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on Regulation |
| By: | Alberto Alesina (Harvard and Igier); Yann Algan (Sciences Po, Ofce); Pierre Cahuc (Ecole Polytechnique, Crest); Paola Giuliano, UCLA (UCLA) |
| Abstract: | Flexible labor markets requires geographically mobile workers to be efficient. Otherwise, firms can take advantage of the immobility of workers and extract monopsony rents. In cultures with strong family ties, moving away from home is costly. Thus, individuals with strong family ties rationally choose regulated labor markets to avoid moving and limiting the monopsony power of firms, even though regulation generates lower employment and income. Empirically, we do find that individuals who inherit stronger family ties are less mobile, have lower wages, are less often employed and support more stringent labor market regulations. There are also positive cross-country correlations between the strength of family ties and labor market rigidities. Finally, we find positive correlations between labor market rigidities at the beginning of the twenty first century and family values prevailing before World War II, which suggests that labor market regulations have deep cultural roots. |
| Keywords: | Family Values, Regulation of Labor, Labor Markets |
| JEL: | J J2 J4 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.56&r=reg |
| By: | Jean Tirole (Toulouse School of Economics) |
| Abstract: | The recent crisis was characterized by massive illiquidity. This paper reviews what we know and don't know about illiquidity and all its friends: market freezes, fire sales, contagion, and ultimately insolvencies and bailouts. It first explains why liquidity cannot easily be apprehended through a single statistics, and asks whether liquidity should be regulated given that a capital adequacy requirement is already in place. The paper then analyzes market breakdowns due to either adverse selection or shortages of financial muscle, and explains why such breakdowns are endogenous to balance sheet choices and to information acquisition. It then looks at what economics can contribute to the debate on systemic risk and its containment. Finally, the paper takes a macroeconomic perspective, discusses shortages of aggregate liquidity and analyses how market value accounting and capital adequacy should react to asset prices. It concludes with a topical form of liquidity provision, monetary bailouts and recapitalizations, and analyses optimal combinations thereof; it stresses the need for macro-prudential policies. |
| Keywords: | Liquidity, Contagion, Bailouts, Regulation |
| JEL: | E44 E52 G28 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.78&r=reg |
| By: | Carlo Cambini (Politecnico di Torino, IMT Lucca and FEEM); Laura Rondi (Politecnico di Torino and FEEM) |
| Abstract: | This paper examines the investment and financial decisions of a sample of 92 EU regulated utilities, taking into account key institutional features of EU public utilities, such as: a) regulation by agencies with various degrees of independence; b) partial ownership of the state in the regulated firm; and c) the government’s political orientation, which may ultimately influence the regulatory climate to be either more pro-firm or more pro-consumers. Our results show that regulatory independence matters for both investment and financial decisions. Investment increases under an Independent Regulatory Agency (IRA), while ownership has no effect. Leverage also increases when the IRA is in place, especially so if the regulated firm is privately controlled. Finally political orientation does matter, as firm investment increases under more conservative (pro-firm) governments, but this effect appears to revert when the IRA is in place. |
| Keywords: | Regulated Utilities, Investment, Capital Structure, Private and State Ownership, Regulatory Independence, overnment’s Political Orientation |
| JEL: | G31 G32 L33 L51 L90 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.69&r=reg |
| By: | Manuel Willington (ILADES-Georgetown University, Universidad Alberto Hurtado); Jorge Lining (OSITRAN, Peru) |
| Abstract: | This paper’s purpose is to study the problem of a regulator of a utility monopoly, who has a universal service goal that is binding, in the sense that there is no two- part tariff that can induce efficient consumption, self-finance the firm, and guarantee universal access at the same time. The optimal two-part tariffs that the regulator should set under the following three different regulatory rules are derived: no flexibility (the monopolist just offers the regulated plan), partial flexibility (the monopolist can offer alternative plans, but these -and the regulated one- must be available to all customers), and full flexibility (the regulated plan must be available to all customers, but not the alternative ones). The solutions under the three schemes are characterized, and provide an unambiguous ranking of regulatory rules: total flexibility is weakly better than partial flexibility, with the latter being strictly better than no flexibility. |
