Showing papers on "Negative relationship published in 2006"

Stability and Change in the Educational Gradient of Divorce. A Comparison of Seventeen Countries

Abstract: In a series of papers, William J. Goode argued that the relationship between modernization and the class composition of divorce is inverse. Starting from his hypothesis, we examine the relationship between female education and the risk of divorce over time in 17 countries. We expect that the relationship differs across countries and across time, so that women with higher education have a higher risk of divorce in countries and at times when the social and economic costs of divorce are high, and that there is no relationship or a negative relationship where these costs are lower. Using discrete-time event-history techniques on data on first marriages from the Fertility and Family Surveys (FFS), we find that women with higher education had a higher risk of divorce in France, Greece, Italy, Poland, and Spain. We do not find a relationship between education and divorce in Estonia, Finland, West-Germany, Hungary, Latvia, Sweden, and Switzerland, nor, depending on the model specification, in Flanders and Norway. In Austria, Lithuania, and the United States, the educational gradient of divorce is negative. Furthermore, as predicted by our hypotheses, the educational gradient becomes increasingly negative in Flanders, Finland, France, Hungary, Italy, Lithuania, Poland, Sweden, and the United States. We explore this variation across time and countries in more detail with multilevel models and direct measures on the legal, social, and economic environment of the countries. We find that the de-institutionalization of marriage and unconventional family practices are associated with a negative educational gradient of divorce, while welfare state expenditure is associated with a more positive gradient.

Uncertainty Avoidance and the Rate of Business Ownership Across 21 OECD Countries, 1976-2004

Abstract: Persistent differences in the level of business ownership across countries have attracted the attention of scientific as well as political debate. Cultural as well as economic influences are assumed to play a role. This paper deals with the influence of cultural attitudes towards uncertainty on the rate of business ownership across 21 OECD countries. First, the concepts of uncertainty and risk are elaborated, as well as their relevance for entrepreneurship. An occupational choice model is introduced to underpin our reasoning at the macro-level. Second, regression analysis using pooled macro data for 1976, 1990 and 2004 and controlling for several economic variables, yields evidence that uncertainty avoidance is positively correlated with the prevalence of business ownership. According to our model, a restrictive climate of large organizations in high uncertainty avoidance countries pushes individuals striving for autonomy towards self-employment. Regressions for these three years separately show that in 2004, this positive correlation is no longer found, indicating that a compensating pull of entrepreneurship in countries with low uncertainty avoidance may have gained momentum in recent years. Third, an interaction term between uncertainty avoidance and GDP per capita in the pooled panel regressions shows that the historical negative relationship between GDP per capita and the level of business ownership is substantially weaker for countries with lower uncertainty avoidance. This suggests that rising opportunity costs of self-employment play a less important role in this cultural environment, or are being compensated by increasing entrepreneurial opportunities.

Company Dividends and Ownership Structure: Evidence from UK Panel Data*

Abstract: This study investigates the relationship between dividends and ownership structure for a panel of 330 large quoted UK firms. Controlling for unobserved firm-specific effects, results indicate a negative relationship between dividends and ownership concentration. Ownership composition also matters, with a positive relationship observed for shareholding by insurance companies, and a negative one for individuals. These results are consistent with agency models in which dividends substitute for poor monitoring by a firm's shareholders but can also be explained by the presence of powerful principals who are able to impose their preferred payout policy upon firms.

Services Inputs and Firm Productivity in Sub-Saharan Africa : Evidence from Firm-Level Data

Abstract: The authors investigate the relationship between the productivity of African manufacturing firms and their access to services inputs. They use data from the World Bank Enterprise Survey for over 1,000 firms in 10 Sub-Saharan African countries to calculate the total factor productivity of firms. The Enterprise Surveys also contain unique measures of firms' access to communications, electricity, and financial services. The availability of these measures at the firm level, both as subjective and objective indicators, allows the authors to exploit the variation in services performance at the subnational regional level. Furthermore, by using the regional variation in services performance, they are also able to address concerns about the possible endogeneity of the services variables. The results show a significant and positive relationship between firm productivity and service performance in all three services sectors analyzed. The authors thus provide support for the argument that improvements in services industries contribute to enhancing the performance of downstream economic activities, and thus are an essential element of a strategy for promoting growth and reducing poverty.

