Showing papers by "London School of Economics and Political Science published in 1999"

World Risk Society

Abstract: 1. Introduction: The Cosmopolitan Manifesto. 2. World Risk Society as Cosmopolitan Society? Ecological Questions in a Framework of Manufactured Uncertainties. 3. From Industrial Society to the Risk Society: Questions of Survival, Social Structure and Ecological Enlightenment. 4. Risk Society and the Welfare State. 5. Subpolitics: Ecology and the Disintegration of Institutional Power. 6. Knowledge or Unawareness: Two Perspectives on a Reflexive Modernizationa . 7. Risk Society Revisited: Theory, Politics, Critiques and Research Programmes. Notes. References. Index.

Neural Network Learning: Theoretical Foundations

Abstract: This important work describes recent theoretical advances in the study of artificial neural networks. It explores probabilistic models of supervised learning problems, and addresses the key statistical and computational questions. Chapters survey research on pattern classification with binary-output networks, including a discussion of the relevance of the Vapnik Chervonenkis dimension, and of estimates of the dimension for several neural network models. In addition, Anthony and Bartlett develop a model of classification by real-output networks, and demonstrate the usefulness of classification with a "large margin." The authors explain the role of scale-sensitive versions of the Vapnik Chervonenkis dimension in large margin classification, and in real prediction. Key chapters also discuss the computational complexity of neural network learning, describing a variety of hardness results, and outlining two efficient, constructive learning algorithms. The book is self-contained and accessible to researchers and graduate students in computer science, engineering, and mathematics.

