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Rebellion Against Reason? A Study of Expressive Choice and Strikes
Abstract
In this paper we challenge the conventional view that strikes are caused by asymmetric information regarding firm profitability such that union members are uninformed. Instead, we build an expressive model of strikes where the perception of unfairness provides the expressive benefit of voting for a strike. The model predicts that larger union size increases both wage offers and the incidence of strikes. Furthermore, while asymmetric information is still important in causing strikes, we find that it is the employer who is not fully informed about the level of emotionality within the union, thereby contributing to strike incidence. An empirical test using UK data provides support for the predictions. In particular, union size has a positive effect on the incidence of strikes and other industrial actions even when asymmetric information regarding profitability is controlled for.
In this paper we estimate the long- and short-run price elasticities of residential electricity consumption in Switzerland from a household survey by constructing an index of the stock of household appliances as well as by using energy services. We create the index by aggregating the information on the major household appliances. The index is used to estimate the impact of appliances on residential electricity demand. Furthermore, we also use energy services to estimate the electricity demand. We adopt an instrumental variables approach to obtain consistent estimates of the price elasticity to account for potential endogeneity concerns with the average price as well as the appliance index. Our results suggest that the price elasticity is around -0.6. We conclude that Swiss households are price inelastic in electricity prices. This can be used for policy makers as well as by utility companies to design pricing instruments to modify electricity consumption. We also find that estimates of the electricity demand when we substitute the usual residential characteristics with energy services are quite comparable.
Empirical studies on the relation of the European Union Emissions Trading Scheme (EU ETS)
and its impact on stock prices of affected companies concentrate so far mostly on the mechanism
between emissions allowance (EUA) price and stock returns. This study in contrast examines the
relation of stock returns and the announcement on verified emissions (VE). We use event study
methodology and find on the 15th of May 2006, the first time when allocation could be justified,
a negative cumulated and significant impact of the announcement of VE on stock returns and a positive
cumulated (and marginal significant) impact on the 28th of April 2008, the last announcement
of VE in the first period. Using the results from the event-study for cross sectional analysis we find
evidence for a change in how announcements on VE were incorporated in stock markets.
A growing literature has focussed attention on ‘expressive’ rather than ‘instrumental’ behaviour in political settings - particularly voting A common criticism of the expressive idea is that its myriad possibilities make it rather ad hoc and lacking in both predictive and normative bite. We agree that no single clear definition of expressive behaviour has emerged to date, and no detailed foundations of specific expressive motivations have been provided, so that there are rather few specific implications drawn from the analysis of expressive behaviour. In response, we provide a foundational discussion and definition of expressive behaviour that accounts for a range of factors. We also discuss the content of expressive choice distinguishing between moral, social and emotional cases, and relate this more general account to the specific theories of expressive choice in the literature. Finally, we discuss the normative and institutional implications of expressive behaviour.
Realist and other scholars commonly hold that rationally led states can and sometimes do fight when no peaceful bargains exist that both would prefer to war. Against this view, I show that under very broad conditions there will exist negotiated settlements that genuinely rational states would mutually prefer to a risky and costly fight. Popular rationalist and realist explanations for war fail either to address or to explain adequately what would prevent leaders from locating a less costly bargain. Essentially just two mechanisms can resolve this puzzle on strictly rationalist terms. The first turns on the fact that states have both private information about capabilities and resolve and the incentive to misrepresent it. The second turns on the fact that in specific strategic contexts states may be unable credibly to commit to uphold a mutually preferable bargain. Historical examples suggest that both mechanisms are empirically plausible.
Corruption in the public sector erodes tax compliance and leads to higher tax evasion. Moreover, corrupt public officials abuse their public power to extort bribes from the private agents. In both types of interaction with the public sector, the private agents are bound to face uncertainty with respect to their disposable incomes. To analyse effects of this uncertainty, a stochastic dynamic growth model with the public sector is examined. It is shown that deterministic excessive red tape and corruption deteriorate the growth potential through income redistribution and public sector inefficiencies. Most importantly, it is demonstrated that the increase in corruption via higher uncertainty exerts adverse effects on capital accumulation, thus leading to lower growth rates.
One of the best-known and most-quoted books ever written on labor unions is "What Do Unions Do?" by Richard Freeman and James Medoff. Published in 1984, the book proved to be a landmark because it provided the most comprehensive and statistically sophisticated empirical portrait of the economic and socio-political effects of unions, and a provocative conclusion that unions are on balance beneficial for the economy and society. The present volume represents a twentieth-anniversary retrospective and evaluation of "What Do Unions Do?" The objectives are threefold: to evaluate and critique the theory, evidence, and conclusions of Freeman and Medoff; to provide a comprehensive update of the theoretical and empirical literature on unions since the publication of their book; and to offer a balanced assessment and critique of the effects of unions on the economy and society. Toward this end, internationally recognized representatives of labor and management cover the gamut of subjects related to unions. Topics covered include the economic theory of unions; the history of economic thought on unions; the effect of unions on wages, benefits, capital investment, productivity, income inequality, dispute resolution, and job satisfaction; the performance of unions in an international perspective; the reasons for the decline of unions; and the future of unions. The volume concludes with a chapter by Richard Freeman in which he assesses the arguments and evidence presented in the other chapters and presents his evaluation of how "What Do Unions Do?" stands up in the light of twenty years of additional experience and research. This highly readable volume is a state-of-the-art survey by internationally recognized experts on the effects and future of labor unions. It will be the benchmark for years to come.