Economic reforms and bank efficiency in developing countries: the case of the Indian banking industry

Abstract: Using the Indian banking industry as a case study, this paper proposes and tests hypotheses regarding the possibility of a relationship between three elements of the Economic Reforms (ERs) – namely, fiscal reforms, financial reforms, and private investment liberalisation – and bank efficiency in developing countries. Bank efficiency is measured using data envelopment analysis (DEA); the relationship between the measured efficiency and various bank-specific characteristics and environmental factors associated with the ERs is examined using the OLS and the GMM estimations. Our results show an improvement in the efficiency of banks, especially that of foreign banks, after the ERs. We find a positive relationship between the level of competition and bank efficiency. However, a negative relationship between the presence of foreign banks and bank efficiency is found, which we attribute to a short-run increase in costs due to the introduction of new banking technology by foreign banks. Furthermore, we find that ...

Corruption and human development

Abstract: Corruption, defined as the misuse of public power (office) for private benefit, is most likely to occur where public and private sectors meet. In other words, it occurs where public officials have a direct responsibility for the provision of a public service or application of specific regulations (Rose-Ackerman 1997: 31). Corruption tends to emerge when an organization or a public official has monopoly power over a good or service that generates rent, has the discretionary power to decide who will receive it, and is not accountable (Klitgaard 1988: 75). Corruption's roots are grounded in a country's social and cultural history, political and economic development, bureaucratic traditions and policies. Tanzi (1998) argues that there are direct and indirect factors that promote corruption. Direct factors include regulations and authorizations, taxation, spending decisions, provision of goods and services at below market prices, and financing political parties. On the other hand, quality of bureaucracy, level of public sector wages, penalty systems, institutional controls, and transparency of rules, laws, and processes are the indirect factors that promote corruption. Corruption is a symptom of deep institutional weaknesses and leads to inefficient economic, social, and political outcomes. It reduces economic growth, retards long-term foreign and domestic investments, enhances inflation, depreciates national currency, reduces expenditures for education and health, increases military expenditures, misallocates talent to rent-seeking activities, pushes firms underground, distorts markets and the allocation of resources, increases income inequality and poverty, reduces tax revenue, increases child and infant mortality rates, distorts the fundamental role of the government (on enforcement of contracts and protection of property rights), and undermines the legitimacy of government and of the market economy. There are two opposing approaches in the literature on corruption, regarding the impact of corruption: efficiency enhancing and efficiency reducing. Advocates of the efficiency-enhancing approach, like Left (1964), Huntington (1968), Friedrich (1972), and Nye (1967) argue that corruption greases the wheels of business and commerce and facilitates economic growth and investment. Thus, corruption increases efficiency in an economy. Advocates of the efficiency-reducing approach, like McMullan (1961), Krueger (1974), Myrdal (1968), Shleifer and Vishny (1998), Tanzi and Davoodi (1997), and Mauro (1995) claim that corruption slows down the wheels of business and commerce. Consequently, it hinders economic growth and distorts the allocation of resources. As a result, it has a damaging impact on efficiency. In recent years, especially after 1995, there have been numerous empirical studies about the impact of corruption. A summary of these empirical studies is reported in Table 1. Viewing corruption as an illegal tax, Vinod (1999: 601) estimates that a corrupt act worth $1 imposes a $1.67 burden on the economy. Mauro (1996), Ades and Di Tella (1997), and Tanzi and Davoodi (1997) find a negative relationship between investments and corruption. Mauro (1996), Leite and Weideman (1999), Tanzi and Davoodi (2000), and Abed and Davoodi (2000) find a negative association between real per capita GDP growth and corruption. Mo (2001) investigates the relationship between corruption and economic growth (GDP growth). His empirical analysis reveals that a 1 percent increase in the corruption level reduces the growth by about 0.72 percent. Examining the impact of corruption on foreign direct investment (FDI), Wei (2000), Drabek and Payne (1999), and Habib and Zurawieki (2001) find that corruption is a deterrent factor for foreign investors. Al-Marhubi (2000) investigates the relationship between inflation and corruption and finds a positive relationship. Bahmani-Oskooee and Nasir (2002) analyze the impact of the corruption on real exchange rate. …

