Economica最新文献

We study the efficiency of non-compete agreements (NCAs) in an equilibrium model of labour turnover. The model is consistent with empirical studies showing that NCAs reduce turnover and average wages for low-wage workers. The model also predicts that, by reducing turnover, NCAs raise recruitment and employment. We show that optimal NCA policy: (i) is characterized by a Hosios-like condition that balances the benefits of higher employment against the costs of inefficient congestion and poaching; (ii) depends critically on the minimum wage; and (iii) alone cannot always achieve the constrained-efficient allocation—a result that also holds for optimal minimum wage policy—yet with both policies, efficiency is always attainable. To guide policymakers, we derive a sufficient statistic in the form of an easily computed employment threshold above which NCAs are necessarily inefficiently restrictive, and show that employment levels in current low-wage US labour markets typically exceed this threshold. Finally, we calibrate the model and show that Oregon's 2008 NCA ban for low-wage workers increased welfare modestly (by roughly 0.1%), and that if policymakers had also raised the minimum wage to its optimal level conditional on the enacted NCA ban (a 30% increase), then welfare would have increased more substantially—by over 1%.

This paper studies the impact of political risk on exchange rates. We focus on the Brexit Referendum as it provides a natural experiment where both exchange rate expectations and a time-varying political risk factor can be measured directly. We build a portfolio model that relates changes in the Leave probability to changes of the British pound's market price, both via expectations and via a political risk factor. We estimate the model for multilateral and bilateral British pound exchange rates. We find that the Leave probability predicts a depreciation of the pound, consistent with the outcome post-referendum, and that the time-varying political risk affects exchange rates independently.

Daylight Saving Time (DST) is a widely adopted practice implemented by over 70 countries to align sunlight with day-to-day activities and reduce energy demands. However, we do not have a clear knowledge of how it affects individuals' welfare. Using a regression discontinuity combined with a difference-in-differences design, we find that the Spring DST transition causes a significant decline in life satisfaction. By inducing a reallocation of time, the transition into DST deteriorates sleep quality and increases time stress, which in turn affects physical and emotional health. Using an event study approach, we find that such effects persist for about six days after the DST transition. Conversely, we provide evidence that the Autumn DST transition gives rise to a significant increase in life satisfaction. Finally, using a simple cost-benefit analysis, we discuss the potential benefits of ending DST.

This paper investigates the role of firm-to-firm relationships in export market dynamics, documenting the following stylized facts for French exporters. First, exporters grow in a foreign market by expanding their customer base; the average French exporter doubles its number of buyers after 8 years. Second, sales to existing customers remain the predominant source of growth in a foreign market, with long-lasting relationships contributing to most export values. Third, as a mechanism driving firms' growth in a relationship, prices fall as a relationship ages. Fourth, I exploit the Brexit referendum as a quasi-natural experiment to examine how firm-to-firm relationships adjust in response to changes in market access. I find that French exporters with long-lasting relationships in the UK are less affected by the referendum shock and exhibit higher exchange rate pass-through. Overall, these findings indicate that long-lasting relationships represent a crucial margin for export market growth and in shielding exporters from changing market conditions.

This paper discusses the historical and social origins of the bifurcation in the political institutions of China and Western Europe. An important factor, recognized in the literature, is that China centralized state institutions very early on, while Europe remained politically fragmented for much longer. These initial differences, however, were amplified by the different social organizations (clans in China, corporate structures in Europe) that spread in these two societies at the turn of the first millennium AD. State institutions interacted with these organizations, and were shaped and influenced by this interaction. The paper discusses the many ways in which corporate organizations contributed to the emergence of representative institutions and gave prominence to the Rule of Law in the early stages of state formation in Europe, and how specific features of lineage organizations contributed to the consolidation of the Imperial regime in China.

In a stochastic economy with uninsurable endowment risk, we establish a condition under which hyperbolic-discounting consumers commit to a future consumption path using both illiquid assets and borrowing constraints as commitment devices. There is the possibility that a state-dependent commitment can be adopted as an equilibrium consumption strategy. On a path leading to low future endowment, the current self can commit to its own optimal consumption path, which is undesirable for future selves. In contrast, along the path with a high future endowment, the current self cannot make a commitment and must accept a consumption allocation that future selves will revise. Thus, depending on what stochastic state will arise, people cannot fully utilize the available commitment devices in risky situations.

While focusing on residual control rights, the property rights theory of the firm overlooks that the legal protection of each party's input shapes its ex post bargaining power. To evaluate this issue, we assume that the property rights on the inputs are selected by a legislator to maximize full investment and, conditional on this goal being reached, minimize inefficient deviations to intermediate investment profiles. Our model delivers three key novel implications. First, the strength of a party's property rights is related negatively to the strength of its residual control rights and determines entirely its ex ante incentives to invest. Second, the legislator tends to protect a firm less when its default payoff under its preferred ownership structure is larger and when its contribution to the relationship is the greatest. Finally, the extent of integration falls weakly with the default payoffs and displays an inverted U-shaped link with the intensity of the downstream firm's investment activity. Crucially, these predictions are consistent with the relationships between proxies for the strength of the downstream firms' property rights and firms' presence in the value chain, and measures of asset specificity and R&D intensity for 119 countries observed over the 2006–18 period.