Showing papers by "London School of Economics and Political Science published in 2004"
TL;DR: The authors argue that existing models of urban concentrations are incomplete unless grounded in the most fundamental aspect of proximity; face-to-face contact, and develop formal economic models of two of them.
Abstract: This paper argues that existing models of urban concentrations are incomplete unless grounded in the most fundamental aspect of proximity; face-to-face contact. Face-to-face contact has four main features: it is an efficient communication technology; it can help solve incentive problems; it can facilitate socialization and learning; and it provides psychological motivation. We discuss each of these features in turn, and develop formal economic models of two of them. Face-to-face is particularly important in environments where information is imperfect, rapidly changing, and not easily codified, key features of many creative activities.
2,203 citations
TL;DR: In this article, the authors investigate whether the industrial relations climate in Indian states has affected the pattern of manufacturing growth in the period 1958-92 and show that pro-worker ammendments to the Industrial Disputes Act are associated with lowered investment, employment, productivity and output in registered manufacturing.
Abstract: This paper investigates whether the industrial relations climate in Indian states has affected the pattern of manufacturing growth in the period 1958-92. We show that pro-worker ammendments to the Industrial Disputes Act are associated with lowered investment, employment, productivity and output in registered manufacturing. Regulating in a pro-worker direction is also associated with increases in urban poverty. This suggests that attempts to redress the balance of power between capital and labor can end up hurting the poor.
1,137 citations
TL;DR: In this paper, the determinants of the decline in research productivity using panel data on manufacturing firms in the US for the period 1980-93 were analyzed, focusing on three factors: the level of demand, the quality of patents and technological exhaustion.
Abstract: We analyse the determinants of the decline in research productivity using panel data on manufacturing firms in the US for the period 1980–93. We focus on three factors: the level of demand, the quality of patents and technological exhaustion. We develop an index of patent ‘quality’ using detailed patent information and show that using multiple indicators substantially reduces the measured variance in quality. Research productivity at the firm level is inversely related to patent quality and the level of demand, as predicted by theory and patent quality is positively associated with the stock market value of firms.
1,125 citations
TL;DR: In this paper, the authors investigated the relationship between product market competition and innovation and found a robust inverted-U relationship between competition and patenting, and developed an endogenousm growth model with step-by-step innovation that can deliver this inverted U pattern.
Abstract: This paper investigates the relationship between product market competition and innovation. It uses the radical policy reforms in the UK as instruments for changes in product market competition, and finds a robust inverted-U relationship between competition and patenting. It then develops an endogenousm growth model with step-by-step innovation that can deliver this inverted-U pattern. In this model, competition has an ambiguous effect on innovation. On the one hand, it discourages laggard firms from innovating, as it reduces their rents from catching up with the leaders in the same industry. On the other hand, it encourages neck-and-neck firms to innovate in order to escape competition with their rival. The inverted-U pattern results from the interplay between these two effects, together with the effect of competition on the equilibrium industry structure. The model generates two additional predictions: on the relationship between competition and the average technological distance between leaders and followers across industries; and on the relationship between the distance of an industry to its technological frontier and the steepness of the inverted-U. Both predictions are supported by the data.
1,114 citations
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TL;DR: In this paper, the authors present an empirical analysis of unemployment patterns in the OECD countries from the 1960s to the 1990s, showing that broad movements in unemployment across the OECD can be explained by shifts in labour market institutions.
Abstract: This paper presents an empirical analysis of unemployment patterns in the OECD countries from the 1960s to the 1990s. Our results indicate the following. First, broad movements in unemployment across the OECD can be explained by shifts in labour market institutions. Second, interactions between average values of these institutions and shocks make no significant additional contribution to our understanding of OECD unemployment changes.
1,051 citations
TL;DR: The authors argue that the growing presence of a new type of man brought up in a family in which the mother worked has been a significant factor in the increase in female labor force participation over time.
Abstract: This paper argues that the growing presence of a new type of man—one brought up in a family in which the mother worked—has been a significant factor in the increase in female labor force participation over time. We present cross-sectional evidence showing that the wives of men whose mothers worked are themselves significantly more likely to work. We use variation in the importance of World War II as a shock to women's labor force participation—as proxied by variation in the male draft rate across U. S. states—to provide evidence in support of the intergenerational consequences of our propagation mechanism.
900 citations
TL;DR: In this article, the authors suggest that intra-MNC knowledge flows are a key determinant of subsidiary bargaining power and argue that subsidiary managers can exploit such power to pursue their own ends.
