Do Generous Welfare States Generate Efficiency Gains which Counterbalance Short Run Losses? Testing Downside Risk Theory with Economic Panel Data for the U.S., Germany and The Netherlands

The purpose of the paper is to assess the theory that the downside risk insurance provided by more generous welfare states generates long run efficiency gains, which counterbalance the short run efficiency losses caused by work disincentives in these states (Feldstein 1974, 1976; Sinn 1995, 1996). Testing downside risk theory requires long term data, so the paper makes use of the three longest running national socio-economic panel surveys. These are the American Panel Study of Income Dynamics (PSID, 1968-), the German Socio-Economic Panel (1984-) and the Dutch Socio-Economic Panel (SEP, 1984-). The paper focusses on prime age households (heads 25–59) and assesses their participation in and returns to adult education and job training. Our results indicate some support for the theory in so far as Dutch and German prime age adults, living in more generous welfare states, were much more likely than Americans to take the risk of foregoing current earnings and investing in additional education. In all three countries returns on investment were substantial.

Economic Lot Scheduling Problem with Returns

Motivated by a case study of a company that produces car parts, we study the multi‐product economic lot scheduling problem for a hybrid production line with manufacturing of new products and remanufacturing of returned products. For this economic lot scheduling problem with returns (ELSPR), we consider policies with a common cycle time for all products, and with one manufacturing lot and one remanufacturing lot for each product during a cycle. For a given cycle time, the problem is formulated as a mixed integer linear programming (MIP) problem, which provides the basis for an exact solution. The application of this model for one of the core products of the case study company indicates a 16% reduction in cost compared to the current lot scheduling policy.     

Who Enjoys the Fruits of Growth? Impact of Governments and Markets on Living Standards in Germany,The Netherlands and the U.S.A., 1987–1996

The 1980s and 1990s have been decades of quitegood economic growth in North America and muchof Western Europe. But how have the fruits ofgrowth been shared? This paper reviews changingincome distributions in the U.S., Germany and theNetherlands. These three countries may be takenas exemplars and leading economic performers in``the three worlds of welfare capitalism''(Esping-Andersen, 1990). The U.S. is a liberalwelfare-capitalist state, Germany a corporatiststate, and the Netherlands (less clearly) asocial democratic welfare-capitalist state. Thepaper focuses particularly on income changes inthe bottom, middle and top quintiles and takesa ten year period into account.Previous analyses have shown that labor andmarket income dispersion are increasing, withincreased returns to human capital. Thepotential impact of government through thetax-transfer system has been largely ignored.All three governments redistribute income fromthe rich to the poor. However, the paper showsthat only the Dutch government hasredistributed sufficiently to ensure that thebottom quintile has gained along with others.In Germany and the U.S. the poorest quintile wasconsiderably worse off in absolute terms at theend of the decade.than the beginning. TheGerman government somewhat counteracted thetrend towards greater income dispersion byredistributing to the poorest quintile, so theloss of market income was partly compensated. In the U.S. the impact of government on thepoorest quintile stayed about the same, so thisgroup ended up with about the same decrease indisposable income as market income.The U.S., Germany and the Netherlands are theonly three countries for which ten or moreconsecutive years of panel data are available.The data come from the PSID-GSOEP EquivalentFile 1980-97 and from a comparable fileconstructed from the Dutch SEP data.

     

Getting What You Pay For—Strategic Process Improvement Compensation and Profitability Impact

Profit‐maximizing firm owners who incentivize their managers with a bonus for process improvement create an intentional misalignment of their own objective and management attention. From the viewpoint of a single firm, such a local misalignment can never be profitable, but in this study we take a wider strategic perspective by investigating cost‐reducing process improvements of two firms competing in a Cournot market. We find that the use of a process improvement bonus (by firm A) can be profitable, by affecting the competitor's decision making. Informed about the reward structure at firm A, which provides an incentive for process improvement and thereby for increased production at that firm, the manager of the competing firm (B) is inclined to produce less if the owner of firm B only rewards profit. This leads to a higher profit for firm A. However, we also show that firm B's best strategy is to also offer a process improvement bonus, even if that firm is a cost laggard (with higher costs for process improvement), and that this leads to reduced profit for both firms in many situations unless one of them is sufficiently superior in its ability to improve processes. These results are robust for uncertain process improvement outcomes, multidimensional process improvement decisions, and information asymmetry in the owner–manager relationship.     

Determining optimal disassembly and recovery strategies

We present a stochastic dynamic programming algorithm for determining the optimal disassembly and recovery strategy, given the disassembly tree, the process-dependent quality distributions of assemblies, and the quality-dependent recovery options and associated profits for assemblies. This algorithm generalizes the one proposed by Krikke et al. (International Journal of Production Research 1998; 36(1):111–39) in two ways. First, there can be multiple disassembly processes. Second, partial disassembly is allowed. Both generalizations are important for practise.     

Sensitivity Analysis to Evaluate the Impact of Uncertain Factors in a Scenario Tree Model for Classical Swine Fever Introduction

Introduction of classical swine fever virus (CSFV) is a continuing threat to the pig production sector in the European Union. A scenario tree model was developed to obtain more insight into the main risk factors determining the probability of CSFV introduction (P(CSFV)). As this model contains many uncertain input parameters, sensitivity analysis was used to indicate which of these parameters influence model results most. Group screening combined with the statistical techniques of design of experiments and meta-modeling was applied to detect the most important uncertain input parameters among a total of 257 parameters. The response variable chosen was the annual P(CSFV) into the Netherlands. Only 128 scenario calculations were needed to specify the final meta-model. A consecutive one-at-a-time sensitivity analysis was performed with the main effects of this meta-model to explore their impact on the ranking of risk factors contributing most to the annual P(CSFV). The results indicated that model outcome is most sensitive to the uncertain input parameters concerning the expected number of classical swine fever epidemics in Germany, Belgium, and the United Kingdom and the probability that CSFV survives in an empty livestock truck traveling over a distance of 0-900 km.     

Gender patterns in Vietnam’s child mortality

We analyze child mortality in Vietnam focusing on gender aspects. Contrary to several other countries in the region, mortality rates for boys are substantially larger than for girls. The mortality rate of boys appears to be more sensitive to parents’ education levels than the mortality rate of girls. A high education level of the father is particularly protective for boys. The rural–urban mortality difference in the raw data, which is particularly large for boys, can be fully explained by differences in observable characteristics of urban and rural households.     

Minimum cost spanning tree games and spillover stability

This article discusses interactive minimum cost spanning tree problems and argues that the standard approach of using a transferable utility game to come up with a fair allocation of the total costs has some flaws. A new model of spillover games is presented, in which each player??s decision whether or not to cooperate is properly taken into account.     

Case studies--ergonomics in projects

The aim of a series of sessions on Company Case Studies, is to learn from practical experiences, to give feed back to researchers on applicability of theories, methods and techniques, and last but not least, to market ergonomics. In order to learn from case material, reports need to be easy accessible and well structured. System ergonomics provides such a structure. Usually a project is not done twice, i.e. with and without ergonomics. Therefore, it is not possible to make comparisons and determine the impact of ergonomics directly. A different approach is needed. It has been suggested at the IEA2006 World Congress, to compile a database of published case studies, each case to be reported in a fixed report format and critically reviewed to enable generalizing the outcomes. This paper proposes such a format. At the IEA2012 World Congress 40 case studies have been accepted, representing applied ergonomics cases in manufacturing, process industries, aviation and logistic systems.