CONTRACT DESIGN AND SELF‐CONTROL WITH ASYMMETRIC INFORMATION

We study optimal contracting by a monopolistic seller of investment goods to a time‐inconsistent consumer and, in doing so, introduce asymmetric information to the model of DellaVigna and Malmendier (2004) . We find (1) the below‐marginal‐cost‐pricing rule may fail for a low‐value consumer; (2) the firm's profit is no longer unaffected by the consumer's short‐run impatience, as the latter is sophisticated. We find that there is an important threshold value of short‐run patience. When the consumer's short‐term patience is below this level, then, as the patience increases, the firm suffers. When the consumer's short‐run patience is above this threshold, then, as it increases, the firm benefits. Finally, we show that unlike monopoly, perfect competition with asymmetric information achieves the first‐best outcome. (JEL D03, D82, D91)     

MILITARY SPENDING AND THE GROWTH‐MAXIMIZING ALLOCATION OF PUBLIC CAPITAL: A CROSS‐COUNTRY EMPIRICAL ANALYSIS

In this paper we present an endogenous growth model to analyze the growth maximizing allocation of public investment among N different types of public capital. Using this general model of public capital formation, we analyze the stability of the long‐run equilibrium and we derive the growth‐maximizing values of the shares of public investment allocated to the different types of public capital, as well as the growth‐maximizing tax rate (amount of total public investment as a share of GDP). Then we proceed with an empirical investigation of the theoretical implication of the model that both the effects of the shares of public investment and the tax rate on the long‐run growth rate are non‐linear, following an inverse U‐shaped pattern. Using data of public investment in infrastructure and military capital formation, we derive empirical estimations that confirm the theoretical implications of the model. (JEL E62, H56, O40).     

THE LONG‐TERM EFFECTS OF CONDITIONAL CASH TRANSFERS ON CHILD LABOR AND SCHOOL ENROLLMENT

This paper investigates the long‐term effects of conditional cash transfers on school attainment and child labor. To this end, we construct a dynamic heterogeneous agent model, calibrate it with Brazilian data, and introduce a policy similar to the Brazilian Bolsa Família. Our results suggest that this type of policy has a very strong impact on educational outcomes, sharply increasing primary school completion. The conditional transfer is also able to reduce the share of working children from 22% to 17%. We then compute the transition to the new steady state and show that the program actually increases child labor over the short run, because the transfer is not enough to completely cover the schooling costs, so children have to work to be able to comply with the program's schooling eligibility requirement. We also evaluate the impacts on poverty, inequality, and welfare. (JEL O11, I25, J24)     

GROWTH AND CONVERGENCE WHEN TECHNOLOGY AND HUMAN CAPITAL ARE COMPLEMENTS

This article presents a model of endogenous growth, in which a firm's technology and a country's human capital stock are complementary in the production of output. Production technologies are created by costly research and development (R&D) and are owned by firms that can freely choose where in the world to produce. Both production and R&D have a positive effect on a country's human capital stock. While all countries typically grow at the same rate in the long run, they differ in their levels of human capital, per capita output, and the quality of the technologies that are used in production. A country's relative position in terms of productivity is history dependent. Countries that start out with a lower human capital stock or industrialize later end up with a lower per capita GDP in long‐term equilibrium. (JEL O4, O33, O47)     

FUNDING FORMS,MARKET CONDITIONS,AND DYNAMIC EFFECTS OF GOVERNMENT R&D SUBSIDIES: EVIDENCE FROM CHINA

We examine various factors that influence the effects of government‐subsidized research and development (R&D) programs on firm productivity. Based on a panel dataset of Chinese firms, we find the effects of the Innovation Fund for Small and Medium Technology Based Firms (Innofund) are dynamic over time and are heterogeneous depending on funding forms and the level of marketization and economic development across regions. In general, Innfound has significant and positive effects on firm productivity in both the short and long run. However, the short‐term effects of Innofund are stronger than the long‐term ones. Additionally, the positive effects of Innofund are stronger for firms backed by interest‐free bank loans than those supported by appropriation. Meanwhile, Innofund has stronger positive effects in provinces that are less market‐oriented or less developed economically. Finally, the short‐term effects of Innofund stay stronger than the long‐term ones even after we control the funding forms and the market conditions across regions. Identification and selection concerns are addressed through the propensity score matching approach and two‐stage estimation. (JEL G28 O38 H76)     