Declining union density in many industrialized countries directs attention to alter- native ways of labor relations and worker representation as, e.g., works councils. German works councils belong to the most powerful worker representations in de- veloped countries but little is known of their causal effect on productivity. A large linked employer-employee panel is used to examine this issue. Comparing firms with and without a works council I find that firms with a works council are on average 6.5 percent more productive. I present evidence that this estimate is the lower bound to the causal productivity effect of works councils.
An economic strike is a suspension of production while workers and their employer argue about how to divide the surplus from their relationship. Modern economic theories of strikes assume that at least one side has private information about the surplus, viewing the lost production as a cost of extracting information. Empirically, strikes are quite rare. There is evidence that strike incidence is high at the peak of the business cycle, but strike duration seems to fall when the economy is strong. Strike activity is evidently influenced by the legislative environment, and particularly by legislation restricting the use of replacement workers.
An axiomatic construction for lifecycle preferences accounting for the finiteness and the randomness of life duration is provided. We emphasise the role of intertemporal correlation aversion and explain why multiplication preferences provide an interesting alternative to additive preferences, allowing to separate risk aversion from intertemporal elasticity of substitution. Implications regarding the shape of the optimal consumption profiles are discussed.
This paper studies the voluntary provision of public goods that is partially driven by a desire to offset for individual polluting activities. We first extend existing theory and show that offsets allow a reduction in effective environmental pollution levels while not necessarily extending the consumption of a polluting good. We further show a nonmonotonic income-pollution relationship and derive comparative static results for the impact of an increasing environmental preference on purchases of offsets and mitigation activities. Several theoretical results are then econometrically tested using a novel data set on activities to reduce CO2 emissions for the case of vehicle purchases in the U.S. and Germany. We show that an increased environmental preference triggers the use of CO2 offsetting and mitigation channels in both countries. However, we find strong country differences for the purchase of CO2 offsets. While such activities are already triggered by a high general awareness of the climate change problem in the U.S., driver’s license holders in Germany need to additionally perceive road traffic as being responsible for CO2 emissions to a large extent.
Project-based emissions trading schemes, like the Clean Development Mechanism, are particularly prone to problems of asymmetric information between project parties and the regulator. In this paper, we extend the general framework on incomplete enforcement of policy instruments to reflect the particularities of credit-based mechanisms. The main focus of the analysis is to determine the regulator’s optimal spot-check frequency given plausible assumptions of incomplete enforcement under asymmetric information on reduction costs and heterogeneous verifiability of projects. We find that, depending on the actual abatement cost and penalty schemes, optimal monitoring for credit-based systems is often discontinuous and significantly differs from the one to be applied for cap-and-trade schemes or environmental taxes. We conclude that, in a real-world context, project admission should ultimately be based on the criterion of verifiability.
While most countries have harmonized intellectual property rights (IPR) legislation, the dispute about the optimal level of IPR-enforcement remains. This paper develops an endogenous growth framework with two open economies satisfying the classical North-South assumptions to study (a) IPR-enforcement in a decentralized game and (b) the desired globally-harmonized IPR-enforcement of the two regions. The results are compared to the constrained-efficient enforcement level. Our main insights are: The regions' desired harmonized enforcement levels are higher than their equilibrium choices, however, the gap between the two shrinks with relative market size. While growth rates substiantially increase when IPR-enforcement is harmonized at the North's desired level, our numerical simulation suggests that the South may also benefit in terms of long-run welfare.
One of the motivations for voting is that one vote can make a difference. In a presidential election, the probability that your vote is decisive is equal to the probability that your state is necessary for an electoral college win, times the probability the vote in your state is tied in that event. We computed these probabilities a week before the 2008 presidential election, using state-by-state election forecasts based on the latest polls. The states where a single vote was most likely to matter are New Mexico, Virginia, New Hampshire, and Colorado, where your vote had an approximate 1 in 10 million chance of determining the national election outcome. On average, a voter in America had a 1 in 60 million chance of being decisive in the presidential election.
In 2009, 455,200 working days were lost in the UK from 98 stoppages of work arising from labour disputes. In 2009 strike action between the public and private sectors were evenly spread, with 49 strikes in each sector.The article analyses the three main measures of labour disputes; working days lost, stoppages and workers involved - by industry, region, cause, size and duration. The statistics are put into context by considering estimates of working days lost per 1,000 employees and working time lost through strikes as a proportion of time actually worked. This year's article will present data in both a Standard Industrial Classification (SIC) 2003 and 2007 basis, although the majority of the article will be solely SIC 2007.Data is taken from a number of sources including regular centralised returns from some industries and public bodies, as well as directly from the employer or trade union involved after ONS has been notified of a dispute from press reports. This article presents final figures on labour disputes for 2009 and analyses the figures in more depth than the provisional estimates published as part of monthly Labour Market Statistics Bulletin.
