A Romerian contribution to the empirics of economic growth

Mankiw, Romer, and Weil (1992) made the Solovian set up widely used to test the determinants of economic growth and the speed of convergence. In accordance with the nature of the Solow framework, almost all empirical growth studies considered technological progress constant and identical across countries and over time, and hence underemphasized its role. In this study, in order to overcome this weakness, we propose that the Mankiw, Romer, and Weil (1992) set-up should be replaced by the Solovianized Romer (1990) framework, thus allowing the role of technology to be considered in the empirical analysis. In particular, within this framework, the growth rate of technology varies across economies and over time. We estimate the convergence equation derived from Solovianized Romer model for 31 OECD countries for the period 1980–2008 by applying the system GMM approach. The empirical findings of the model support the conditional convergence hypothesis, but reveal a lower convergence rate than that predicted by the existing literature. As a policy implication, we argue that, investment in R&D and human capital are important determinants of convergence, and in cases where economies are unable to allocate sufficient resources to R&D, policy makers should ease the diffusion of technology (e.g., via FDI or trade) in order to retain a high convergence rate.     

MANAGERS AND (SECRET) SOCIAL NETWORKS: THE INFLUENCE OF THE FREEMASONRY ON FIRM PERFORMANCE

In this paper, I study the impact of managers’ affiliations with the Freemasonry on the performances of companies. Using a unique data set of 412 companies quoted on the London Stock Exchange between 1895 and 1902, I find that young and small firms run by Masonic managers exhibited larger leverage ratios. These companies earned higher profits, although the effect is not statistically significant. Large publicly quoted corporations managed by Freemasons instead had lower profits and lower Tobin’s Q. I discuss the issue of the endogeneity of Freemasonry membership, and I use four different approaches to partially address this.     

WHAT DETERMINES ENTREPRENEURIAL CLUSTERS?

We contrast two potential explanations of the substantial differences in entrepreneurial activity observed across geographical areas: entry costs and external effects. We extend the Lucas model of entrepreneurship to allow for heterogeneous entry costs and for externalities that shift the distribution of entrepreneurial talents. We show that these assumptions have opposite predictions on the relation between entrepreneurial activity and firm‐level TFP: with different entry costs, in areas with more entrepreneurs firms' average productivity should be lower; with heterogeneous external effects it should be higher. We test these implications on a sample of Italian firms and unambiguously reject the entry costs explanation in favor of the externalities explanation. We also investigate the sources of external effects, finding robust evidence that learning externalities are an important determinant of cross‐sectional differences in entrepreneurial activity.     

Latin America's recovery from debt problems: An assessment of model-based projections

This paper examines economic assumptions used in assessing prospective economic adjustment of Latin America in response to its debt problems. The analysis compares forecasts obtained by combining parameter estimates from different researchers' trade models with the authors' macroeconomic models for Brazil. Chile, and Mexico. The influence of econometric procedure on simulation results is discussed. Then, by simulation analysis, the following issues are addressed: (1) likelihood of high domestic growth rates for Latin America in the late 1980s; (2) whether OECD growth or interest rates have a larger impact on developing-country economies; (3) effects of dollar depreciation and high interest rates on Latin America's debt problems.     

Revealing side effects of quota rules on group cooperation

The quota rule in employment is a legal tool to promote gender equality in professions and positions where women are underrepresented. An accompanying assumption is that gender diversity positively affects one of the aspects of team performance in form of group cooperation. However, it is unclear whether this positive effect can be achieved if diversity increases due to a quota rule. In two fully incentivized experiments involving a real-effort task (N₁ = 188 and N₂ = 268), we examined the impact of quotas as compared to performance-based promotion on group cooperation. We thereby categorized participants either with regard to gender or to an artificial category that was randomly assigned. Cooperation within groups declined when promotion was based on quota compared to performance-based promotion, irrespective of the categorization criterion. Further analyses revealed that this negative effect of quota rules on cooperation is not driven by procedural fairness perceptions or expectations about performance of the promoted group member. Implications of the results for the implementation of equality and diversity initiatives are discussed.     

Competitive conditions in the Central and Eastern European banking systems

The aim of this study is to conduct an empirical analysis of the competitive conditions in the banking systems of Central and Eastern European countries. The well-known model of Panzar and Rosse [1] is implemented on bank-level data over the period 1999–2006. The estimates based on the separate country panels suggest a wide variation in the competitive conditions of the banking systems examined, with some being characterized as (monopolistically) competitive and other as non-competitive. Finally, the results from the full sample indicate that bank revenue is substantially influenced by structural and macroeconomic conditions.     

THE WELFARE COST OF LAWLESSNESS: EVIDENCE FROM SOMALI PIRACY

In spite of general agreement that establishing the rule of law is central to properly functioning economies, little is known about the cost of law and order breakdowns. This paper studies a specific context of this by estimating the effect of Somali piracy attacks on shipping costs using data on shipping contracts in the dry bulk market. To estimate the effect of piracy, we look at shipping routes whose shortest path exposes them to piracy and find that the increase in attacks in 2008 led to around an 8% to 12% increase in costs. From this we calculate the welfare loss imposed by piracy. We estimate that generating around 120 USD million of revenue for Somali pirates led to a welfare loss in excess of 630 USD million, making piracy an expensive way of making transfers.     

The employment adjustment of male immigrants in England

In this paper the employment performance of native and foreign born men in England is examined, using 1993–1994 data from the Quarterly Labour Force Survey of the United Kingdom. Chiswick's (1982) hypotheses of immigrant employment adjustment are investigated using logistic regression analysis. We show that there are interesting and important employment effects arising from immigrant characteristics. Recent white immigrants experience a transitory employment disadvantage. However non-white immigrants never attain employment equality with native born white men. Education, potential experience, family characteristics and country of birth are also found to be important determinants of employment. Received: 13 September 1998/Accepted: 15 July 1999