This study examines how the educational level attained by individuals affects their migration propensity. Using an original 2006 Ecuadorian survey, which gathered information on household members who were not in the country at the time of the survey (i.e., emigrants), we implement a Regression Discontinuity Design and control for potential endogeneity of the education explanatory variable based on the 1977 educational reform in Ecuador. Our results provide evidence of positive self-selection among migrants. Taking into account the 27{57 age sample, an individual with a lower secondary level of education increases the migration propensity by 31.30%; this propensity is even higher (34.47%) when the sample of migrants is restricted to the urban areas. Considering both country-specific characteristics and gender differentials, our results do not indicate a significant impact of an increase in human capital on the male migration propensity. However, there is a positive and significant effect on the female migration propensity, in particular, for women from larger cities. The results are consistent with theoretical models related to positive self-selection in response to labor market distortions, such as the disparities between genders.
{"title":"Education and Migration: Empirical Evidence from Ecuador","authors":"C. Falco","doi":"10.2139/ssrn.2581601","DOIUrl":"https://doi.org/10.2139/ssrn.2581601","url":null,"abstract":"This study examines how the educational level attained by individuals affects their migration propensity. Using an original 2006 Ecuadorian survey, which gathered information on household members who were not in the country at the time of the survey (i.e., emigrants), we implement a Regression Discontinuity Design and control for potential endogeneity of the education explanatory variable based on the 1977 educational reform in Ecuador. Our results provide evidence of positive self-selection among migrants. Taking into account the 27{57 age sample, an individual with a lower secondary level of education increases the migration propensity by 31.30%; this propensity is even higher (34.47%) when the sample of migrants is restricted to the urban areas. Considering both country-specific characteristics and gender differentials, our results do not indicate a significant impact of an increase in human capital on the male migration propensity. However, there is a positive and significant effect on the female migration propensity, in particular, for women from larger cities. The results are consistent with theoretical models related to positive self-selection in response to labor market distortions, such as the disparities between genders.","PeriodicalId":415063,"journal":{"name":"University of Milan Bicocca Department of Economics","volume":"105 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-03-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132993530","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Constitutional structures shape politicians' behaviour and hence policy outcomes through the di fferent incentive schemes at work. In this paper we analyse these mechanisms in parliamentary and presidential systems. Such a comparison is carried over by analysing how the two systems are able to select the effi cient policy in presence of asymmetric information. The constitutional structures di ffer in that the policy proposal in parliamentary democracies is observable and confi dence-dependent. The main findings suggest that the parliament responds to the incentive scheme better in presidential systems due to less uncertainty that legislators face over their term limit. However, the parliamentary system induces the executive to behave more e fficiently due to selection and disciplining e ffects.
{"title":"Do the Right Thing. A Comparison of Politicians' Incentives Across Constitutional Systems","authors":"M. Cella, G. Iannantuoni, Elena Manzoni","doi":"10.2139/ssrn.2548392","DOIUrl":"https://doi.org/10.2139/ssrn.2548392","url":null,"abstract":"Constitutional structures shape politicians' behaviour and hence policy outcomes through the di fferent incentive schemes at work. In this paper we analyse these mechanisms in parliamentary and presidential systems. Such a comparison is carried over by analysing how the two systems are able to select the effi cient policy in presence of asymmetric information. The constitutional structures di ffer in that the policy proposal in parliamentary democracies is observable and confi dence-dependent. The main findings suggest that the parliament responds to the incentive scheme better in presidential systems due to less uncertainty that legislators face over their term limit. However, the parliamentary system induces the executive to behave more e fficiently due to selection and disciplining e ffects.","PeriodicalId":415063,"journal":{"name":"University of Milan Bicocca Department of Economics","volume":"40 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-01-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127532456","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Under limited asset market participation fiscal consolidations have a deep and prolonged deflationary effect, causing substantial short term welfare losses to households whose access to financial markets is limited. We show that it is possible to both reduce public debt and boost consumption of constrained households. This is obtained by allowing taxes to immediately undershoot their post-consolidation steady-state values. A similar result is achieved if temporary public transfers to constrained households are exploited to stimulate demand. We also find that an interest rate rule which reacts not only to inflation but also to the output gap is an effective complement to fiscal policy as a stabilization tool. In fact, the output gap target induces the Central Bank to implement a stronger interest rate cut which triggers a surge in the consumption of Ricardian households. This, in turn, has beneficial effects on labor incomes and on RT households' consumption. We obtain the apparently paradoxical result that such a policy allows to obtain better control of inflation, limiting deflationary pressures.