Abstract: In recent years, as multinational corporation (MNC) subsidiaries have become more closely linked to international networks, their knowledge intensity has risen, and some of their R&D has gained a more creative role. Simultaneously, and often connectedly, many subsidiaries have acquired considerable strategic independence in all aspects of their operations, and therefore are able to exercise considerable intra-firm bargaining power to influence the distribution of the firm’s resources. In this context, we suggest that intra-MNC knowledge flows are a key determinant of subsidiary bargaining power. We argue that subsidiary managers can exploit such power to pursue their own ends. Such rent-seeking behavior is implicit in much of the literature on managerialism, but our analysis suggests that such behavior can now occur in headquarters–subsidiary and subsidiary–subsidiary relations. Thus subsidiary strategic independence, designed to enhance the competitiveness of outputs (market knowledge) and inputs (asset-seeking and learning), can be corroded when the pursuit of subsidiary objectives encourages rent-seeking. Empirical analysis of a sample of high-technology subsidiaries in the UK provides strong support for the theory. We examine several avenues whereby the incentives of units within the MNC can be aligned.
799 citations
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TL;DR: This paper study a multi-sector model of growth with differences in TFP growth rates across sectors and derive sufficient conditions for the coexistence of structural change, characterized by sectoral labor reallocation, and constant aggregate growth path.
Abstract: We study a multi-sector model of growth with differences in TFP growth rates across sectors and derive sufficient conditions for the coexistence of structural change, characterized by sectoral labor reallocation, and constant aggregate growth path. The conditions are weak restrictions on the utility and production functions commonly applied by macroeconomists. We present evidence from US two-digit industries that is consistent with our predictions about structural change and successfully calibrate the historical shift from agriculture to manufacturing and services. We show quantitatively that reasonable deviations from our conditions do not have a big impact on the properties of the model.
740 citations
TL;DR: In this article, the authors address three central questions currently facing the public, policy-makers and academy: What is media literacy? How is it changing? And what are the uses of literacy?
Abstract: Within both academic and policy discourses, the concept of media literacy is being extended from its traditional focus on print and audiovisual media to encompass the internet and other new media. The present article addresses three central questions currently facing the public, policy-makers and academy: What is media literacy? How is it changing? And what are the uses of literacy? The article begins with a definition: media literacy is the ability to access, analyse, evaluate and create messages across a variety of contexts. This four-component model is then examined for its applicability to the internet. Having advocated this skills-based approach to media literacy in relation to the internet, the article identifies some outstanding issues for new media literacy crucial to any policy of promoting media literacy among the population. The outcome is to extend our understanding of media literacy so as to encompass the historically and culturally conditioned relationship among three processes: (i) the symb...
709 citations
TL;DR: It is argued that useful information for model selection can be obtained from using AIC and BIC together, particularly from trying as far as possible to find models favored by both criteria.
Abstract: The two most commonly used penalized model selection criteria, the Bayesian information criterion (BIC) and Akaike’s information criterion (AIC), are examined and compared. Their motivations as approximations of two different target quantities are discussed, and their performance in estimating those quantities is assessed. Despite their different foundations, some similarities between the two statistics can be observed, for example, in analogous interpretations of their penalty terms. The behavior of the criteria in selecting good models for observed data is examined with simulated data and also illustrated with the analysis of two well-known data sets on social mobility. It is argued that useful information for model selection can be obtained from using AIC and BIC together, particularly from trying as far as possible to find models favored by both criteria.
707 citations
TL;DR: The empirical basis of the neoliberal argument is questioned and the evidence confirms that globalization in the context of the world economic regime in place since the end of Bretton Woods generates more "mutual benefit" than "conflicting interests".
TL;DR: A review and evaluation of the use of problem structuring methods (PSMs) in practice and some possible future developments are suggested, especially through productive interactions with similar or related practices.
TL;DR: It is suggested that the four design principles of enabling use can facilitate field studies of management control systems, but that they can also be used to define an enabling typology for contingency researchers to analyze the ways in which organizations simultaneously pursue efficiency and flexibility through their management control system.
Abstract: In this paper we seek to demonstrate that the design principles presented by Adler and Borys 1996 are directly relevant to the study of management control systems. We do this by showing that they provide a concise and powerful way of drawing together the complex and overlapping approaches to management control that we observed in an exploratory field study.