Migrant Opportunity and the Educational Attainment of Youth in Rural China

Abstract: In this paper, we investigate how reductions of barriers to migration affect the decision of middle school graduates to attend high school in rural China. Change in the cost of migration is identified using exogenous variation across counties in the timing of national identity card distribution, which made it easier for rural migrants to register as temporary residents in urban destinations. We show that timing of ID card distribution is unrelated to local rainfall shocks affecting demand for migration, and not related to proxies reflecting time-varying changes in village policy or administrative capacity. We find a robust negative relationship between migrant opportunity and high school enrollment. The mechanisms behind the negative relationship are suggested by observed increases in subsequent local and migrant non-agricultural employment of high school age young adults as the size of the current village migrant network increases.

Bank Risk-Taking and Competition Revisited; New Theory and New Evidence

Abstract: This paper studies two new models in which banks face a non-trivial asset allocation decision. The first model (CVH) predicts a negative relationship between banks' risk of failure and concentration, indicating a trade-off between competition and stability. The second model (BDN) predicts a positive relationship, suggesting no such trade-off exists. Both models can predict a negative relationship between concentration and bank loan-to-asset ratios, and a nonmonotonic relationship between bank concentration and profitability. We explore these predictions empirically using a cross-sectional sample of about 2,500 U.S. banks in 2003 and a panel data set of about 2,600 banks in 134 nonindustrialized countries for 1993-2004. In both these samples, we find that banks' probability of failure is positively and significantly related to concentration, loan-to-asset ratios are negatively and significantly related to concentration, and bank profits are positively and significantly related to concentration. Thus, the risk predictions of the CVH model are rejected, those of the BDN model are not, there is no trade-off between bank competition and stability, and bank competition fosters the willingness of banks to lend.

An Economic History of Fertility in the U.S.: 1826-1960 ⁄

Abstract: In this paper we use data from the US census to document the history of the relationship between fertility choice and key economic indicators at the individual level for women born between 1826 and 1960. We find that this data suggests several new facts that should be useful for researchers trying to model fertility. (1) The reduction in fertility known as the Demographic Transition (or the Fertility Transition) seems to be much sharper based on cohort fertility measures compared to usual measures like Total Fertility Rate; (2) The baby boom was not quite as large as is suggested by some previous work; (3) We find a strong negative relationship between income and fertility for all cohorts and estimate an overall income elasticity of about -0.38 for the period; (4) We also find systematic deviations from a time invariant isoelastic relationship between income and fertility. The most interesting of these is an increase in the income elasticity of demand for children for the 1876-1880 to 1906-1910birth cohorts. This implies an increased spread in fertility by income which was followed by a dramatic compression. (authors)

The crime-control effect of incarceration: does scale matter?*

Abstract: Research Summary: Several prominent empirical studies estimate models of a constant proportional effect of prison on crime, finding that effect is substantial and negative. A separate literature argues against the crime-reducing effect of prison but mainly on theoretical grounds. This second literature suggests that the elasticity of the prison/crime relationship is not constant. We provide a model that nests these two literatures. Using data from the United States over 30 years, we find strong evidence that the negative relationship between prison and crime becomes less strongly negative as the scale of imprisonment increases. This revisionist model indicates that (1) at low levels of incarceration, a constant elasticity model underestimates the negative relationship between incarceration and crime, and (2) at higher levels of incarceration, the constant elasticity model overstates the negative effect. Policy Implications: These results go beyond the claim of declining marginal returns, instead finding accelerating declining marginal returns. As the prison population continues to increase, albeit at a slower rate, after three decades of phenomenal growth, these findings provide an important caution that for many jurisdictions, the point of accelerating declining marginal returns may have set in. Any policy discussion of the appropriate scale of punishment should be concerned with the empirical impact of this expensive and intrusive government intervention.