{"title":"Fiscal Consolidations: Can We Reap the Gain and Escape the Pain?","authors":"M. Ferrara, P. Tirelli","doi":"10.2139/ssrn.2509715","DOIUrl":"https://doi.org/10.2139/ssrn.2509715","url":null,"abstract":"Under limited asset market participation fiscal consolidations have a deep and prolonged deflationary effect, causing substantial short term welfare losses to households whose access to financial markets is limited. We show that it is possible to both reduce public debt and boost consumption of constrained households. This is obtained by allowing taxes to immediately undershoot their post-consolidation steady-state values. A similar result is achieved if temporary public transfers to constrained households are exploited to stimulate demand. We also find that an interest rate rule which reacts not only to inflation but also to the output gap is an effective complement to fiscal policy as a stabilization tool. In fact, the output gap target induces the Central Bank to implement a stronger interest rate cut which triggers a surge in the consumption of Ricardian households. This, in turn, has beneficial effects on labor incomes and on RT households' consumption. We obtain the apparently paradoxical result that such a policy allows to obtain better control of inflation, limiting deflationary pressures.","PeriodicalId":415063,"journal":{"name":"University of Milan Bicocca Department of Economics","volume":"8 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2014-10-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131743222","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper analyzes the relation between CEOs monetary incentives, financial regulation and risk in banks. We present a model where banks lend to opaque entrepreneurial projects to be monitored by managers; managers are remunerated according to a pay-for-performance scheme and their effort is unobservable to depositors and shareholders. Within a prudential regulatory framework that defines a capital requirement and a deposit insurance, we study the effect of increasing the variable component of managerial compensation on risk taking. We then test empirically how monetary incentives provided to CEOs in 2006 affected banks' stock price and volatility during the 2007-2008 financial crisis on a sample of large banks around the World. The cross-country dimension of our sample allows us to study the interaction between CEO incentives and financial regulation. The empirical analysis suggests that the sensitivity of CEOs equity portfolios to stock prices and volatility has been indeed related to worse performance in countries with explicit deposit insurance and weaker monitoring by shareholders. This evidence is coherent with the main prediction of the model, that is, the variable part of the managerial compensation, combined with weak insiders' monitoring, exacerbates the risk-shifting attitude by managers.
{"title":"Managerial Compensation, Regulation and Risk in Banks: Theory and Evidence from the Financial Crisis","authors":"Vittoria Cerasi, Tommaso Oliviero","doi":"10.2139/ssrn.2472135","DOIUrl":"https://doi.org/10.2139/ssrn.2472135","url":null,"abstract":"This paper analyzes the relation between CEOs monetary incentives, financial regulation and risk in banks. We present a model where banks lend to opaque entrepreneurial projects to be monitored by managers; managers are remunerated according to a pay-for-performance scheme and their effort is unobservable to depositors and shareholders. Within a prudential regulatory framework that defines a capital requirement and a deposit insurance, we study the effect of increasing the variable component of managerial compensation on risk taking. We then test empirically how monetary incentives provided to CEOs in 2006 affected banks' stock price and volatility during the 2007-2008 financial crisis on a sample of large banks around the World. The cross-country dimension of our sample allows us to study the interaction between CEO incentives and financial regulation. The empirical analysis suggests that the sensitivity of CEOs equity portfolios to stock prices and volatility has been indeed related to worse performance in countries with explicit deposit insurance and weaker monitoring by shareholders. This evidence is coherent with the main prediction of the model, that is, the variable part of the managerial compensation, combined with weak insiders' monitoring, exacerbates the risk-shifting attitude by managers.","PeriodicalId":415063,"journal":{"name":"University of Milan Bicocca Department of Economics","volume":"78 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2014-07-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132393282","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper explores the link between sourcing and performance for a representative sample of manufacturing firms located in Lombardy, the leading economic region in Italy. Survey estimation methods, applied to the authors’ original database, reveal that there exist some performance premia for firms engaged in foreign, rather than domestic and in- rather than out- sourcing. This result is robust to different specifications, samples, performance measures and definitions of sourcing strategies.