TL;DR: In this article, the theoretical micro-foundations of urban agglomeration economies are studied, based on sharing, matching, and learning mechanisms, and a handbook chapter is presented.
Abstract: This handbook chapter studies the theoretical micro-foundations of urban agglomeration economies. We distinguish three types of micro-foundations, based on sharing, matching, and learning mechanisms. For each of these three categories, we develop one or more core models in detail and discuss the literature in relation to those models. This allows us to give a precise characterisation of some of the main theoretical underpinnings of urban agglomeration economies, to discuss modelling issues that arise when working with these tools, and to compare different sources of agglomeration economies in terms of the aggregate urban outcomes they produce as well as in terms of their normative implications.
TL;DR: The cost of atrial fibrillation to health and social services in the UK in 1995 and, based on epidemiological trends, to project this estimate to 2000, are an extremely costly public health problem.
Abstract: Objective: To evaluate the cost of atrial fibrillation (AF) to health and social services in the UK in 1995 and, based on epidemiological trends, to project this estimate to 2000. Design, setting, and main outcome measures: Contemporary estimates of health care activity related to AF were applied to the whole population of the UK on an age and sex specific basis for the year 1995. The activities considered (and costs calculated) were hospital admissions, outpatient consultations, general practice consultations, and drug treatment (including the cost of monitoring anticoagulant treatment). By adjusting for the progressive aging of the British population and related increases in hospital admissions, the cost of AF was also projected to the year 2000. Results: There were 534 000 people with AF in the UK during 1995. The “direct” cost of health care for these patients was £244 million (~€350 million) or 0.62% of total National Health Service (NHS) expenditure. Hospitalisations and drug prescriptions accounted for 50% and 20% of this expenditure, respectively. Long term nursing home care after hospital admission cost an additional £46.4 million (~€66 million). The direct cost of AF rose to £459 million (~€655 million) in 2000, equivalent to 0.97% of total NHS expenditure based on 1995 figures. Nursing home costs rose to £111 million (~€160 million). Conclusions: AF is an extremely costly public health problem.
TL;DR: The authors consider a general equilibrium model with frictions in credit markets used by households and show that such a change would increase the effect of monetary policy shocks on consumption, but would decrease the effect on house prices and housing investment.
TL;DR: Rodriguez-Pose et al. as mentioned in this paper assesses, using cross-sectional and panel data analyses, the failure so far of European development policies to fulfil their objective of de...
Abstract: Rodriguez-Pose A. and Fratesi U. (2004) Between development and social policies: the impact of European Structural Funds in Objective 1 regions, Reg. Studies 38, 97–113. European regional support has grown in parallel with European integration. The funds targeted at achieving greater economic and social cohesion and reducing disparities within the European Union (EU) have more than doubled in relative terms since the end of the 1980s, making development policies the second most important policy area in the EU. The majority of the development funds have been earmarked for Objective 1 regions, i.e. regions where GDP per capita is below the 75% threshold of the EU average. However, the European development policies have come under increasing criticism based on two facts: the lack of upward mobility of assisted regions; and the absence of regional convergence. This paper assesses, using cross-sectional and panel data analyses, the failure so far of European development policies to fulfil their objective of de...
TL;DR: In this paper, a dynamic equilibrium model of a multi-asset market with stochastic volatility and transaction costs is proposed, where the key assumption is that investors are fund managers, subject to withdrawals when fund performance falls below a threshold.
Abstract: We propose a dynamic equilibrium model of a multi-asset market with stochastic volatility and transaction costs. Our key assumption is that investors are fund managers, subject to withdrawals when fund performance falls below a threshold. This generates a preference for liquidity that is time-varying and increasing with volatility. We show that during volatile times, assets’ liquidity premia increase, investors become more risk averse, assets become more negatively correlated with volatility, assets’ pairwise correlations can increase, and illiquid assets’ market betas increase. Moreover, an unconditional CAPM understates the risk of illiquid assets because these assets become riskier when investors are the most risk averse.
TL;DR: In this paper, the authors examined the economic and statistical signi cantance of two types of asymmetries for asset allocation decisions in an out-of-sample setting and concluded that capturing skewness and asymmetric dependence leads to gains that are economically and statistically signifi cant in some cases.
