Awards in the form of orders, medals, decorations, prizes, and titles are ubiquitous in monarchies and republics, private organizations, and not-for-profit and profit-oriented firms. Nevertheless, this kind of nonmaterial extrinsic incentive has been given little attention in the social sciences, including psychology. The demand for awards relies on an individual's desire for distinction, and the supply of awards is governed by the desire to motivate. The technique of analytic narratives is used to show that a number of empirically testable propositions about awards are consistent with observable data.
We provide a brief account of the ongoing debate on the relationship between international capital flows and economic growth. In particular, we argue that the current debate may be enriched by looking more closely at the relationship between these key variables and educational choice and public education policy.
Democracy can be characterized by policy outcomes as well as governmental processes. In this article, it is argued that people have preferences about both aspects and that they derive utility from the processes involved in decision making over and above the utility gained from outcomes. The authors study political participation possibilities as an important source of procedural utility. To distinguish between outcome and process utility, they take advantage of the fact that nationals can participate in political decision making, while foreigners are excluded and thus cannot enjoy the respective procedural utility. Utility is assumed to be measurable by individually reported subjective well-being. As an additional indicator for procedural utility, reported belief in political influence is analyzed.
Economists often claim that their discipline has a great influence on the economy. An analysis of the existing literature reveals, however, that little convincing empirical evidence exists. The two approaches used are subject to major shortcomings. The "Economics Production Function" relating the input of economic ideas to economic outcomes, is faced with major estimation problems. The "Revealed Behaviour Approach" of choosing to study economics is based on very restrictive assumptions. It is argued that the "Case Study Approach" analysing specific policy instances constitutes a more promising avenue and should be undertaken to identify more general patterns of influence.
Agency Theory as the dominant view of Corporate Governance disregards that the key task of firm governance is to generate, accumulate, transfer, and protect firm specific knowledge. Three different foundations to the theory of the firm which underpin different concepts of corporate governance are discussed: The traditional view of the firm as a nexus of contracts, the view of the firm as a nexus of firm specific investments and the view of the firm as a nexus of firm specific knowledge investments. The latter view distinguishes two fundamental differences between contracting firm specific knowledge investments in contrast to financial investment: (1) A knowledge worker cannot contract his or her future knowledge in the same way as the exchange of tangible goods. (2) Only insiders can evaluate firm specific knowledge generation and transformation. We suggest a concept of corporate governance that takes investments in firm specific knowledge into account: (1) The board should rely more on insiders. (2) Those employees of the firm making firm-specific knowledge investments should elect the insiders. (3) A neutral person should chair the board. This concept provides a theoretical foundation of corporate governance based in the knowledge-based theory of the firm.
This paper provides an analysis of outsourcing and trade in a spatial model à la Hotelling. In this setting, we discuss the trade-off between transport-cost-related disadvantages and outsourcing-related production cost advantages of a large economy and we investigate how the existence of national transport costs influences both the structure of industrial production and the pattern of final goods trade. In addition, the model gives a rich picture of the possible welfare effects of trade liberalization. In particular, we show that a final goods exporting country definitely gains from economic integration, while a final goods importing country may lose. Finally, when lowering domestic outsourcing activities, trade liberalization may reduce world welfare, even if pro-competitive effects lead to a decline in consumer prices.
Recent developments, including the analysis of firm-level adjustment to falling trade costs, have contributed to a revival of interest in intra-industry trade (IIT). Most empirical work still relies on the standard Grubel–Lloyd measure. This however refers only to international trade, disregarding income flows stimulated by repatriated profits of multinational firms. Given the overwhelming importance of the latter, this is a major shortcoming. This paper provides a guide to measurement and estimation of the determinants of bilateral IIT shares from the perspective of new trade theory with multinational firms. We develop an analytically solvable general equilibrium model to investigate the impact of investment costs, multinational activities and income flows from repatriated profits. We also discuss and quantify the bias of the Grubel–Lloyd index associated with repatriated profit flows of multinationals. Using bias-corrected versions of the Grubel–Lloyd index as the dependent variable, we demonstrate that the determinants motivated by our theoretical analysis offer important insights into variations in IIT shares.
This article presents first insights into the role of international outsourcing on the productivity of low-skilled workers in EU manufacturing. Whereas in the short run international outsourcing exhibits a negative marginal effect on real value added per low-skilled worker, the long-run parameter estimates reveal a positive impact. This may be explained by imperfections in European labor and goods markets, which prohibit an immediate adjustment in the factor employment and the output structure. The change in the outsourcing intensity since 1993 alone acounts for a long-run increase of about 6.0% in the real value added per low-skilled worker.
In dynamic wage bargaining models it is usually assumed that individual unemployment benefits are a fraction of the average wage level. In most countries, however, unemployment benefits are instead tied to the previous level of individually earned wages. We show how the analysis has to be modified if this fact is taken into account and compare our findings for the wage-setting curve with outcomes under other unemployment compensation schemes. From this comparison it becomes evident how the shape and position of the wage-setting curve depends on the specification of the unemployment benefit system. We also demonstrate that a reduction of unemployment benefits of those who become unemployed after the bargaining period leads to higher equilibrium unemployment.
This paper sets up a model, where multinationals compete in quantities and domestic firms form a competitive fringe. Within this framework, we analyse the relationship between market concentration, international outsourcing and the industry price-cost margin. The empirical results of a panel of 66 industries and the EU12 countries in the 1990s strongly confirm our theoretical hypotheses. Market concentration and international outsourcing are positively related to industry price–cost margins. In a thought experiment, we show that industry price–cost margins would have decreased by 0.4 percentage points more in the 1990s, if international outsourcing had not changed since 1990. In addition, international outsourcing accounts for a convergence in margins across industries in the last decade.