This paper demonstrates that temporal risk aversion makes smoothing consumption over time less attractive, while the usual risk aversion makes it more attractive. As temporal risk aversion increases, the equilibrium interest rate decreases and the equity premium increases. This paper also shows a striking and novel result that an increase in time impatience can lead to either a decrease or an increase in the interest rate depending on the nature of the nonseparability. Copyright 1989 by American Finance Association.
Analyses the three main measures of labour disputes and puts the statistics into context in two separate ways.In 2006, 754,500 working days were lost in the UK from 158 stoppages of work arising from labour disputes.This article analyses the three main measures of labour disputes – working days lost, stoppages and workers involved – by industry, region, cause, size and duration. The statistics are put into contextby considering estimates of working days lost per 1,000 employees and working time lost through strikes as a proportion of time actually worked.Data are taken from a number of sources, including regular centralised returns from some industries and public bodies, as well as directly from the employer or trade union involved after the Office for National Statistics has been notified of a dispute from press reports. Economic & Labour Market Review (2007) [1], 25–36; doi:10.1057/palgrave.elmr.1410089
Union members may vote for a strike even if they do not expect to thereby increase their wages. For under majority voting any one member's vote for a strike is unlikely to be decisive. A union member who obtains a noninfinitesimal emotional benefit from the act of voting for a strike may therefore vote in its favor. This hypothesis can explain the existence of strikes and the conditions that make strikes especially likely. Copyright 1992 by Oxford University Press.
In British manufacturing during the 1980s, about one in forty wage settlements involved a strike. Using data provided by the Confederation of British Industry, the authors analyze the incidence of strikes in some 6,000 negotiations at the level of the bargaining group. Among their findings are that multiunionism (the presence in a workplace of more than one union with the authority to bargain) was associated with higher strike incidence than was single unionism; changes in industrial relations laws during the 1980s were associated with reduced strike incidence; and, contrary to the findings of most similar studies of North American strikes, strike incidence in Britain during the 1980s appears to have been counter-cyclical, increasing as unemployment increased. Three strike theories are assessed in light of the empirical evidence. (Abstract courtesy JSTOR.)
This paper outlines a "collective voice" approach for examining the behavioral determinants of variation in strike activity at the organizational level. The author argues that strikes should be viewed primarily as expressions of worker discontent rather than a result of imperfect or asymmetrical information. An analysis of survey data collected from 112 Canadian firms in 1980-81 indicates that managerial practices, operations size and technology, product market structure and conditions, union politics, and various other factors that influence the behavioral context of negotiations are significantly related to days lost due to strike activity. These findings are generally consistent with predictions from the collective voice approach. (Abstract courtesy JSTOR.)
Corruption in the public sector erodes tax compliance and leads to higher tax evasion. Moreover, corrupt public officials abuse their public power to extort bribes from the private agents. In both types of interaction with the public sector, the private agents are bound to face uncertainty with respect to their disposable incomes. To analyse effects of this uncertainty, a stochastic dynamic growth model with the public sector is examined. It is shown that deterministic excessive red tape and corruption deteriorate the growth potential through income redistribution and public sector inefficiencies. Most importantly, it is demonstrated that the increase in corruption via higher uncertainty exerts adverse effects on capital accumulation, thus leading to lower growth rates.
People like to help those who are helping them and to hurt those who are hurting them. Outcomes rejecting such motivations are called fairness equilibria. Outcomes are mutual-max when each person maximizes the other's material payoffs, and mutual-min when each person minimizes the other's payoffs. It is shown that every mutual-max or mutual-min Nash equilibrium is a fairness equilibrium. If payoffs are small, fairness equilibria are roughly the set of mutual-max and mutual-min outcomes; if payoffs are large, fairness equilibria are roughly the set of Nash equilibria. Several economic examples are considered and possible welfare implications of fairness are explored. Copyright 1993 by American Economic Association.
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(G); Hotels and Restaurants (H); Transport, Storage and Communication (I);
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- Q Oberpriller
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Rules vs. Targets: Climate Treaties under Uncertainty
12/158 H. Gersbach and O. Ponta
Unraveling Short-and Farsightedness in Politics
12/157 A. Bommier and F. Le Grand
Too Risk Averse to Purchase Insurance? A Theoretical Glance at the Annuity Puzzle
International Trade and Net Investment: Theory and Evidence 11/143 H. Gersbach Campaigns, Political Mobility, and Communication 11/142 J. G. Becker On the Number of α-Pivotal Players
- L Bretschger
- S Valente
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International Trade and Net Investment: Theory and Evidence
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11/142 J. G. Becker
On the Number of α-Pivotal Players
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- A Schrimpf
- A F Wagner
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/141 P. S. Schmidt, U. von Arx, A. Schrimpf, A. F. Wagner and A. Ziegler
On the Construction of Common Size, Value and Momentum Factors in International
Stock Markets: A Guide with Applications
10/140 L. Leinert
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Market concentration and the likelihood of financial crises