{"title":"Estimating Sourcing Premia with Italian Regional Data","authors":"V. Gattai, Valentina Trovato","doi":"10.2139/ssrn.2456851","DOIUrl":"https://doi.org/10.2139/ssrn.2456851","url":null,"abstract":"This paper explores the link between sourcing and performance for a representative sample of manufacturing firms located in Lombardy, the leading economic region in Italy. Survey estimation methods, applied to the authors’ original database, reveal that there exist some performance premia for firms engaged in foreign, rather than domestic and in- rather than out- sourcing. This result is robust to different specifications, samples, performance measures and definitions of sourcing strategies.","PeriodicalId":415063,"journal":{"name":"University of Milan Bicocca Department of Economics","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2014-06-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129040612","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Models based on the representative agent assumption cannot rationalize observed equity premia. In response to this, exchange economy models have introduced agents heterogeneity, typically in the form of bond and equity holders. We reconsider the issue introducing Limited Asset Market Participation in an otherwise standard medium scale DSGE model. Our model fits financial and macroeconomic data well. We obtain that the correlation between asset holders consumption and financial returns strongly increases in the share of agents excluded from financial markets participation, The predicted unconditional equity premium is therefore large. Further, the strong correlation between dividends and Ricardian households' consumption unambiguously increases precautionary savings and reduces the riskless rate.
{"title":"The Equity Premium in a DSGE Model with Limited Asset Market Participation","authors":"Lorenzo Menna, P. Tirelli","doi":"10.2139/ssrn.2456100","DOIUrl":"https://doi.org/10.2139/ssrn.2456100","url":null,"abstract":"Models based on the representative agent assumption cannot rationalize observed equity premia. In response to this, exchange economy models have introduced agents heterogeneity, typically in the form of bond and equity holders. We reconsider the issue introducing Limited Asset Market Participation in an otherwise standard medium scale DSGE model. Our model fits financial and macroeconomic data well. We obtain that the correlation between asset holders consumption and financial returns strongly increases in the share of agents excluded from financial markets participation, The predicted unconditional equity premium is therefore large. Further, the strong correlation between dividends and Ricardian households' consumption unambiguously increases precautionary savings and reduces the riskless rate.","PeriodicalId":415063,"journal":{"name":"University of Milan Bicocca Department of Economics","volume":"2 4 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2014-06-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123736392","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We study the relation between the macroeconomic variables and the term structure of interest rates during the Great Moderation. We interpolate a term structure using three latent factors of the yield curve to analyze the responses of all maturities to macroeconomic shocks. A Nelson–Siegel model is implemented to estimate the latent factors which correspond to the level, the slope, and the curvature of the curve. As policy implication, the interpolated term structure informs the policymaker how all the macroeconomic shocks impact the whole term structure, even if the impact has a different magnitude across maturities.
{"title":"The Macroeconomic Determinants of the US Term-Structure during the Great Moderation","authors":"Alessia Paccagnini","doi":"10.2139/ssrn.2447564","DOIUrl":"https://doi.org/10.2139/ssrn.2447564","url":null,"abstract":"We study the relation between the macroeconomic variables and the term structure of interest rates during the Great Moderation. We interpolate a term structure using three latent factors of the yield curve to analyze the responses of all maturities to macroeconomic shocks. A Nelson–Siegel model is implemented to estimate the latent factors which correspond to the level, the slope, and the curvature of the curve. As policy implication, the interpolated term structure informs the policymaker how all the macroeconomic shocks impact the whole term structure, even if the impact has a different magnitude across maturities.","PeriodicalId":415063,"journal":{"name":"University of Milan Bicocca Department of Economics","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2014-06-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123214637","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The standard index of urban quality of life provides an approximated value of the quality of life, since it associates the bundles of amenities observed in urban areas with their implicit marginal prices, and not with the prices of infra-marginal units. In this paper, we adjust the standard measure to determine the monetary value of any bundle, which might substantially differ from the bundle of the marginal quantities of amenities. Our methodology relies on a welfare measure that represents the individual willingness to give up (accept) to insure (forego) a change in the current distribution of amenities across areas will take place, keeping the level of utility unchanged. We obtain a new measure, the value-adjusted quality of life index, that can be identified from parametric models of consumer preferences. We use this index to measure the quality of life in the city of Milan.