Tariffs and Growth: An Empirical Exploration of Contingent Relationships

Abstract: A large body of empirical research indicates that countries with low policy-induced trade barriers tend to enjoy rapid growth, ceteris paribus. In contrast, alternative theoretical models suggest that the relationship between trade barriers and growth may be contingent on the level of development. Employing a direct trade-barrier measure—ad valorem tariff rates—we find evidence of such a contingency: the marginal effect of tariffs on growth is declining in the level of per capita income. Moreover, evidence of a negative relationship between tariffs and growth is apparent only among the world's rich countries.

Coping With Customer Complaints

Abstract: This article investigates the relationship between customer complaints and service personnel commitment to customer service. Positive and negative affectivity are considered as potential moderators of this relationship. Using data obtained from a survey of 432 retail service personnel in a national retail chain with 124 stores, the authors find that customer complaints are significantly and negatively associated with service personnel commitment to customer service. Higher levels of service employee positive affectivity significantly reduced this negative relationship. Contrary to expectations, high levels of negative affectivity also reduced the negative relationship between complaints and commitment to customer service. Potential explanations for these findings are provided, and implications for managers and future research are considered.

The Rise in Firm-Level Volatility: Causes and Consequences

Abstract: We document that the recent decline in aggregate volatility has been accompanied by a large increase in firm level risk. The negative relationship between firm and aggregate risk seems to be present across industries in the US, and across OECD countries. Firm volatility increases after deregulation. Firm volatility is linked to research and development spending as well as access to external financing. Further, R&D intensity is also associated with lower correlation of sectoral growth with the rest of the economy.

How do Trade and Financial Integration Affect the Relationship between Growth and Volatility

Abstract: The influential work of Ramey and Ramey (1995) highlighted an empirical relationship that has now come to be regarded as conventional wisdom - that output volatility and growth are negatively correlated. We reexamine this relationship in the context of globalization - a term typically used to describe the phenomenon of growing international trade and financial integration that has intensified since the mid-1980s. Using a comprehensive new dataset, we document that, while the basic negative association between growth and volatility has been preserved during the 1990s, both trade and financial integration significantly weaken this negative relationship. Specifically, we find that the estimated coefficient on the interaction between volatility and trade integration is significantly positive. We find a similar, although less significant, result for the interaction of financial integration with volatility.

Bank Risk-Taking and Competition Revisited: New Theory and New Evidence

Abstract: This paper studies two new models in which banks face a non-trivial asset allocation decision. The first model (CVH) predicts a negative relationship between banks' risk of failure and concentration, indicating a trade-off between competition and stability. The second model (BDN) predicts a positive relationship, suggesting no such trade-off exists. Both models can predict a negative relationship between concentration and bank loan-to-asset ratios, and a nonmonotonic relationship between bank concentration and profitability. We explore these predictions empirically using a cross-sectional sample of about 2,500 U.S. banks in 2003 and a panel data set of about 2,600 banks in 134 nonindustrialized countries for 1993-2004. In both these samples, we find that banks' probability of failure is positively and significantly related to concentration, loan-to-asset ratios are negatively and significantly related to concentration, and bank profits are positively and significantly related to concentration. Thus, the risk predictions of the CVH model are rejected, those of the BDN model are not, there is no trade-off between bank competition and stability, and bank competition fosters the willingness of banks to lend.