ENTERTAINING MALTHUS: BREAD,CIRCUSES, AND ECONOMIC GROWTH

Motivated by the basic adage that man does not live by bread alone, we offer a theory of historical economic growth and population dynamics where human beings need food to survive, but enjoy other things, too. Our model imposes a Malthusian constraint on food, but introduces a second good to the analysis that affects living standards without affecting population growth. We show that technological change does a good job explaining historical consumption patterns and population dynamics, including the Neolithic Revolution, the Industrial Revolution, and the Great Divergence. Our theory stands in contrast to models that assume a single composite good and a Malthusian constraint. These models generate negligible growth prior to the Industrial Revolution. However, recent revisions to historical data show that historical living standards—though obviously much lower than today's—varied over time and space much more than previously thought. These revisions include updates to Maddison's dataset, which served as the basis for many papers taking long‐run stagnation as a point of departure. This new evidence suggests that the assumption of long‐run stagnation is problematic. Our model shows that when we give theoretical accounting of these new observations the Industrial Revolution is much less puzzling. (JEL B10, I31, J1, N1, O30)     

THE POLITICAL ECONOMY OF INTERGENERATIONAL INCOME MOBILITY

The intergenerational elasticity of income is considered one of the best measures of the degree to which a society gives equal opportunity to its members. While much research has been devoted to measuring this reduced‐form parameter, less is known about its underlying structural determinants. Using a model with exogenous talent endowments, endogenous parental investment in children, and endogenous redistributive institutions, we identify the structural parameters that govern the intergenerational elasticity of income. The model clarifies how the interaction between private and collective decisions determines the equilibrium level of social mobility. Two societies with similar economic and biological fundamentals may have vastly different degrees of intergenerational mobility depending on their political institutions. We offer empirical evidence in line with the predictions of the model. We conclude that international comparisons of intergenerational elasticity of income are not particularly informative about fairness without taking into account differences in politico‐economic institutions. (JEL E24, J62, J68, P16)     

Attitudes towards judicial review in Japan and South Korea: indications for the existence of a liberal-democratic civic culture

Though very close geographically and culturally, postwar Japan and the Republic of Korea – both non-classical Western democracies – each experienced a very different democratization process and adopted a different kind of democratic regime. This is strongly expressed in the form of their judicial review mechanisms that are aimed in different ways at assisting citizens in encouraging the courts to review laws and policies. Given this backdrop, through the analysis of the attitudes of the Japanese and Korea's citizens to their judicial review mechanisms we search for civic attitudes in these societies. By doing so, we try to contribute to the great debate regarding the capability of non-Western societies that did not develop from a well-rooted liberal culture to adopt and internalize liberal-democratic values.     

Bonding and attachment of Australian Aboriginal children

In New South Wales, Australia, there is an increasing emphasis in the children's court on bonding and attachment assessments to determine whether or not a child remains with their carers. Aboriginal children and young people are over nine times more likely than other children and young people to be in out‐of‐home care. There is a paucity of information on culturally appropriate assessments of Aboriginal children in relation to bonding and attachment. Most assessments on the Australian indigenous families are based on the dominant Australian community's perception of what constitutes competent parenting. The question arises as to whether we are making psychologically and ethically sound decisions about whether or not a child remains with their Aboriginal carers based on evidence that is culturally appropriate for Western families but culturally inappropriate for the indigenous families. It is argued that the core hypotheses of attachment theory such as caregiver sensitivity, competence and secure base have to be based on the Australian Aboriginal people's cultural values. The aims of this paper are to explore the current practice on the bonding and attachment assessment of Aboriginal children using a dynamic eco‐systemic approach in the assessment of bonding and attachment of the indigenous people, with an emphasis on the historical, cultural and spiritual contexts. Copyright © 2003 John Wiley & Sons, Ltd.     