| Keywords: | Monopoly regulation, network utilities, universal service obligation, Non-Linear Tariffs |
| JEL: | L50 D52 D80 |
| Date: | 2009–12 |
| URL: | http://d.repec.org/n?u=RePEc:ila:ilades:inv239&r=reg |
| By: | Leonard I. Nakamura |
| Abstract: | This paper sets forth a discussion framework for the information requirements of systemic financial regulation. It specifically proposes a large macro-micro database for the U.S. based on an extended version of the Flow of Funds. The author argues that such a database would have been of material value to U.S. regulators in ameliorating the recent financial crisis and will be of aid in understanding the potential vulnerabilities of an innovative financial system in the future. The author also argues that the data should -- under strict confidentiality conditions -- be made available to academic researchers investigating the detection and measurement of systemic risk. |
| Keywords: | Flow of funds ; Financial crises ; Financial institutions - Law and legislation |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpwp:10-22&r=reg |
| By: | Adam Gersl (Czech National Bank; Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic); Petr Jakubík (European Central Bank; Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic) |
| Abstract: | This paper examines procyclicality of the financial system. The introduction describes the natural and regulatory sources of procyclicality, focusing on the potential procyclical effect of the current Basel II regulatory framework for banks. It also mentions the regulatory tools for mitigating procyclical behaviour by financial institutions currently being discussed in international forums. Under certain conditions, procyclical behaviour of the banking sector can lead to an adverse feedback loop whereby banks, in response to an economic downswing, engage in deleveraging and reduce their lending to the economy in order to maintain the required capital adequacy ratio. This then further negatively affects economic output and impacts back on banks in the form of, for example, increased loan losses. In the main empirical section of the paper, this effect was simulated on the example of the Czech banking sector. The simulation results suggest that under certain assumptions the feedback loop may play an important role. |
| Keywords: | procyclicality; feedback loop; bank regulation; deleveragin |
| JEL: | G21 E44 E47 |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:fau:wpaper:wp2010_14&r=reg |
| By: | Lamar Pierce (Olin Business School, Washington University in St. Louis); Michael W. Toffel (Harvard Business School, Technology and Operations Management Unit) |
| Abstract: | Profit-seeking firms can present efficiency improvements when performing functions traditionally relegated to government. Yet these potential cost-efficiencies from market competition are often offset by poor enforcement quality resulting from moral hazard, which can be particularly onerous when outsourcing enforcement of government regulation. In this paper, we argue that the considerable moral hazard of private regulatory enforcement can be mitigated by the scope of organizations' product/service portfolios and by private governance mechanisms. These organizational characteristics affect the stringency of enforcement through reputation and customer loyalty, differential impacts of government sanctions, and standardization and internal monitoring of operations. We test our theory in the context of vehicle emissions testing in a state in which the government has outsourced inspection and enforcement to private sector establishments. Analyzing millions of emissions tests, we find empirical support for our hypotheses that particular forms of firm governance and product portfolios can mitigate moral hazard. |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:hbs:wpaper:11-004&r=reg |
| By: | Alexander Vasa |
| Abstract: | The EU Emissions Trading Scheme (EU ETS) is the main instrument to reduce greenhouse gas emissions in Europe. Subject to a country specific limit, installations in the EU ETS can use EU allowances (EUA) and certified emissions reductions (CERs) generated through the Clean Development Mechanism (CDM) to fulfil their emission reduction target. The CDM encourages and finances emission reduction projects in developing countries. The basis for the implementation of a CDM usage limit is the supplementarity criteria, which was established to ensure that developed countries only cover part of their compliance obligations with emissions reductions abroad. The CDM limits are differentiated between EU member states to cater to the different levels of emission reduction ambitions, the progress made when the limits were established and the ability of the Member State to reduce emissions. The binding limits created substantial arbitrage rents, due to the CER-EUA spread in the range of 200 million Euro for the year 2008. This