Growth effects of public expenditure on the state and local level: evidence from a sample of rich governments

Abstract: There is a vast empirical literature investigating the relationship between government size and economic growth. But the empirical evidence of growth effects of public expenditure using cross-country regressions is still inconclusive. According to a number of authors this is not surprising since the negative relationship only applies for rich countries with a large public sector. Restricting their analysis on rich countries only they can show the predicted negative impact. Naturally, a selection of a sub-sample of rich countries is always somewhat arbitrary. Another possibility is to concentrate on governments within a rich country. However, only few studies investigate the effect of state and local spending on economic growth. This study concentrates on the relationship between public expenditure and economic growth within a rich country using the full sample of state and local governments from Switzerland over the 1981–2001 period. The general finding is a fairly robust negative relationship between government size and economic growth. However, in contrast to public spending from operating budgets there is no significant impact on economic growth by expenditure from capital budgets.

Inflation and growth in South Africa

Abstract: This paper studies the relationship between inflation and growth in South Africa. Two main issues are addressed: do tests of the South African data support the findings of cross-section studies that inflation has a negative effect on growth over the longer term? and, can higher growth be gained at the cost of higher inflation in the short run? The findings are that inflation drags down growth in South Africa over the longer term, and that, in the short run, growth above its trend requires accelerating inflation. Thus, for growth to be pulled substantially above its present low trend, inflation targeting in South Africa would have to be abandoned. However, this would be counterproductive over the longer term, once the negative relationship between inflation and growth manifests itself. Copyright 2006, Oxford University Press.

Growth effects of public expenditure on the state and local level: evidence from a sample of rich governments

Abstract: There is a vast empirical literature investigating the relationship between government size and economic growth. But the empirical evidence of growth effects of public expenditure using cross-country regressions is still inconclusive. According to a number of authors this is not surprising since the negative relationship only applies for rich countries with a large public sector. Restricting their analysis on rich countries only they can show the predicted negative impact. Naturally, a selection of a sub-sample of rich countries is always somewhat arbitrary. Another possibility is to concentrate on governments within a rich country. However, only few studies investigate the effect of state and local spending on economic growth. This study concentrates on the relationship between public expenditure and economic growth within a rich country using the full sample of state and local governments from Switzerland over the 1981–2001 period. The general finding is a fairly robust negative relationship between gov...

Dynamic Interactions among the Stock Market, Federal Funds Rate, Inflation, and Economic Activity

Abstract: This paper examines the dynamic interactions among the equity market, economic activity, inflation, and monetary policy under three monetary policy regimes using bivariate and multivariate vector autoregressive cointegrating specifications. The bivariate results for the real stock returns-inflation pair weakly support a negative correlation in the 1970s and 1980s. While the bivariate findings suggest a weak, negative relationship between real returns and the federal funds in the 1970s and 1980s, the multivariate findings strongly support short-term linkages in the 1970s. There appears to be no consistent dynamic relationship between monetary policy and stock prices in that the relationship differs across monetary regimes.

Financial Sector Deepening and Economic Growth: Evidence from Turkey

Abstract: This paper analyzes the effects of financial sector deepening on economic growth using a province-level data set for 1996-2001 on Turkey. This period is associated with a weakly regulated and relatively unsupervised expansion of the banking sector which led to the 2001 financial crisis. Contrary to findings in the previous literature, our results indicate a strong negative relationship between financial deepening-both public and private-and economic growth. In light of the developments in the period of analysis, this result is not surprising, as the main function of the banking sector at that time was to provide financing for the Turkish Treasury, which channeled these funds to the government-albeit mainly for rent distribution purposes. However, it is important to note that the growth of private banking sector needs yet to be examined separately, as government ownership of banks may distort the development of the banking sector as a whole. Yet, it is possible to conclude that financial development may not always contribute to economic growth, and the conditions under which such a contribution takes place should be investigated further.