Abstract: Recent studies in the empirical Þnance literature have reported evidence of two types of asymmetries in the joint distribution of stock returns. The Þrst is skewness in the distribution of individual stock returns, while the second is an asymmetry in the dependence between stocks: stock returns appear to be more highly correlated during market downturns than during market upturns. In this paper we examine the economic and statistical signiÞcance of these asymmetries for asset allocation decisions in an out-of-sample setting. We consider the problem of a CRRA investor allocating wealth between the risk-free asset, a small-cap and a large-cap portfolio, using monthly data. We use models that can capture time-varying means and variances of stock returns, and also the presence of time-varying skewness and kurtosis. Further, we use copula theory to construct models of the time-varying dependence structure that allow for greater dependence during bear markets than bull markets. The importance of these two asymmetries for asset allocation is assessed by comparing the performance of a portfolio based on a normal distribution model with a portfolio based on a more sexible distribution model. For a variety of performance measures and levels of risk aversion our results suggest that capturing skewness and asymmetric dependence leads to gains that are economically signiÞcant, and statistically signiÞcant in some cases.
TL;DR: In this article, the authors examined the impact of demographic factors on a pollutant other than carbon dioxide at the cross-national level and found that a higher urbanization rate and lower average household size increase emissions.
Abstract: This study adds to the emerging literature examining empirically the link between population size, other demographic factors and pollution. We contribute by using more reliable estimation techniques and examine two air pollutants. By considering sulfur dioxide, we become the first study to explicitly examine the impact of demographic factors on a pollutant other than carbon dioxide at the cross-national level. We also take into account the urbanization rate and the average household size neglected by many prior cross-national econometric studies. For carbon dioxide emissions we find evidence that population increases are matched by proportional increases in emissions while a higher urbanization rate and lower average household size increase emissions. For sulfur dioxide emissions, we find a U-shaped relationship, with the population-emissions elasticity rising at higher population levels. Urbanization and average household size are not found to be significant determinants of sulfur dioxide emissions. For both pollutants, our results suggest that an increasing share of global emissions will be accounted for by developing countries. Implications for the environmental Kuznets curve literature are described and directions for further work identified.
Book•
01 Jan 2004TL;DR: Barry Buzan as mentioned in this paper proposes a new theoretical framework that can be used to address globalisation as a complex political interplay among state and non-state actors, and highlights the idea of primary institutions as the central contribution of English school theory.
Abstract: In this 2004 book, Barry Buzan offers an extensive critique and reappraisal of the English school approach to International Relations. Starting on the neglected concept of world society and bringing together the international society tradition and the Wendtian mode of constructivism, Buzan offers a new theoretical framework that can be used to address globalisation as a complex political interplay among state and non-state actors. This approach forces English school theory to confront neglected questions about both its basic concepts and assumptions, and about the constitution of society in terms of what values are shared, how and why they are shared, and by whom. Buzan highlights the idea of primary institutions as the central contribution of English school theory and shows how this both differentiates English school theory from realism and neoliberal institutionalism, and how it can be used to generate distinctive comparative and historical accounts of international society.
TL;DR: For example, this article found that a 10 percentage point increase in the growth of web hosts in a country leads to about a 0.2 percentage points increase in export growth for the average country in their sample.
Posted Content•
TL;DR: In this article, the authors examined the impact of demographic factors on a pollutant other than carbon dioxide at the cross-national level and found a U-shaped relationship between population size and sulfur dioxide emissions.
Abstract: This study adds to the emerging literature examining empirically the link between population size, other demographic factors and pollution. We contribute by using more robust estimation techniques and examine two air pollutants. By considering sulfur dioxide, we become the first study to explicitly examine the impact of demographic factors on a pollutant other than carbon dioxide at the cross-national level. We also take into account the urbanization rate and the average household size neglected by many prior cross-national econometric studies. For carbon dioxide emissions we find evidence that population increases are matched by proportional increases in emissions while a higher urbanization rate and lower average household size increase emissions. The results suggest particular concern for developing countries with their high population growth rates and a trend towards urbanization and smaller household sizes. We find a U-shaped relationship between population size and sulfur dioxide emissions. Beyond a threshold level at a small population size, the estimated elasticity increases with higher existing population levels. For sulfur dioxide, other demographic factors do not matter.
TL;DR: A brief description of the relevance of the access principle of equity, and the research programme that is necessary for turning the principle into a useful, operational policy objective are provided.
Abstract: The Ministers of Health from Chile, Germany, Greece, New Zealand, Slovenia, Sweden, and the United Kingdom recently established The International Forum on Common Access to Health Care Services, based on a common belief that their citizens should enjoy universal and equitable access to good quality health care. The ministers intend to form a network to share thinking and evidence on healthcare improvements, with the specific aim of sustaining and promoting equitable access to health care. Despite a vast literature on the notion of equity of access, little agreement has been reached in the literature on exactly what this notion ought to mean. This article provides a brief description of the relevance of the access principle of equity, and summarises the research programme that is necessary for turning the principle into a useful, operational policy objective.
