might respond to each of the four reforms. …

Income-Generating Functions In A Low Income Country: Colombia, Gary S. Fields, T. Paul Schultz

Gary S Fields

Income generating functions are statistical tools used to explain income inequality and other economic outcomes and behavior. These functions are often associated with a strict human capital framework, but they need not be. Instead, they may be viewed as a reduced form equation summarizing the relationship between income and various personal and locational characteristics. Following this latter interpretation, we develop the regression and analysis of variance approaches to income generating functions and estimate them empirically using micro-economic data from one low income country, Colombia. Proceeding to increasingly parsimonious specifications of income generating functions, insights are gained into the structure of …

Employment, Income Distribution And Economic Growth In Seven Small Open Economies, Gary S. Fields

Gary S Fields

[Excerpt] Resurgent interest has been manifested among development economists in trickle-down, i.e., the view that the more rapid the rate of economic growth, the more rapid the improvement in employment and income distribution. Throughout this paper, the term ‘income distribution’ will refer to the location and dispersion of the pattern of incomes, i.e., to ‘absolute incomes and poverty’ and to ‘relative income inequality’. Empirical evidence supports trickle-down in some cases, but the evidence is contrary to trickle-down in others.

These data indicate:

1. A high rate of economic growth is neither necessary nor sufficient for inequality to decline.
2. A high rate …

Income Distribution And Economic Growth, Gary S. Fields

Gary S Fields

[Excerpt] Who benefits how much from economic growth and why? This question is fundamental to today’s development economics. This chapter reviews some of the major lessons learned and major directions for future research in the study of income distribution and economic development.

Employment And Economic Growth In Costa Rica, Gary S. Fields

Gary S Fields

Costa Rica’s economic growth in the last 25 years has had favorable labor market and income distribution consequences. Overall, employment growth kept pace with labor force growth, the mix of jobs improved, real wages rose, and relative inequality and absolute poverty fell. But during the economic crisis of 1980-82, when real per capita income plummeted, labor market conditions deteriorated markedly: unemployment doubled, employment composition worsened, and real wages fell by 40%. Growth, labor market conditions, and income distribution have moved together.

Import Competition In The High-Wage Sector And Trade Policy Effects On Labor, Gary S. Fields, Earl L. Grinols

Gary S Fields

This article evaluates the employment and welfare effects of increased trade competition and protection in economies with wage dualism, unemployment, and on-the-job search. A micro-based measure of economy welfare distinguishes between workers and other sectors of the economy is developed to deal with labor market imperfections and distributional issues. For example, increased competition in high-wage sector goods reduces high-wage employment, but may or may not increase overall unemployment. Policy may be chosen to mitigate loss in worker earnings that are partly or wholly offset by gains to consumers of the importable.

An Empirical Analysis Of Manufacturing Overhead Cost Drivers, Rajiv D. Banker, Gordon S. Potter, Roger G. Schroeder

Gordon Potter

Empirical validity of the claim that overhead costs are driven not by production volume but by transactions resulting from production complexity is examined using data from 32 manufacturing plants from the electronics, machinery, and automobile components industries. Transactions are measured using number of engineering change orders, number of purchasing and production planning personnel, shop- floor area per part, and number of quality control and improvement personnel. Results indicate a strong positive relation between manufacturing overhead costs and both manufacturing transactions and production volume. Most of the variation in overhead costs, however, is explained by measures of manufacturing transactions, not volume.

Manufacturing Performance Reporting For Continuous Quality Improvement, Rajiv D. Banker, Gordon S. Potter, Roger G. Schroeder

Gordon Potter

Recently many plants have implemented the new manufacturing strategy of continuous quality improvement. The central hypothesis in this paper is that the implementation of a policy of continuous quality improvement results in a shift in the management control system. This article tests this hypothesis by examining the shop floor reporting policies of forty-two plants located in the United States. The paper documents that the extent of information concerning the current status of manufacturing, such as charts on defect rates or schedule compliance and productivity information, provided to workers on the shop floor is positively related to the implementation of continuous …

Identifying Entrepreneur Characteristics And Attributes In Relation To Small And Medium Sized Enterprises In A Regional Context: A Case Study Of The Greater Illawarra Region, Amir Arjomandi, Scott Burrows, Charles Harvie

Amir Arjomandi

The Integrity Of Financial Analysts: Evidence From Asymmetric Responses To Earnings Surprises, Rui Lu, Wenxuan Hou, Henry Oppenheimer, Ting Zhang

Ting Zhang

This paper investigates the integrity of financial analysts by examining their recommendation responses to large quarterly earnings surprises. Although there is no significant difference in recommendation changes between affiliated and unaffiliated analysts in response to positive earnings surprises, affiliated analysts are more reluctant than unaffiliated analysts to downgrade stock recommendations in response to negative earnings surprises. The evidence implies that conflicts of interest undermine the integrity of financial analysts. We further examine the effects of reputation concern and the Global Research Analyst Settlement as informal and formal mechanisms, on restoring analysts’ integrity. The results show that the positive bias in …

An Analysis Of Risk-Taking Behavior For Public Defined Benefit Pension Plans, Nancy Mohan, Ting Zhang

Ting Zhang

This paper presents the first comprehensive study on the determinants of public pension fund investment risk and reports several new important findings. Unlike private pension plans, public funds undertake more risk if they are underfunded and have lower investment returns in the previous years, consistent with the risk transfer hypothesis. Furthermore, pension funds in states facing fiscal constraints allocate more assets to equity and have higher betas. There also appears to be a herding effect in that CalPERS equity allocation or beta is mimicked by other pension funds. Finally, our results suggest that government accounting standards strongly affect pension fund …