The effect of increased disclosure on cost of capital: Evidence from China

Abstract: This study examined the relationship between disclosure and the cost of capital. Prior studies empirically testing this relationship provided mixed findings, and also raised several concerns, such as the endogeneity of disclosure, the information disclosure environment, and the sample size. This study investigated this relationship based on data from the Chinese capital market where a unique institutional arrangement makes the disclosure exogenous. This unique characteristic, in conjunction with a less stringent information environment and a big sample size, helped address these concerns. Our findings confirmed the negative relationship between disclosure and cost of capital.

Determinants of absenteeism in a large Danish bank

Abstract: An empirical study of the determinants of absenteeism in a large Danish bank is performed. The study is based on information from approx. 7,000 employees in 500 different units. Based on a review of the absence literature a model combining the psychological and economic approaches to absence studies is constructed. The model is based on hedonic theory and uses the frequency metric when measuring absence. The results of the empirical study show that there is indeed a significant negative relationship between job satisfaction and absence. Furthermore, the study shows that demographic variables for both employees and employers play an important role for the frequency of absence. One very interesting result is that the absenteeism for employees is very clearly related to observed absence by the unit manager.

A note on the “risk-adjusted” price–concentration relationship in banking

Abstract: Price–concentration studies in banking typically find a significant and negative relationship between consumer deposit rates (i.e., prices) and market concentration. This implies highly concentrated banking markets are “bad” for depositors. It also provides support for the Structure-Conduct-Performance hypothesis and rejects the Efficient-Structure hypothesis. However, these studies have focused almost exclusively on supply-side control variables and neglected demand-side variables when estimating the reduced form price–concentration relationship. For example, previous studies have not included in their analysis bank-specific risk variables as measures of cross-sectional derived deposit demand. We find that when bank-specific risk variables are included in the analysis the magnitude of the relationship between deposit rates and market concentration decreases by over 50%. We offer an explanation for these results based on the correlation between a bank’s risk profile and the structure of the market in which it operates. These results suggest that it may be necessary to reconsider the well-established assumption that higher market concentration necessarily leads to anticompetitive deposit pricing behavior by commercial banks. This has direct implications for the antitrust evaluations of bank merger and acquisition proposals by regulatory agencies. And, in a more general sense, these results suggest that any Structure-Conduct-Performance based study that does not explicitly consider the possibility of very different risk profiles of the firms analyzed may indeed miss a very important set of explanatory variables. And, thus, the results from those studies may be spurious.

Regional Patterns and Determinants of New Firm Formation and Survival in Western Germany

Abstract: "There is a large body of literature on the determinants of regional variation in new firm formation. In contrast there are few articles on the spatial differences in new firm survival. Using panel data we analyse both items for 74 western German regions over a ten-year period. The positive relationship between entry and exit which is often stated suggests a negative correlation between entry and survival. On the other hand, however, it seems convincing that regions with high birth rates should also have high survival rates, because a favourable environment for the founding of new firms should also be encouraging for the development of these firms. However, an analysis of both rates for 74 western German regions over a ten-year period reveals the existence of a negative relationship in general. This means that the survival rates are below average in regions with high birth rates. Despite this overall correlation, however, it is shown that the spatial pattern of a combination of both rates is complex, and all types of possible relationships exist. With a multivariate panel analysis we study the factors that influence regional birth and survival rates using the same set of independent variables. It is shown that in the service sector most variables literally work in opposite directions in the birth and survival rates models. But this does not hold for the manufacturing sector. This can be rated as evidence for the 'supportive environment thesis'. The reason for this is a completely different outcome of the estimated birth rates models for both industry sectors, whereas there are only minor differences in the estimated survival rate models. We can therefore deduce firstly that the two industries have different requirements for their 'seed bed' but not for their further successful development; and secondly, that the spatial structures which increase the number of newly founded businesses in the service sector are detrimental to the survival rates of newly founded firms." (Author's abstract, IAB-Doku) ((en))