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01 Jan 2004TL;DR: This paper reviewed all the back issues for articles of particular note worth saving and found that risk and risk management begin to receive regular exposure only from about the mid-1990s onwards, and the late 1990s reveal an increasing commentary on practice management and risks to professional partnerships.
Abstract: I recently decided that there was no longer space to store 20 years worth of Accountancy and Accountancy Age. Prior to disposal I reviewed all the back issues for articles of particular note worth saving. In the course of this process, a number of things were striking. First, articles on financial reporting were conspicuous in the 1980s, and in the 1990s it was auditing which seemed to be the main object of discussion. Second, risk and risk management begin to receive regular exposure only from about the mid‐1990s onwards. In particular, the late 1990s reveal an increasing commentary on practice management and risks to professional partnerships.
TL;DR: In this paper, the authors used global game techniques to solve for the unique trigger point at which the liquidity black hole comes into existence, which is the analogue of the run outcome in a bank run model.
Abstract: Traders with short horizons and privately known loss limits interact in a market for a risky asset. Risk-averse, long horizon traders generate a downward sloping residual demand curve that faces the short-horizon traders. When the price falls close to the loss limits of the short horizon traders, selling of the risky asset by any trader increases the incentives for others to sell. Sales become mutually reinforcing among the short term traders, and payoffs analogous to a bank run are generated. A "liquidity black hole" is the analogue of the run outcome in a bank run model. Short horizon traders sell because others sell. Using global game techniques, we solve for the unique trigger point at which the liquidity black hole comes into existence. Empirical implications include the sharp V-shaped pattern in prices around the time of the liquidity black hole.
TL;DR: In this article, the New Deal for Young People in the U.K. was used to identify treatment effects of a labor market program, which includes extensive job assistance and wage subsidies to employers.
Abstract: This paper exploits area-based piloting and age-related eligibility rules to identify treatment effects of a labor market program—the New Deal for Young People in the U.K. A central focus is on substitution/displacement effects and on equilibrium wage effects. The program includes extensive job assistance and wage subsidies to employers. We find that the impact of the program significantly raised transitions to employment by about 5 percentage points. The impact is robust to a wide variety of nonexperimental estimators. However, we present some evidence that this effect may not be as large in the longer run. (JEL: J18, J23, J38)
TL;DR: In this article, the authors argue that medical expertise in Finland was "hybridised" in the first half of the 1990s and examine the willing adoption of management accounting techniques by medical professionals in the context of the New Public Management reforms in Finland.
Abstract: This paper argues that medical expertise in Finland was “hybridised” in the first half of the 1990s. It examines the willing adoption of management accounting techniques by medical professionals in the context of the New Public Management reforms in Finland. It documents this process of adoption, charts some of its effects for the set of practices and legitimated competencies that make up the domain of medical expertise, and seeks to understand these by reference to the position of management accounting within the Finnish pedagogic and institutional setting. As a counterpoint, it notes the contrast with the UK, where medical professionals have been seen to resist the intrusion of accounting practices into the medical domain.
TL;DR: In this paper, the effect of state unemployment and economic growth rates on mortality in the states of Germany over the period 1980-2000, both in a static and a dynamic econometric model.
TL;DR: In this article, the fundamental issues in performance measurement systems broadly conceived are discussed and three key moments or themes are identified: the foundations of measurement in counting practices, their inherent reductionism, and the relations between measurement and monitoring and control, such as auditing.
Abstract: This article explores fundamental issues in performance measurement systems broadly conceived. Three key moments or themes are identified. First, the foundations of measurement in counting practices, and their inherent reductionism, are considered. Second, the relations between measurement and technologies of monitoring and control, such as auditing, are discussed. Third, first- and second-order measurement (meta-measurement) are distinguished, respectively as particular institutions of counting and data production, and as related dense networks of calculating experts operating on these numbers within specific cultures of objectivity. Finally, arguments about the consequences of performance measurement systems are evaluated, contrasting democratic enthusiasm for performance measurement control technologies with the view that they are some kind of ‘fatal remedy’. In place of a simple dichotomy of trust or distrust in numbers, the development of performance measurement instruments is argued to be a cycle of...