Risk and Responsibility

Abstract: level. Risks only exist when there are decisions to be taken, for reasons given earlier. The idea of responsibility also presumes decisions. What brings into play the notion of responsibility is that someone takes a decision having discernable consequences. The transition from external to manufactured risk is bringing about a crisis of responsibility, because the connections between risk, responsibility and decisions alter. This is a crisis of responsibility with negative and positive features, roughly corresponding to the negative and positive aspects of risk. Given the inherently ambiguous nature of most situations of manufactured risk, and the inherent reflexivity of these situations, responsibility can neither easily be attributed nor assumed. This applies both where responsibility means limiting risk (as in ecological risks, or health risks) and where risk is an energising principle (financial markets). Several consequences follow: 1. The emergence of what Beck calls ‘organised irresponsibility’. By this he means that there are a diversity of humanly created risks for which people and organisations are certainly ‘responsible’ in a sense that they are its authors but where no one is held specifically accountable. Various questions then come to the fore. Who is to determine how harmful products are, what side effects are produced by them, and what level of risk is acceptable? How can ‘sufficient proof’ be determined in a world full of contested knowledge claims and probabilities? If there are damages to be paid, or reparations made, who is to decide about compensation and appropriate forms for future control or regulation? Much of the ‘social interrogation’ of risk and responsibility takes place through the prism of external risk and simple modernisation. This is true, for example, of anyone who expects an actuary to predict risk, and therefore assess responsibility, on the basis of past trends; or of anyone who supposes that one can simply turn to experts to provide solutions. Coping with situations of organised irresponsibility is likely to become more and more important in the fields of law, insurance and politics, but this won’t be easy to do precisely because of the rather imponderable character of most circumstances of manufactured risk. The dilemma of scaremongering versus cover-ups is a direct indication of the deep seated nature of the problems involved here. 2. Some say that the most effective way to cope with the rise of manufactured risk is to limit responsibility by adopting the ‘precautionary principle’. The notion of the precautionary principle seems to have first emerged in The Modern Law Review [Vol. 62 8 s The Modern Law Review Limited 1999 Germany in the 1980s, in the context of the ecological debates that were carried on there. At its simplest, it proposes that action on environmental issues (and by inference other forms of risk) should be taken even though there is scientific uncertainty about them. Thus in the 1980s, in several Continental countries, programmes were initiated to counter acid rain, whereas in Britain lack of conclusive evidence was used to justify inactivity on this and other pollution problems too. Yet the precautionary principle isn’t always helpful or even applicable as a means of coping with problems of responsibility. The precept of ‘staying close to nature’, or of limiting innovation rather than embracing it, can’t always apply. The reason is that the balance of benefits and dangers from scientific and technological advance, and other forms of social change, is imponderable. We may need quite often to be bold rather than cautious in supporting scientific innovation or other forms of change. This having been said, variations on the precautionary principle can nevertheless be a significant way of reintroducing responsibility. One variant of the principle, for example, is that firms producing goods should think through the whole product cycle before those goods are released onto the market or relevant technical processes utilised. Thus in the Brent Spar episode, the company putting up the oil platform in the first place had not adequately thought through to the final point of effective and reasonably safe disposal. 3. Situations of manufactured risk shift the relation between collective and individual responsibility in many risk situations. Although in many circumstances individuals cannot be held culpable, this is not the same as non-culpability in conditions of organised irresponsibility. In the latter case, this results from viewing responsibilities through the lenses of external or passive risk. Consider, for instance, health risks. Many people get ill through no fault of their own. But a large proportion of illnesses are related both to lifestyle practises and to wider conditions of the ‘created environment’. It doesn’t make any sense to suppose that liability in these circumstances can remain wholly with the collectivity, whether this be government or an insurance company. The active assumption of responsibility, as in attempts to reduce levels of smoking, becomes part of the very definition of risk situations and therefore the attribution of responsibility. Something quite similar applies to our responsibilities towards future generations. When most risk was external, such responsibility was relatively limited: nature was largely intact. Our responsibilities to future generations now are thoroughly infused with decisions we have to take resulting from our transformation of nature. 4. These considerations are relevant to one of the major political issues of our times, the future of the welfare state. The history of the welfare state in all countries is a tangled one. The welfare state emerged in some part as a means of holding back the aspirations of the poor and of controlling them – it had some of its roots in the political right. In recent years, however, as described earlier, the left has appropriated the welfare state as its own project. The debate around the welfare state has therefore concentrated to a considerable degree upon its role in limiting or reducing inequality. But the welfare state is more correctly seen as a form of collective risk management. The idea that the welfare state should be understood as a ‘safety’ or ‘provident’ state has been raised most forcefully in the writings January 1999] Risk and Responsibility s The Modern Law Review Limited 1999 9 of the French thinker Francois Ewald. The welfare state is tied into the basic suppositions of modernity – that security comes from the ever more effective control by human beings of their material and social environments. The crisis of the welfare state is usually represented as a fiscal one. If the welfare state is in trouble, it is because people won’t pay the taxes needed to fund welfare systems properly. There is some validity to this, but it is more illuminating to see the crisis of the welfare state as a crisis of risk management. The welfare state was built up on the presumption of external or passive risk. If you become unemployed, fall ill, become disabled or lose your home, the welfare state will step in to protect you. Welfare systems must now confront large areas of manufactured risk, shifting the relation between risk and responsibility. It isn’t surprising that there is now a great deal of talk about the need to connect rights with responsibilities. Unconditional rights might seem appropriate when individuals bear no responsibility for the risks they face, but such is not the case in situations of manufactured risk. 5. Where a society hasn’t got effective means of dealing with organised irresponsibility, the result isn’t always that no one is held culpable. On the contrary, the price of manufactured uncertainty is probably closely associated with the emergence of the ‘litiginous’ society. Where a common ‘contract of responsibility’ has broken down, culpability can appear everywhere. Here indemnity has effectively been separated from causality. I might be held responsible, for example, if someone is hurt through slipping on my garden path. 6. The theme of responsibility has to be integrated with a concern for the two sides of risk. The negative and positive sides of risk are still often discussed as though they were separate from one another. This translates into a division between two large bodies of literature. It is a remarkable fact that most of those who write about environmental risk make no reference at all to the literature on financial or entrepreneurial risk, or vice versa. Two of the most influential books to have been written about risk over the past ten years, for example, are Risk Society by Ulrich Beck and Against the Gods written by Peter Bernstein. Yet these books make no reference at all to one another. The fact that risk is often a positive or energising phenomenon is relevant to most of the situations of risk and responsibility discussed above, not just to economic risk. Thus to create a more effective welfare state, it is important that in some situations people are psychologically and materially able to take risks albeit in a ‘responsible’ way. It isn’t a good outcome for the individual or the wider society where a person is stuck on benefits or unwilling to take the risk of plunging into the labour market. The same applies to someone caught up in a dysfunctional or violent relationship. Risk is not only closely associated with responsibility, but also with initiative and the exploration of new horizons – something which takes us back to our starting point when the notion was first developed in post-

