What Happens to Defined Contribution Accounts When Labor Markets and Financial Markets Move Together?

The relationship among earnings, savings, and retirement is well known; however, the linkage between labor market outcomes and financial market performance is generally unacknowledged. We examine the implications of the link between labor markets and financial markets for workers who save money in individual retirement accounts. Specifically, differences in labor market outcomes across groups may imply differences in the timing of investments, which may reduce savings over time for these groups compared to their counterparts. Using monthly data from the Current Population Survey (1979–2002), we generate hypothetical investment portfolios using stock and bond indices. We exploit differences across demographic groups in unemployment and wage growth and use these differences to examine each group's investment outcomes. We then disaggregate the total effects into short-term and long-term components. We find some evidence of short-term market timing effects on investment, but we find much larger long-term effects for some groups. Our findings suggest that, for many people, the retirement savings losses associated with the timing of markets are similar to the costs of annuitizing savings upon retirement. The differences are especially pronounced by education and gender.     

International social indicators: The OECD experience

One of the few efforts to develop an operational set of international social indicators is underway through the Organization for Economic Cooperation and Development. The paper describes the OECD plan and gives some preliminary appraisal of the completed first phase of the work, the definition of the elements of well-being for which specific indicators of change should be developed. Attention is directed to certain aspects of the overall strategy being pursued by OECD including its careful delimitation of scope to the one type of social indicators (herein termed well-being indicators) for which international agreement now appears possible although very difficult. A possible governmental strategy for development of more comprehensive social indicators in the longer term context is suggested.     

Adjustments of wage-tenure profiles with respect to entry age

This paper adds a new empirical finding of the impact of workers’ entry age on wage-tenure profiles to the literature, which might be explained by human capital and deferred compensation models. I analyze two different data sets stemming from personnel records of a large German company and from German linked employer-employee data. The analyzed company employs a quite large share of older workers but does not hire many older workers. Estimated earnings functions indicate that wage-tenure profiles are adjusted with respect to entry age: workers with older entry age earn higher entry wages and have lower wage growths than younger workers. The linked employer-employee data confirm the findings from personnel records as most firms pay higher entry wages and flatter wage-tenure profiles to older new entrants. The personnel data set and the linked employer-employee data set have their advantages and disadvantages so that an analysis of both enhances the credibility of the main results.     

RELATIVE FACTOR ENDOWMENTS AND INTERNATIONAL PORTFOLIO CHOICE

We present a model of international portfolio choice based on cross‐country differences in relative factor abundance. Countries have varying degrees of similarity in their factor endowment ratios, and are subject to aggregate productivity shocks. Risk‐averse consumers can insure against these shocks by investing their wealth at home and abroad. In a many‐good setup, the change in factor prices after a positive shock in a particular country provides insurance to countries that have dissimilar factor endowment ratios, but is bad news for countries with similar factor endowment ratios, since their incomes will worsen. Therefore countries with similar relative factor endowments have a stronger incentive to invest in one another for insurance purposes than countries with dissimilar endowments. The importance of this effect depends on the size of countries. Empirical evidence linking bilateral international equity investment positions to a proxy for relative factor endowments supports our theory: the similarity of host and source countries in their relative capital–labor ratios has a positive effect on the source country’s investment position in the host country. The effect of similarity is enhanced by the size of host countries.     

The ‘Habsburg Dilemma’ Today: Competing Discourses of National Identity in Contemporary Austria

This article analyses discourses of Austrian national identity. It discusses the reproduction (and contestation) of national identities on the levels of everyday language, political debate and policy. Three discursive formations of the nation—and their histories—are discussed: a nowadays marginal and de-legitimated discourse of pan-Germanic ethnicism; the hegemonic paradigm of ‘Austrian-ness’, which itself comprises a range of ideological positions and constitutes the over-arching framework to most (relevant) debates; and counter-hegemonic discourses including European- and ‘post-national’ identity formations. The article also discusses individuals’ ongoing negotiation of, and possible resistance to, discourses of national belonging, and concludes by relating its findings to the contemporary salience of national identities as a reaction to the (perceived) consequences of economic globalisation.     

The St. Petersburg Paradox at 300

Nicolas Bernoulli’s discovery in 1713 that games of hazard may have infinite expected value, later called the St. Petersburg Paradox, initiated the development of expected utility in the following three centuries. An account of the origin and the solution concepts proposed for the St. Petersburg Paradox is provided. D’Alembert’s ratio test is used for a uniform treatment of the manifestations of the St. Petersburg Paradox and its solution proposals. It is also shown that a St. Petersburg Paradox can be solved or regained by appropriate transformations of the winnings or their utilities on the one hand or the probabilities on the other. This last feature is novel for the analysis of the St. Petersburg Paradox.     

The Relationship Between Disadvantaged Fathers’ Employment Stability,Workplace Flexibility,and Involvement With Their Infant Children

ABSTRACT

In the United States, the slow pace of economic recovery and change in the workplace has created barriers for disadvantaged fathers to engage with their infant children. Using secondary data from the Fragile Families and Child Well-Being Study (n = 1,548), one of a few national studies that examine disadvantaged fathers, we conducted a series of regression analyses examining the relationship between disadvantaged fathers’ employment stability, workplace flexibility, and involvement with their infant children. The results showed that resident, younger, Black, higher income-earning fathers and fathers with stable employment and workplace flexibility were more involved with their infant children. This study provides additional evidence to the literature espousing the importance of workplace policies and arrangements that provide employees with stability and flexibility in the workplace. In doing so, policymakers, employers, and practitioners should develop and implement workplace policies and arrangements strengthening the relationships between disadvantaged fathers and their children and families, employees and their employers, businesses and their consumers, and businesses and their communities. With changes in the American household and workforce nationwide, especially as they relate to men and disadvantaged fathers, it is important that future research continue to examine the relationship between these two entities.     

COUNTERVAILING POWER AND DYNAMIC EFFICIENCY

This paper studies the impact of buyer power on dynamic efficiency. We consider a bargaining model in which buyer power arises endogenously from size and may impact on a supplier’s incentives to invest in lower marginal cost. We challenge the view frequently expressed in policy circles that the exercise of buyer power stifles suppliers’ incentives. Instead, we find that the presence of larger buyers keeps a supplier “more on his toes” and induces him to improve the competitiveness of his offering, in terms of both price and quality, relative to buyers’ alternative options.     

Cognitive differentiation in consumer product judgments

The investigations reported in this article examined some of the individual and situational determinants of the level of cognitive product differentiation in consumer products judgements, Subjects consisted of four large samples of male and female consumers in two large metropolitan areas in the USA. These four independent studies found empirical support for the following hypothesis: consumers tend to have more differentiated judgments of negatively valenced products than positively valenced products. These findings were discussed in the context of the “vigilance”. “justification” and “Pollyanna” hypotheses. Finally, as a promising direction for future research. the need for an interactionist approach to cognitive functioning was emphasized.