paper discusses different options for the allocation of this rent. The paper finds that making the right to use CERs tradable or the regulator precommitting to buying CERs at the level of the limit reduces the inefficiencies connected to the current regulation. Auctioning these CER usage rights furthermore shifts the rents created through the CER-EUA spread to the state. Both the EU ETS and the CDM are scrutinised by academics, industry and non-governmental institutions according to their efficiency and environmental effectiveness. The debate about wind-fall profits has shown that climate policies need to be designed carefully. In light of improving the EU ETS, the use of CDM and in light of upcoming regional emissions trading schemes in other developed economies, this paper shows how CDM limits can be designed more efficiently. |
| Keywords: | Clean Development Mechanism, Emissions Trading, Climate Policy, Efficiency |
| JEL: | K23 K32 Q48 Q54 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1032&r=reg |
| By: | Rachel Griffith (Institute for Fiscal Studies and University College London); Gareth Macartney (Institute for Fiscal Studies and University College London) |
| Abstract: | <p>The theoretical effects of labour regulations such as employment protection legislation (EPL) on innovation is ambiguous, and empirical evidence has thus far been inconclusive. EPL increases job security and the greater enforceability of job contracts may increase worker investment in innovative activity. On the other hand EPL increases adjustment costs faced by firms, and this may lead to under-investment in activities that are likely to require adjustment, including technologically advanced innovation. In this paper we find empirical evidence that both effects are at work - multinational enterprises locate more innovative activity in countries with high EPL, however they locate more technologically advanced innovation in countries with low EPL.</p> |
| Keywords: | Innovation, employment protection, multinational firm location |
| JEL: | D21 F23 O31 J24 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:ifsewp:10/01&r=reg |
| By: | Martin Gaynor; Rodrigo Moreno-Serra; Carol Propper |
| Abstract: | The effect of competition on the quality of health care remains a contested issue. Most empirical estimates rely on inference from non experimental data. In contrast, this paper exploits a pro-competitive policy reform to provide estimates of the impact of competition on hospital outcomes. The English government introduced a policy in 2006 to promote competition between hospitals. Patients were given choice of location for hospital care and provided information on the quality and timeliness of care. Prices, previously negotiated between buyer and seller, were set centrally under a DRG type system. Using this policy to implement a difference-in-differences research design we estimate the impact of the introduction of competition on not only clinical outcomes but also productivity and expenditure. Our data set is large, containing information on approximately 68,000 discharges per year per hospital from 162 hospitals. We find that the effect of competition is to save lives without raising costs. Patients discharged from hospitals located in markets where competition was more feasible were less likely to die, had shorter length of stay and were treated at the same cost. |
| JEL: | I11 I18 L13 L32 |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:16164&r=reg |
| By: | Sonia Schwartz (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - CNRS : UMR6579); Hubert Stahn (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - CNRS : UMR6579) |
| Abstract: | Permit markets lead polluting firms to purchase abatement goods from an eco-industry, which is often concentrated. This paper studies the consequences of imperfect competition in an eco-industry on the equilibrium choices of the competitive polluting firms. It then characterizes the second best pollution cap. By comparing this situation to a competitive one, we show that Cournot competition on the abatement good market contributes not only to a non optimal level of emission reduction but also to a higher permit price, which reduces the production level. These distortions increase with market power measured by the margin taken by the non competitive firms and suggest a second best less stringent pollution cap |
| Keywords: | pollution permit market, eco-industry, imperfect competition |
| Date: | 2010–07–12 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00501831_v1&r=reg |
| By: | Robert W. Hahn (University of Manchester and University of Oxford); Robert N. Stavins (John F. Kennedy School of Government, Harvard University Resources for the Future National Bureau of Economic Research) |