Voices of pacific youth: Video research as a tool for youth expression

Between 1994 and 1998, UNICEF administered a project to document on video tape the concerns and experience of young people living in the South Pacific Islands. Video was a valuable dual‐purpose medium for this project: it was useful both as a research tool and as a means to communicate sensitive issues across culturally defined borders between young and old. In this article I review the UNICEF produced videos as primary documents about the changing circumstances of youth who live in the Pacific societies. I also examine the challenges of trying to conduct investigations of this sort in cultural environments where young people are inhibited from expressing their views and feelings, and where adolescent perspectives are categorically devalued.     

Culture,human agency,and economic theory: culture as a determinant of material welfare

In this paper cultural factors are incorporated into a behavioral model of economic growth and development and the circumstances under which culture can make a difference are articulated. In this context, the question of the long run survival, in a competitive environment, of firms and societies imbued with cultural precepts that are not conducive to growth and development, is addressed. This discussion attempts to redress a gap in economic theory, which does not well incorporate cultural factors as independent and causally substantive variables.     

WHY DO GOVERNMENTS END UP WITH DEBT? SHORT‐RUN EFFECTS MATTER

This paper reconsiders the impact of public debt in an economy with heterogeneous households and incomplete markets to emphasize the short‐run effects of an increase in public debt. As compared to models that rest on steady‐state analysis, we show that the welfare gains of a public debt increase are substantially higher when transitional dynamics are accounted for. The additional debt issue allows for a temporary reduction in the income tax rate, which stimulates labor supply and generates an overshooting of the interest rate. The short‐run gains create a temptation to deviate toward higher levels of debt. Debt increases continue to generate welfare gains even when debt is considerably higher than its long‐run optimal level. (JEL E60, H60)     

Culturally appropriate pedagogy: the case of group learning in a Confucian Heritage Culture context

Cultural heritage preservation has become a much‐debated topic in recent decades. This paper contributes to the call for educational approaches that take a society's cultural diversity into account. It also attempts to draw attention to non‐Western societies, where educational theories and practices from elsewhere (the West) have been imported and applied without proper consideration for the host culture's heritage. To illustrate the intricacy of developing such a culturally appropriate pedagogy, a case study of using group learning strategies in a Confucian Heritage Cultural context is introduced, which closely examines both educational and cultural issues. The results of this examination reveal a complex web of cultural conflicts and mismatches that are likely to happen when a Western educational methodology is applied in another context without rigorous adaptation to improve compatibility with the host culture.     

Inclusive schooling: fostering citizenship among immigrant students in Europe

Growing ethnic and cultural diversity within Europe has brought increased attention to the impact and inclusion of immigrant populations and has also presented societies with valuable opportunities for intercultural learning between diverse groups. Using the International Civic and Citizenship Study data from 24 European education systems, in this paper we explore whether fostering an atmosphere of inclusion in schools relates to select attitudes and behaviours typically associated with an inclusive society, particularly among immigrant students. Our study is able to tease out some of the differences related to social class among immigrant students, opening up important avenues for discussion and future research. According to our findings, first generation immigrant students from higher socio-economic status backgrounds tended to have significantly more negative attitudes toward their resident country. Findings also collectively suggest that local-level practices, such as improving immigrant student participation in schools and positive relations between immigrant students and teachers, could be significant factors in fostering an inclusive society. Based on these results, we describe several education policies and practices that can promote greater inclusion, such as encouraging increased civic participation within the school and community, and providing a forum where students can contribute to school governance.     

NORMS OF PUNISHMENT: EXPERIMENTS WITH STUDENTS AND THE GENERAL POPULATION

Norms of cooperation and punishment differ across societies, but also within a single society. In an experiment with two subject pools sharing the same geographical and cultural origins, we show that opportunities for peer punishment increase cooperation among students but not in the general population. In previous studies, punishment magnified the differences across societies in people's ability to cooperate. Here, punishment reversed the order: with punishment, students cooperate more than the general population while they cooperate less without it. (JEL C72, C90, Z13)     

Socio‐cultural correlates of incidence of impotence: A cross‐cultural study

Data on the social structural characteristics, sexual attitudes and sexual practices of thirty preindustrial and industrializing societies are examined in an attempt to identify some of the major sociological (as opposed to purely psychological) correlates of impotence. Results suggest two major conclusions: First, socio‐cultural characteristics are clearly related to the incidence of impotence reported across societies; second, among the variables investigated those reflecting the degree of a society's sexual restrictiveness were most predictive of incidence of impotence.     