{"title":"Welfare Measures to Assess Urban Quality of Life","authors":"F. Andreoli, A. Michelangeli","doi":"10.2139/ssrn.2460600","DOIUrl":"https://doi.org/10.2139/ssrn.2460600","url":null,"abstract":"The standard index of urban quality of life provides an approximated value of the quality of life, since it associates the bundles of amenities observed in urban areas with their implicit marginal prices, and not with the prices of infra-marginal units. In this paper, we adjust the standard measure to determine the monetary value of any bundle, which might substantially differ from the bundle of the marginal quantities of amenities. Our methodology relies on a welfare measure that represents the individual willingness to give up (accept) to insure (forego) a change in the current distribution of amenities across areas will take place, keeping the level of utility unchanged. We obtain a new measure, the value-adjusted quality of life index, that can be identified from parametric models of consumer preferences. We use this index to measure the quality of life in the city of Milan.","PeriodicalId":415063,"journal":{"name":"University of Milan Bicocca Department of Economics","volume":"45 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2014-06-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133300919","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper surveys recent contributions about internationalization and performance of Italian enterprises. It covers both theoretical and empirical studies taking a microeconomic perspective and studying a potential link between firms’ global involvement and heterogeneity in economic, human capital & innovation and financial measures. The discussion is organized in an intuitive and non-technical way. More than 40 papers are analyzed from a multifaceted perspective, considering their research outline, internationalization measures, performance indicators, causality and results.
{"title":"Internationalization and Performance of Italian Enterprises","authors":"V. Gattai","doi":"10.2139/SSRN.2362815","DOIUrl":"https://doi.org/10.2139/SSRN.2362815","url":null,"abstract":"This paper surveys recent contributions about internationalization and performance of Italian enterprises. It covers both theoretical and empirical studies taking a microeconomic perspective and studying a potential link between firms’ global involvement and heterogeneity in economic, human capital & innovation and financial measures. The discussion is organized in an intuitive and non-technical way. More than 40 papers are analyzed from a multifaceted perspective, considering their research outline, internationalization measures, performance indicators, causality and results.","PeriodicalId":415063,"journal":{"name":"University of Milan Bicocca Department of Economics","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2013-12-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131714851","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this paper we show how a rich variety of dynamical behaviors can emerge in the standard Keynesian income-expenditure model when a nonlinearity is introduced, both in the cases with and without endogenous government spending. A specific sigmoidal functional form is used for the adjustment mechanism of income with respect to the excess demand, in order to bound the income variation. With the aid of analytical and numerical tools, we investigate the stability conditions, bifurcations, as well as periodic and chaotic dynamics. Globally, we study multistability phenomena, i.e., the coexistence of different kinds of attractors.
{"title":"Dynamics in a Nonlinear Keynesian Good Market Model","authors":"A. Naimzada, M. Pireddu","doi":"10.2139/ssrn.2339924","DOIUrl":"https://doi.org/10.2139/ssrn.2339924","url":null,"abstract":"In this paper we show how a rich variety of dynamical behaviors can emerge in the standard Keynesian income-expenditure model when a nonlinearity is introduced, both in the cases with and without endogenous government spending. A specific sigmoidal functional form is used for the adjustment mechanism of income with respect to the excess demand, in order to bound the income variation. With the aid of analytical and numerical tools, we investigate the stability conditions, bifurcations, as well as periodic and chaotic dynamics. Globally, we study multistability phenomena, i.e., the coexistence of different kinds of attractors.","PeriodicalId":415063,"journal":{"name":"University of Milan Bicocca Department of Economics","volume":"485 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2013-09-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124123344","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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