| Abstract: | We examine an implication of the “Coase Theorem” which has had an important impact both on environmental economics and on public policy in the environmental domain. Under certain conditions, the market equilibrium in a cap-and-trade system will be cost-effective and independent of the initial allocation of tradable rights. That is, the overall cost of achieving a given aggregate emission reduction will be minimized, and the final allocation of permits will be independent of the initial allocation. We call this the independence property. This property is very important because it allows equity and efficiency concerns to be separated in a relatively straightforward manner. In particular, the property means that the government can establish the overall pollution-reduction goal for a cap-and-trade system by setting the cap, and leave it up to the legislature – such as the U.S. Congress – to construct a constituency in support of the program by allocating the allowances to various interests without affecting either the environmental performance of the system or its aggregate social costs. Our primary objective in this paper is to examine the conditions under which the independence property is likely to hold – both in theory and in practice. A number of factors can call the independence property into question theoretically, including market power, transaction costs, non-cost-minimizing behavior, and conditional allowance allocations. We find that, in practice, there is support for the independence property in some, but not all cap-and-trade applications. |
| Keywords: | Cap-and-Trade System, Tradable Permits, Coase Theorem, Allowance Allocation |
| JEL: | Q58 H11 L51 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.80&r=reg |
| By: | Oliver Budzinski (Department of Environmental and Business Economics, University of Southern Denmark) |
| Abstract: | The literature identifies a significant drop in merger control enforcement activity on both sides of the Atlantic during the last decade. Furthermore, this drop in enforcement activity is convincingly connected to enforcement problems on the sides of the competition agencies. This paper goes beyond the identification of under-enforcement and proceeds to the analysis of causes for the enforcement problems and the discussion of possible solutions. It argues that modern institutional economics suggest that a lack of ‘fit’ between the ‘new’ economic approach to merger control and the ‘old’ institutional environment of the legal enforcement procedures explains the drop of enforcement effectiveness on both sides of the Atlantic by implicitly raising the standard of proof, leading to unattainable standards, virtually eroding merger control enforcement power. As a consequence, the effects-based approach to merger control fails due to its failure to acknowledge its institutional implications. Reconciling industrial and institutional economics – promoting a comprehensive competition economics approach – however offers avenues towards an effective use of sophisticated industrial economic theories and methods. Firstly, incorporating economics into enforceable rules like strong rebuttable presumptions would adjust substantive merger control policy to the procedural institutional environment. Secondly, a reform of the standards of proof provisions would adjust the procedural framework to the characteristics of modern economic evidence and concepts. In summary, the enforcement problems in merger control require even more economic thinking, complementing industrial economic thought with institutional economic thought. I like to thank Arndt Christiansen and Eva Roth as well as the participants of research seminars at the Kiel Institute for the World Economy and at the Düsseldorf Institute for Competition Economics (DICE) for valuable comments on earlier versions of this paper. |
| Keywords: | Merger control, European competition policy, antitrust, enforcement problems, in-stitutional economics, more economic approach, standard of proof |
| JEL: | K21 L40 D02 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:sdk:wpaper:101&r=reg |
| By: | Christine Cumming; Robert A. Eisenbeis |
| Abstract: | This paper explores the advantages of a new financial charter for large, complex, internationally active financial institutions that would address the corporate governance challenges of such organizations, including incentive problems in risk decisions and the complicated corporate and regulatory structures that impede cross-border resolutions. The charter envisions a single entity with broad powers in which the extent and timing of compensation are tied to financial results, senior managers and risk takers form a new risk-bearing stakeholder class, and a home-country-based resolution regime operates for the benefit of all creditors. The proposal is offered 1) to highlight the point that even in the face of a more efficient and effective resolution process, incentives for excessive risk taking will continue unless the costs of risk decisions are internalized by institutions, 2) to suggest another avenue for moving toward a streamlined organizational structure and single global resolution process, and 3) to complement other proposals aimed at preserving a large role for market discipline and firm incentives in a post-reform financial system. |