An Analysis Of Risk-Taking Behavior For Public Defined Benefit Pension Plans, Nancy Mohan, Ting Zhang

Nancy Mohan

This paper presents the first comprehensive study on the determinants of public pension fund investment risk and reports several new important findings. Unlike private pension plans, public funds undertake more risk if they are underfunded and have lower investment returns in the previous years, consistent with the risk transfer hypothesis. Furthermore, pension funds in states facing fiscal constraints allocate more assets to equity and have higher betas. There also appears to be a herding effect in that CalPERS equity allocation or beta is mimicked by other pension funds. Finally, our results suggest that government accounting standards strongly affect pension fund …

Delayed Planting, Prevented Planting And Replanting Crop Insurance Coverage, Steven D. Johnson, William M. Edwards

William Edwards

The frequent rains that have soaked Iowa this year have left many corn and soybean fields unplanted or with flooded areas. Many producers are wondering what options they have under their multiple peril crop insurance (MPCI) policies. In Iowa, the crop insurance “late planting period” for corn begins on June 1. Corn can still be planted after this date, but the insurance guarantee on those acres is reduced by 1 percent per day until the acres are planted. Corn acres planted after June 25 will receive insurance coverage equal to 60 percent of their original guarantee. Producers should keep accurate …

Delayed Planting, Prevented Planting And Replanting Crop Insurance Coverage, Steven D. Johnson, William M. Edwards

William Edwards

The frequent rains that have soaked Iowa this year have left many corn and soybean fields unplanted or with flooded areas. Many producers are wondering what options they have under their multiple peril crop insurance (MPCI) policies. In Iowa, the crop insurance “late planting period” for corn begins on June 1. Corn can still be planted after this date, but the insurance guarantee on those acres is reduced by 1 percent per day until the acres are planted. Corn acres planted after June 25 will receive insurance coverage equal to 60 percent of their original guarantee. Producers should keep accurate …

Flood Damaged Crops, Crop Insurance Payments And Lease Contracts, William M. Edwards

William Edwards

Some Iowa corn and soybean producers are facing substantial if not complete crop losses due to flooding. In particular, many acres of crops in the Missouri River Valley have been under water for a month or more this year. Fortunately, nearly 90 percent of Iowa’s corn and soybean acres are protected by multiple peril crop insurance.

Farmland Rental Rates Show Continued Strength In 2012, William M. Edwards, Ann M. Johanns

William Edwards

Anyone who is involved with the rental market for Iowa farmland knows that rental rates have been pushed significantly higher by the favorable corn and soybean prices that farmers have enjoyed since 2010. This trend continued in 2012.

Delayed Planting, Prevented Planting And Replanting Crop Insurance Coverage, Steven D. Johnson, William M. Edwards

William Edwards

The frequent rains that have soaked Iowa this year have left many corn and soybean fields unplanted or with flooded areas. Many producers are wondering what options they have under their multiple peril crop insurance (MPCI) policies. In Iowa, the crop insurance “late planting period” for corn begins on June 1. Corn can still be planted after this date, but the insurance guarantee on those acres is reduced by 1 percent per day until the acres are planted. Corn acres planted after June 25 will receive insurance coverage equal to 60 percent of their original guarantee. Producers should keep accurate …

Insurance Coverage For Drought-Damaged Crops, William M. Edwards

William Edwards

Nearly 90 percent of the corn and soybean acres in Iowa are covered by multiple peril crop insurance. Drought damage is an insurable loss under these policies. Producers should consult with their crop insurance agents before harvesting or destroying any drought-damaged crops, however.

Important Crop Insurance Dates, William M. Edwards

William Edwards

Even the best crop insurance plan is of little use if the right information is not collected and submitted on time. Likewise, if certain actions are not completed by the necessary date, producers may not receive full benefit from the risk protection that they have selected.

Farmland Rental Rates Show Continued Strength In 2012, William M. Edwards, Ann M. Johanns

William Edwards

Anyone who is involved with the rental market for Iowa farmland knows that rental rates have been pushed significantly higher by the favorable corn and soybean prices that farmers have enjoyed since 2010. This trend continued in 2012.

Farmland Rental Rates Show Continued Strength In 2012, William M. Edwards, Ann M. Johanns

William Edwards

Anyone who is involved with the rental market for Iowa farmland knows that rental rates have been pushed significantly higher by the favorable corn and soybean prices that farmers have enjoyed since 2010. This trend continued in 2012.

Delayed Planting, Prevented Planting And Replanting Crop Insurance Coverage, Steven D. Johnson, William M. Edwards

William Edwards

The frequent rains that have soaked Iowa this year have left many corn and soybean fields unplanted or with flooded areas. Many producers are wondering what options they have under their multiple peril crop insurance (MPCI) policies. In Iowa, the crop insurance “late planting period” for corn begins on June 1. Corn can still be planted after this date, but the insurance guarantee on those acres is reduced by 1 percent per day until the acres are planted. Corn acres planted after June 25 will receive insurance coverage equal to 60 percent of their original guarantee. Producers should keep accurate …

Delayed Planting, Prevented Planting And Replanting Crop Insurance Coverage, Steven D. Johnson, William M. Edwards

William Edwards

The frequent rains that have soaked Iowa this year have left many corn and soybean fields unplanted or with flooded areas. Many producers are wondering what options they have under their multiple peril crop insurance (MPCI) policies. In Iowa, the crop insurance “late planting period” for corn begins on June 1. Corn can still be planted after this date, but the insurance guarantee on those acres is reduced by 1 percent per day until the acres are planted. Corn acres planted after June 25 will receive insurance coverage equal to 60 percent of their original guarantee. Producers should keep accurate …