Foreign Investment and Productivity Growth in Czech Enterprises

Abstract: Foreign direct investment had a greater positive impact on total factor productivity in firms in the Czech Republic over a four - year period than joint ventures did, suggesting that parent firms transferred more know-how to affiliates than joint venture firms got from their partners. Firms without foreign partners experienced negative spillover effects, possibly because fewer training efforts made them less able to absorb and benefit from the diffusion of know-how. Firm-level data for the Czech Republic (1992-96) suggest that foreign investment had a positive impact on recipient firms' total factor productivity (TFP) growth. This result is robust to corrections for the sample-selection bias that prevails because foreign investment tends to go to firms with above-average productivity performance. This result is not surprising, given the presumption that foreign investors transfer new technologies and knowledge to partner firms. With some lag, this is likely to be reflected in greater TFP growth. Foreign direct investment appears to have a greater impact on TFP growth than joint ventures, suggesting that parent firms are transferring more know-how (soft or hard) to affiliates than joint venture firms get from their partners. Joint ventures and foreign direct investment together appear to have a negative spillover effect on firms that do not have foreign partnerships. This effect is relatively large and statistically significant. But if the focus is restricted to the impact of foreign-owned affiliates (foreign direct investment) on all other firms in an industry, the magnitude of the negative effect becomes much smaller and loses statistical significance. This result, together with the fact that joint ventures and foreign direct investment together account for significant shares of total output in many industries, suggests that more research is needed to determine how much knowledge diffuses from firms with strong links to foreign firms to firms that do not have such links. Especially important is the extent of spillovers among joint venture firms and between foreign affiliates and firms with joint ventures. Insofar as joint venture firms invest more in technological capacity (as suggested by their training efforts), those firms could be expected to be better able to absorb and benefit from the diffusion of know-how. The absence of such capacity may underlie the observed negative spillover effect on other firms in the industry. Longer time series and collection of data on variables that measure firms' in-house technological effort would help identify the magnitude and determinants of technological spillovers. This paper - a product of the Financial Economics Group - is part of a larger effort in the group to understand the transition process in the Czech Republic.

Conceptualising Social Capital in Relation to the Well-Being of Children and Young People: A Critical Review:

Abstract: This exploratory article forms the background for an empirical study for the Health Education Authority on children, young people, health, well-being and social capital. In terms of morbidity, children tend not to exhibit clear health problems, but obviously engage in activities that have important implications for their health and well-being (West & Sweeting, 1996), and these activities may be influenced by, as well as impact upon, children's social capital. Social capital is an elusive concept and has been defined in various ways, and refers to sociability, social networks and social support, trust, reciprocity, and community and civic engagement. The paper contrasts three interpretations of the concept, by Coleman (1988, 1990), Putnam (1993, 1995) and Bourdieu (1986). It concludes that the concept is currently poorly specified as it relates to children, and that the use of the term is inherently problematic, and needs to be carefully critiqued and empirically grounded before it can usefully be applied in social policy formulations. One possible way forward might be to conceptualise social capital not so much as a measurable ‘thing’, rather as a set of processes and practices that are integral to the acquisition of other forms of ‘capital’ such as human capital and cultural capital (ie qualifications, skills, group memberships, etc).

Foundations of incomplete contracts

Abstract: In the last few years, a new area has emerged in economic theory, which goes under the heading of 'incomplete contracting'. However, almost since its inception, the theory has been under attack for its lack of rigorous foundations. In this paper we evaluate some of the criticisms that have been made of the theory, in particular, those in Maskin and Tirole (1998a). In doing so, we develop a model that provides a rigorous foundation for the idea that contracts are incomplete.

Worlds Apart? The Reception of Genetically Modified Foods in Europe and the U.S.

Abstract: Recent controversies about genetically modified foods in the United Kingdom and several other European countries highlight the apparent differences that exist in public opinion on this subject across the Atlantic. Why are people in the United States seemingly untroubled by a technology that causes Europeans so many difficulties? The results of survey research on public perceptions of biotechnology in Europe and the United States during 1996-1997, together with an analysis of press coverage and policy formation from 1984 to 1996, can help to answer this question.

Diversity and specialisation in cities: why, where and when does it matter?

Abstract: Why are some cities specialised and others diversified? What are the advantages and disadvantages of urban specialisation and diversity? To what extent does the structure of cities, and the activities of the firms and people in them, change over time? How does the sectoral composition of cities and influence their evolution? To answer these and related questions, we first distil some key stylised facts from the empirical literature on cities and the composition of their activities. We then turn ti a review of different theories looking ot such issues, and study the extent to which these theories contribute ti the understanding of the empirical regularities.