| Keywords: | International business enterprises ; Corporate governance ; Executives - Salaries ; Financial risk management ; Reward (Psychology) ; Bank charters |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:457&r=reg |
| By: | De Borger B.; De Bruyne D. |
| Abstract: | We study the implications of vertical integration in logistics and transport operations for welfare-optimal port access charges and hinterland congestion tolls. We show that, first, vertical integration of terminal operators and transport firms does not affect the optimal congestion toll rule for the hinterland, but it does imply higher optimal port access charges. Second, the government not only has an incentive to promote competition between downstream firms, it may also be beneficial to approve of vertical mergers in the logistic chain. Third, the government’s failure to respond to changes in industry market structure may have large welfare effects. Fourth, both under separation and integration, optimal port fees may imply subsidies if downstream firms enjoy a high degree of market power. |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:ant:wpaper:2010012&r=reg |
| By: | Marc Bourreau (Institut Télécom - Télécom ParisTech - Télécom ParisTech, CREST - Centre de Recherche en Économie et Statistique - INSEE - École Nationale de la Statistique et de l'Administration Économique); Johan Hombert (HEC Paris - GROUPE HEC); Jérôme Pouyet (CREST - Centre de Recherche en Économie et Statistique - INSEE - École Nationale de la Statistique et de l'Administration Économique, Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Nicolas Schutz (CREST - Centre de Recherche en Économie et Statistique - INSEE - École Nationale de la Statistique et de l'Administration Économique, Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris) |
| Abstract: | We propose a model of two-tier competition between vertically integrated firms and unintegrated downstream firms. We show that, even when integrated firms compete in prices to offer a homogeneous input, the Bertrand result may not obtain, and the input may be priced above marginal cost in equilibrium, which is detrimental to consumers' surplus and social welfare. We obtain that these partial foreclosure equilibria are more likely to exist when downstream competition is fierce. We then use our model to assess the impact of several regulatory tools in the telecommunications industry. |
| Keywords: | Vertical foreclosure, vertically-related markets, telecommunications. |
| Date: | 2009–12–09 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-00440126_v2&r=reg |
| By: | Bojańczyk, Mirosław |
| Abstract: | The global market is largely a game without rules and without an arbitrator able to dispense necessary medicine. Undoubtedly, the crisis has caused the emergence of new challenges, which require the active role of the state in various areas. States play the role of owners of companies and market regulators. Unfortunately governments were not performing these functions adequately. Those therefore, who themselves committed many mistakes, must improve not just the mis-functioning market, but also a defectively functioning state; or, to put it otherwise, they must improve themselves. |
| Keywords: | state; capital markets; regulations; financial crisis; |
| JEL: | N20 E44 |
| Date: | 2010–05–15 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:23933&r=reg |
| By: | Alexander Schiersch; Jens Schmidt-Ehmcke |
| Abstract: | Boone (2008a) proposes a new competition measure based on Relative Profit Differences (RPD) with superior theoretical properties. However, the empirical applicability and robust-ness of the Boone-Indicator is still unknown. This paper aims to address that question. Using a rich, newly built, data set for German manufacturing enterprises, we test the empirical valid-ity of the Boone-Indicator using cartel cases. Our analysis reveals that the traditional regres-sion approach of the indicator fails to correctly indicate competition. A proposed augmented indicator based on RPDs performs better. The traditional Lerner-Index is still the only meas-ure that correctly indicates the expected competitive changes. |
| Keywords: | Competition, Boone-Indicator, Cartels, Census Data |
| JEL: | L12 L41 D43 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1030&r=reg |
| By: | de Tissot, Olivier (ESSEC Business School); Wagner-Edelman, Francine (Barreau de Paris) |
| Abstract: | The authors analyse the present and coming financial consequences of the revolution caused by the new communication media (TV broadcast, DVD, internet…) towards the diffusion of literary and artistic works protected by intellectual property laws to an increasingly larger public. They successively describe the ongoing extension of the sense of protected works, the concomitant increase of incomes of property rights and the problems raised by the protection of these rights against piracy (Hadopi law), and finally the management perspectives of these rights by means of new legal licences controlled by companies in charge of collecting and distributing royalties (Sociétés de Perception et de Répartition des Droits - SPRD). |