Soviet Marxism and population policy

American demographers have maintained that Marxism, notably Soviet Marxism, is consistently pronatalist. The Soviet view is said to be that population growth is not a problem and that birth control policies in either developed or developing societies are to be rejected; the “correct” (i.e., socialist) socio‐economic structure is the true solution to alleged population problems. Such representations of Soviet thought greatly oversimplify the Soviet position as well as fail to discern the changes in Soviet thought that have been occurring. Since the 1960's Soviet writers have increasingly acknowledged that population growth is, to a considerable degree, independent of the economic base of society and that conscious population policies may be needed to either increase or decrease the rate of population growth. Even socialist societies can have population problems. And where population growth is too rapid, as in the developing countries, policies to slow such growth are needed because of the threat to economic development. However, the Soviets continue to stress that birth control policies must go hand‐in‐hand with social and economic development policies if they are to be effective.     

The making of ‘real men’

This article considers the legacy of Enlightenment and Empire in settler society as a conflict of cultural values,at once a problem of justice and identity. Aotearoa/New Zealand is an exemplary case: the failure of the court system to fully acknowledge that settlement was founded on negotiation with indigenous people threatens to return this society, in constitutional and social terms, to a state of nature. I consider the problem raised by the claims to justice of indigenous Maori through the viewpoint of a major historian, and white New Zealander or Pakeha, J. G. A. Pocock. The progressivism of enlightenment history still evident in his thinking undergirds a view of Maori history as a primitive dreamtime. This misconception belies the refusal of Pakeha to acknowledge the extent to which their own view of history is a product of enlightenment myth-making. The negative British view of Maori in the nineteenth century shows the continuity of racial stereotypes since Captain Cook's encounter. Today, the judicial failure to countenance different cultural values reorients questions of justice. The state of nature returns as the absence of a constitutional framework for negotiating specifically cultural differences. The abstract universalism of liberal justice – Pakeha think justice cannot be culturally inflected – is part of the problem, and fuels Maori grievances. Yet Pakeha are increasingly turning to Maori insignia to establish a sense of national identity. Historical justice and questions of national identity remain inseparable in settler societies. The failure to consider settlement in terms of competing cultural values, evident in the problem of history, creates the conditions for an uncivil society. In this context I question the grounds for regarding acts of indigenous violence as unjustified.     

Relocating Prejudice: A Transnational Approach to Understanding Immigrants' Racial Attitudes

Immigration is changing the racial composition of many societies. Yet leading theories of racial prejudice, even in a multiracial context, focus on dynamics in a single nation‐state and fail to account for the experiences of the foreign‐born. We adopt a transnational approach that incorporates processes creating prejudice from both inside and outside the receiving society and that shows how attitudes move across borders through immigration, transnationalism, and globalization. We draw upon two in‐depth studies of immigrants and those who stay in the home countries, focusing on Koreans' and Dominicans' attitudes toward Black Americans. By situating existing theories of racial prejudice within a transnational framework, we illustrate how models of transnationalism are relevant not just within immigration scholarship, but to more general processes of social change.     

Women's Attitudes Toward Family Formation and Life Stage Transitions: A Longitudinal Study in Korea

Although it is well documented that family attitudes become less traditional over cohorts, little is known about how individuals' attitudes change over time. More research also is needed on how the within‐individual changes relate to important life stage events such as marriage, childbirth, and transitions in education and work. Evidence is particularly lacking in Asian countries, which have socioeconomic and cultural contexts very different from those in the West. To fill these gaps in the literature, the authors analyzed the attitudes toward family formation of Korean women in their 20s and 30s (N = 6,042). Individual fixed effects regression using the panel data from the Korean Longitudinal Survey of Women and Families revealed that women became more traditional over time and that transitions to marriage and motherhood partly accounted for the change. These findings are explained within the context of very low fertility in Korea and have implications for other rapidly changing societies.