Towards a Paradigm for Research on Social Representations

Abstract: Based on Moscovici’s (1961) classical study on the cultivation of psychoanalytic ideas in France in the 1950’s and our own research on modern biotechnology, we propose a paradigm for researching social representations. Following a consideration of the nature of representations and of the ‘iconoclastic suspicion’ that haunts them, we propose a model of the emergence of meaning relating three elements: subjects, objects, and projects. The basic unit of analysis is the elongated triangle of mediation (SOPS): subject 1, object, project, and subject 2, captured in the image of a ‘Toblerone’. Such social units cultivate, that is produce, circulate and receive representation which may be embodied in four modes–habitual behaviour, individual cognition, informal communication and formal communication–and in three mediums–words, visual images or non-linguistic sounds. We propose an operational definition of a ‘social representation’ as the comparison of four characteristics of communication systems: the content structures (anchorings and objectifications; core and peripheral elements), the typified processes (diffusion, propagation, propaganda etc.), and their functions (identity, attitude, opinion, resistance, ideology etc.), within the context of segmented social milieus. Seven implications for research on social representations are outlined: (1) content and process; (2) segmentation by social milieus rather than taxonomies; (3) cultivation studies within social milieus; (4) multi-method (mode and medium) analysis; (5) time structures and longitudinal data; (6) the crossover of cultural projects and trajectories; (7) the disinterested research attitude. This ideal type paradigm leads to an operational clarification to identify new research questions, and to guide the design and evaluation of studies on social representations.

Social Exclusion in Britain 1991—1995

Abstract: The purpose of this paper is to offer a working definition of social exclusion and to operationalize it in such a way that an initial empirical analysis of social exclusion in Britain today can be undertaken. After a brief review of conceptions of social exclusion and some of the key controversies, we operationalize one definition based on the notion of participation in five types of activity—consumption, savings, production, political and social. Using the British Household Panel Survey, indicators for participation on these dimensions are developed and analysed both cross-sectionally and longitudinally for the period 1991–5. We find strong associations between an individual’s participation (or lack of it) on the five different dimensions, and on each dimension over time. However, there is no distinct group of socially excluded individuals: few are excluded on all dimensions in any one year and even fewer experience multiple exclusion for the whole period. The results support the view that treating different dimensions of exclusion separately is preferable to thinking about social exclusion in terms of one homogeneous group.

Functional-Coefficient Regression Models for Nonlinear Time Series

Abstract: Functional-co efficient Regression Models for Nonlinear Time Series ZONGWU C A I Department of Mathematics University of North Carolina Charlotte, NC 28223, USA J I A N Q I N G FAN* Department of Statistics University of California Los Angeles, CA 90095, USA QlWEI Yao' Institute of Mathematics and Statistics University of Kent at Canterbury Canterbury, Kent CT2 7NF, U K Abstract We apply the local linear regression technique for estimation of functional-coefficient regres­ sion models for time series data The models include threshold autoregressive models (Tong 1990) and functional-coefficient autoregressive models (Chen and Tsay 1993) as special cases but with the added advantages such as depicting finer structure of the underlying dynamics and better post-sample forecasting performance We have also proposed a new bootstrap test for the goodness of fit of models and a bandwidth selector based on newly defined cross-validatory estimation for the expected forecasting errors The proposed methodology is data-analytic and is of appreciable flexibility to analyze complex and multivariate nonlinear structures without suffering from the curse of dimensionality The asymptotic properties of the proposed esti­ mators are investigated under the a-mixing condition Both simulated and real data examples are used for illustration Keywords: a-mixing; Asymptotic normality; Bootstrap; Forecasting; Goodness-of-fit test; Local linear regression; Nonlinear time series; Varying-coefficient models *Partially supported by N S F Grant DMS-9803200 and NSA 96-1-0015 +Partially supported by E P S R C Grant L16358 and B B S R C / E P S R C Grant 96/MMI09785

International Differences in the Timeliness, Conservatism and Classification of Earnings

Abstract: In this study we compare the timeliness and conservatism of reported earnings across the U.S. and U.K. GAAP regimes. We present a theoretical model of the differential speeds of recognition of good news and bad news. This suggests informative and relatively robust ways of measuring dimensions of conservatism in income recognition. The analysis shows the importance of distinguishing between delays in reporting good news and early recognition of bad news, when comparing conservatism across GAAP regimes. Empirical results suggest that the treatment of extraordinary items is important in assessing relative conservatism. The degree of conservatism of the U.S. GAAP regime appears significantly greater than for the U.K. GAAP regime, when estimated using ordinary earnings. However, when conservatism is estimated using earnings after extraordinary items we find that the gap is far less pronounced, and may even disappear. Our results further indicate that the main feature distinguishing the timeliness of earnings between the U.S. and U.K. is not the relative speed of recognition of bad news, but the much slower recognition of good news under U.S. GAAP.