| Keywords: | Companies in Charge of Collecting and Distributing Royalties; Hadopi Laws; Intellectual Property; Legal Licences; Piracy; Protected Works |
| JEL: | K00 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:essewp:dr-10002&r=reg |
| By: | Jean-Sébastien Gharbi (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - CNRS : UMR6579); Pelin Sekerler Richiardi (Centre Walras-Pareto - Université de Lausanne, PHARE - Pôle d'Histoire de l'Analyse et des Représentations Economiques - CNRS : FRE2541 - Université Panthéon-Sorbonne - Paris I - Université de Paris X - Nanterre) |
| Abstract: | Les libertariens de gauche défendent à la fois la pleine propriété de soi et l'égale propriété des ressources naturelles. Pour cette raison, ils présentent Léon Walras, qui prônait la pleine propriété de nos facultés personnelles et la propriété commune des terres (1896), comme un de leurs précurseurs (Vallentyne, 1999 ; Vallentyne & Steiner, 2000). Le seul texte qui a véritablement interrogé cette filiation théorique (Bourdeau, 2006) tentait de distinguer le républicanisme de Walras du libertarisme de gauche contemporain en montrant que ces deux positions adoptaient des conceptions différentes de la propriété des ressources naturelles. Cet argument nous semble pouvoir être discuté. Pour ce faire, nous nous proposons, dans un premier temps, de détailler les similitudes qui existent dans la présentation que Walras et les libertariens de gauche donnent de la propriété de soi et de celle des ressources naturelles. Les deux positions aboutissent en effet à une même remise en cause du terme classique de « propriété » concernant les ressources naturelles. Notre démarche ne consistera toutefois pas à faire de Walras un libertarien de gauche. Nous mettrons, dans un second temps, en évidence les points de divergence entre la théorie de la propriété de Walras et la théorie de la justice sociale défendue par les libertariens de gauche. Cela nous permettra, dans un troisième temps, de réinterroger le rapport de Léon Walras au libertarisme de gauche et de déterminer s'il peut à bon droit être qualifié de « précurseur » de cette théorie contemporaine de la justice. |
| Keywords: | Léon Walras, Libertarisme de gauche, Justice sociale, Propriété |
| Date: | 2010–07–12 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00501838_v1&r=reg |
| By: | van der Klaauw, Bas (VU University Amsterdam); van Ours, Jan C. (Tilburg University) |
| Abstract: | To increase their transition from welfare to work, benefit recipients in the municipality of Rotterdam were exposed to various financial incentives, including both carrots to sticks. Once their benefit spell exceeded one year, welfare recipients were entitled to a reemployment bonus if they found a job that lasted at least six months. However, they could also be punished for noncompliance with eligibility requirements and face a sanction, i.e. a temporary reducing of their benefits. In this paper we investigate how benefit sanctions and reemployment bonuses affect job finding rates of welfare recipients. We find that benefit sanctions were effective in bringing unemployed from welfare to work more quickly while reemployment bonuses were not. |
| Keywords: | welfare to work, financial incentives, timing-of-events, dynamic selection |
| JEL: | J64 C21 C41 |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5055&r=reg |
| By: | Donald N. Dewees; Trevor Tombe |
| Abstract: | Growing concern about the environmental effects of electricity generation is renewing demands for electricity conservation and efficient usage. With a substantial fraction of the population insulated from energy price signals in bulk-metered apartment and condominium buildings, some jurisdictions are considering mandatory metering of individual suites. This study analyses data from a Toronto condominium building to assess the impacts of suite (or sub-) metering. We estimate the aggregate reduction in electricity usage arising from sub-metering to be about 20%. Financial savings to residents are much smaller. We analyze large variations across units in electricity consumption after sub-metering finding that unit characteristics explain much but not all of this variation. We perform both private and public cost-benefit analyses of sub-metering and find that the social net benefits depend strongly on the value assigned to externalities from generation and that net social benefits may often be positive when private benefits to the residents are negative. |
| Keywords: | electricity demand, electricity sub-metering, energy conservation |
| JEL: | D12 L94 Q41 |
| Date: | 2010–07–13 |
| URL: | http://d.repec.org/n?u=RePEc:tor:tecipa:tecipa-407&r=reg |