Theory and method of social representations

Abstract: This paper gives an overview of social representation theory, definitions of the key terms and of the social processes leading to a representation and to social identity. Six empirical studies are presented and details of their methods and findings are given to illustrate this social psychological approach. These studies are about the ontogenesis of gender, the public sphere in Brazil, madness on British television, images of androgyny in Switzerland, individualism and democracy in post-communist Europe and metaphorical thinking about conception. The methods are ethnography, interviews, focus-groups, content analysis of media, statistical analysis of word associations, questionnaires and experiments. Finally, social representation theory is compared to theories of attitudes, schemata and social cognition.

Dimensions and alignments in european union politics: Cognitive constraints and partisan responses

Abstract: As the European Union (EU) has evolved, the study agenda has shifted from ‘European integration’ to ‘EU politics’. Missing from this new agenda, however, is an understanding of the ‘cognitive constraints’ on actors and how actors respond, i.e. the shape of the EU ‘political space’ and the location of social groups and competition between actors within this space. The article develops a theoretical framework for understanding the shape of the EU political space (the interaction between an Integration-Independence and Left- Right dimension and the location of class and sectoral groups within this map), and tests this framework on the policy positions of the Socialist, Christian Democrat and Liberal party leaders between 1976 and 1994 (using the techniques of the ECPR Party Manifestos Group Project). The research finds that the two dimensions were salient across the whole period, explains why the party families converged on pro-European positions by the 1990s and discovers the emergence of a triangular ‘core’ of EU politics.

The Separation of Ownership and Control in East Asian Corporations

Abstract: We examine the separation of ownership and control for 2,980 corporations in nine East Asian countries. In all countries, voting rights frequently exceed cash-flow rights via pyramid structures and cross-holdings. The separation of ownership and control is most pronounced among family-controlled firms and small firms. More than two-thirds of firms are controlled by a single shareholder. Managers of closely held firms tend to be relatives of the controlling shareholder's family. Older firms are generally family-controlled, dispelling the notion that ownership becomes dispersed over time. Finally, significant corporate wealth in East Asia is concentrated among a few families.

Unemployment responses to ''skill-biased'' technology shocks: the role of labour market policy

Abstract: Do skill-biased shocks that increase the spread of labour productivities, interacting with different policy regimes, explain the rise in unemployment in Europe relative to the United States in the 1980s and 1990s? The hypothesis is an implication of a version of the Mortensen and Pissarides (1994) model of equilibrium unemployment which allows for worker heterogeneity. A calibrated version of the model implies that a similar unemployment increase would have occurred in the United States over this period, given changes in relative productivity by education implied by observed wage changes, had unemployment compensation and employment protection policies been at European levels.

Childhood Poverty, Early Motherhood and Adult Social Exclusion

Abstract: Childhood poverty and early parenthood are both high on the political agenda. The key new issue addressed in this research is the relative importance of childhood poverty and of early motherhood as correlates of outcomes later in life. How far are the 'effects' of early motherhood on later outcomes due to childhood precursors, especially experience of childhood poverty? If there are powerful associations of both childhood poverty and early parenthood with later adult outcomes, there are a number of subsidiary questions relating to the magnitude of these associations, the particular threshold levels of childhood poverty that prove most critical, and whether it is, as often assumed, only teenage mothers who are subsequently disadvantaged, or also those who have their first birth in their early twenties? The source of data for this study is the National Child Development Study. We examine a range of outcomes at age 33 in a number of domains representing different aspects of adult social exclusion, including: welfare, socio-economic, physical health, and emotional well-being, as well as demographic behaviour. We control for a wide range of childhood factors: poverty; social class of origin and of father; mother's and father's school leaving age; family structure; housing tenure; mother's and father's interest in education; personality attributes; performance on educational tests; and contact with the police by age 16. We show that there are clear associations for the adult outcomes with age at first birth, even after controlling for childhood poverty and a wide range of other childhood background factors. Moreover, we demonstrate that the widest gulf in adult outcomes occurs for those who enter motherhood early (before age 23), though further reinforced for teenage motherhood for most adult outcomes. We also show that it is any experience of childhood poverty that is most clearly associated with adverse outcomes in adulthood, with additional reinforcement for highe

Quantifying the Black Economy: ‘measurement Without Theory’ Yet Again?

Abstract: I shall argue that 'measurement without theory' is a fair description of the published empirical work aimed at guestimating the size of the 'hidden' or 'black economy'.' I shall also argue that a mere guestimate of the overall size of the black economy is of limited value for the policy maker; it is also important to know who is doing what, where, how and why. Then we can see what should and/or can be done about legislating for or against the black economy. In assessing the various attempts to measure the size of the black economy, one should also be aware of a political dimension to some of this work. Perhaps a large and growing black economy is an indication that the economy is overtaxed and over-regulated and a neo-liberal adjustment is needed to free it up? If a large part of the black economy is social security fraud, then maybe unemployment is not really as bad as it looks? Clearly such political conclusions depended on having good theoretical as well as sound quantitative foundations and both these components were generally missing.

The existence and asymptotic properties of a backfitting projection algorithm under weak conditions

Abstract: We derive the asymptotic distribution of a new backfitting procedure for estimating the closest additive approximation to a nonparametric regression function. The procedure employs a recent projection interpretation of popular kernel estimators provided by Mammen, Marron, Turlach and Wand and the asymptotic theory of our estimators is derived using the theory of additive projections reviewed in Bickel, Klaassen, Ritov and Wellner. Our procedure achieves the same bias and variance as the oracle estimator based on knowing the other components, and in this sense improves on the method analyzed in Opsomer and Ruppert. We provide ‘‘high level’’ conditions independent of the sampling scheme. We then verify that these conditions are satisfied in a regression and a time series autoregression under weak conditions.

Chip-Firing and the Critical Group of a Graph

Abstract: A variant of the chip-firing game on a graph is defined. It is shown that the set of configurations that are stable and recurrent for this game can be given the structure of an abelian group, and that the order of the group is equal to the tree number of the graph. In certain cases the game can be used to illuminate the structure of the group.

The quality of ideas: measuring innovation with multiple indicators

Abstract: We model early expectations about the value and technological importance ('quality') of a patented innovation as a latent variable common to a set of four indicators: the number of patent claims, forward citations, backward citations and family size The model is estimated for four technology areas using a sample of about 8000 US patents applied for during 1960-91 We measure how much noise' each individual indicator contains and construct a more informative, composite measure of quality The variance in quality', conditional on the four indicators, is just one-third of the unconditional variance We show the variance reduction generated by subsets of indicators, and find forward citations to be particularly important Our measure of quality is significantly related to subsequent decisions to renew a patent and to litigate infringements Using patent and R&D data for 100 US manufacturing firms, we find that adjusting for quality removes much of the apparent decline in research productivity (patent counts per R&D) observed at the aggregate level

The Changing Corporate Governance Paradigm: Implications for Transition and Developing Countries

Abstract: The rapidly growing literature studying the relationship between legal origin, investor protection and finance has stimulated an important debate in academic circles. It has also generated a cottage industry of applied research and strong policy statements. This paper discusses the implications, in particular for developing and transition countries, from this literature. Our general conclusion is that its focus on the plight of small investors is too narrow when applied to these countries. We argue that this group is unlikely to play an important role in most developing and transition countries. External investors may still be crucial, particularly in transition countries, but they are more likely to come in as strategic investors or creditors. The paper also proposes a broader paradigm including other stakeholders and mechanisms of governance in order to better understand the problems facing these countries and generate policy implications that compensate for the weaknesses of capital markets.

Implementation and renegotiation

Abstract: The paper characterises the choice rules that can be implemented when agents are unable to commit themselves not to renegotiate the mechanism.

The family gap in pay:evidence from seven industrialized countries

Abstract: In this paper, we use microdata on employment and earnings from a variety of industrialized countries to investigate the family gap in pay – the differential in hourly wages between women with children and women without children. We present results from seven countries: Australia, Canada, the United Kingdom, the United States, Germany, Finland, and Sweden. We find that there is a good deal of variation across our sample countries in the effects of children on women’s employment and in the effects of children on women’s hourly wages even after controlling for differences between women with and without children in characteristics such as age and education. We also find that the variation in the family gap in pay across countries is not primarily due to differential selection into employment or to differences in wage structure across countries. We suggest that future research should examine the impact of family policies such as maternity leave and child care on the family gap in pay.