| By: | Chakravorty, Ujjayant (University of Alberta, Department of Economics); Leach, Andrew (University of Alberta School of Business); Moreaux, Michel (Toulouse School of Economics) |
| Abstract: | In this paper, we show that the potential for endogenous technological change in alternative energy sources may alter the behaviour of resource-owning firms. When technological progress in an alternative energy source can occur through learning-by-doing, resource owners face competing incentives to extract rents from the resource and to prevent expansion of the new technology. We show that in such a context, it is not necessarily the case that scarcity-driven higher traditional energy prices over time will induce alternative energy supply as resources are exhausted. Rather, we show that as we increase the learning potential in the substitute technology, lower equilibrium energy prices prevail and there may be increased resource extraction and greenhouse gas emissions. We show that the effectiveness and the incidence of emissions reduction policies may be altered by increased potential for technological change. Our results suggest that treating finite resource rents as endogenous consequences of both technological progress and policy changes will be important for the accurate assessment of climate change policy. |
| Keywords: | resource extraction; climate change; induced innovation; learning-by-doing |
| JEL: | Q30 Q42 Q54 |
| Date: | 2010–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:ris:albaec:2010_012&r=reg |
| By: | De Borger B.; Proost S. |
| Abstract: | In this paper, we take a political economy approach to study the introduction of urban congestion tolls, using a simple majority voting model. Making users pay for external congestion costs is for an economist an obvious reform, but successful introductions of externality pricing in transport are rare. In the few cases where tolls were actually introduced, implementation was characterized by two salient facts. First, the toll revenues were tied to improvements of public transport. Second, opposition to the introduction of tolling decreased substantially after it was introduced. In most cases, a majority was against ex ante, but a majority favored the introduction of tolling after it was implemented. This paper develops a stylized model with car and public transport, allowing for idiosyncratic uncertainty about modal substitution costs. We show that uncertainty reduces the number of voters that favors road pricing ex ante. The model can explain the presence of a majority that is against road pricing ex ante and in favor ex post. Moreover, uncertainty also implies that, if a majority is against ex ante, there will be no majority for organizing an experiment that would take away the individual uncertainty. Finally, we show that it is easier to obtain a majority when the toll revenues are used to subsidize public transport than when they are used for a tax refund. |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:ant:wpaper:2010014&r=reg |
| By: | Roger Fouquet |
| Abstract: | Understandably, focus on a transition to a low carbon economy has overshadowed what happens when the transition has been completed. This paper tries to offer lessons about the very long run aspects of a future economy reliant predominantly on renewable energy sources. The evidence is based on past economies and civilizations and their experiences of economic expansion driven by renewable energy resources. The paper proposes that economies around the world, since antiquity, have managed to survive, and even develop and grow driven by renewable energy sources. Successful long run economic growth depended on sound management of demand, supply and trade of woodfuel. Where governments failed to develop appropriate policies, growth and development was severely constrained. Despite the uncertainty about the future, this paper proposes that researchers start to consider the nature of long run economic growth and appropriate policies within renewable energy systems.<br /> |
| Keywords: | renewable energy; economic growth; low carbon economy; economic history |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:bcc:wpaper:2010-09&r=reg |
| By: | Magazzino, Cosimo |
| Abstract: | “Reaganomics” is a popular term used to refer to the economic policies of Ronald W. Reagan, the 40th U.S. President (1981–1989), which called for widespread tax cuts, decreased social spending, increased military spending, and the deregulation of domestic markets. In this paper, we analyze American economic policy during the Eigh-ties. After a brief introduction, where a general economic context of that country is shown, we discuss and revise the economic literature about these issues. Afterwards, we present an augmented IS-LM model for Reagan years, estimated bay VAR techniques. |
| Keywords: | Reaganomics; Supply-Side Economics; Laffer curve; tax cuts; twin deficits; IS-LM model; VAR. |
| JEL: | E65 N12 |
| Date: | 2010–06–30 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:23930&r=reg |