Assessing the Political Viability of Labour Market Reform: The Case of Employment Protection

We analyze the political support for employment protection legislation. Unlike my previous work on the same topic, this paper pays a lot of attention to the role of obsolescence in the growth process. In voting in favour of employment protection, incumbent employees trade off lower living standards (because employment protection maintains workers in less productive activities) against longer job duration. The support for employment protection will then depend on the value of the latter relative to the cost of the former. We highlight two key deeterminants of this trade-off: first, the workers' bargaining power, second, the economy's growth rate-more precisely its rate of creative destruction.

Adjustment to Target Capital, Finance, and Growth

Does financial development result in capital being reallocated more rapidly to industries where it is most productive? We argue that if this was the case, financially developed countries should see faster growth in industries with investment opportunities due to global demand and productivity shifts. Testing this cross-industry cross-country growth implication requires proxies for (latent) global industry investment opportunities. We show that tests relying only on data from specific (benchmark) countries may yield spurious evidence for or against the hypothesis. We therefore develop an alternative approach that combines benchmark-country proxies with a proxy that does not reflect opportunities specific to a country or level of financial development. Our empirical results yield clear support for the capital reallocation hypothesis.

Motivació i eficiència en l'estudi de l'instrument : la pràctica deliberada

En aquest projecte anomenat “Motivació i eficiència en l’estudi de l’instrument” pretenc reflexionar sobre com els estudiants de música de grau superior entenen i aborden l'estudi de l'instrument. El meu repte consisteix en aprofundir i intentar ampliar tot allò que en sabem relacionat amb aquesta pràctica, donant a conèixer les opinions dels experts i les seves investigacions i aportant noves idees i conclusions pròpies. L’objectiu d’això és intentar que la pràctica amb l'instrument resulti més productiva, diversa i sigui susceptible de ser adaptada als objectius de cadascú perquè serveixi per millorar el rendiment dels instrumentistes. En resum, el projecte farà una reflexió per intentar ampliar la visió de la pràctica i de l’autonomia d’estudi i tractarà de plantejar un enfocament reflexionat.

The role of moral values in the economic analysis of crime: A general equilibrium approach

In this paper, we develop a general equilibrium model of crime and show thatlaw enforcement has different roles depending on the equilibrium characterization and the value of social norms. When an economy has a unique stable equilibrium where a fraction of the population is productive and the remaining predates, the government can choose an optimal law enforcement policy to maximize a welfare function evaluated at the steady state. If such steady state is not unique, law enforcement is still relevant but in a completely different way because the steady state that prevails depends on the initial proportions of productive and predator individuals in the economy. The relative importance of these proportions can be changed through law enforcement policy.

The impact of trade liberalization on skill upgrading. Evidence from Argentina

In this paper I study the effects of a regional free trade agreement on the demand for skill.I start by documenting a series of facts to shed light on the determinants of a steep increasein the relative demand of skilled labor in a panel of Argentinean industrial firms covering thetrade liberalization period. First, this is not explained by labor reallocation across industriesor firms but by skill upgrading within firms. Second, exporters upgrade skill faster than nonexporters. Third, firms upgrading skill also upgrade technology. These findings are consistentwith a model where a reduction in trading partner s tariffs induces the most productive firms(exporters) to adopt skill-intensive production technologies. Indeed, I find that the reduction inBrazil s tariffs induces the most productive Argentinean firms to upgrade skill, while the leastproductive ones downgrade. One third of the increase in the relative demand for skill can beattributed to the reduction in Brazil s tariffs.

Economic growth with bubbles

We develop a stylized model of economic growth with bubbles. In this model, changes in investorsentiment lead to the appearance and collapse of macroeconomic bubbles or pyramid schemes.We show how these bubbles mitigate the effects of financial frictions. During bubbly episodes,unproductive investors demand bubbles while productive investors supply them. These transfersof resources improve the efficiency at which the economy operates, expanding consumption, thecapital stock and output. When bubbly episodes end, these transfers stop and consumption, thecapital stock and output contract. We characterize the stochastic equilibria of the model and arguethat they provide a natural way of introducing bubble shocks into business cycle models.

Endogenous spillovers, increased competition and re-organization waves

We consider an entrepreneur that is the sole producer of a costreducing skill, but the entrepreneur that hires a team to usethe skill cannot prevent collusive trade for the innovation related knowledge between employees and competitors. We showthat there are two types of diffusion avoiding strategies forthe entrepreneur to preempt collusive communication i) settingup a large productive capacity (the traditional firm) and ii)keeping a small team (the lean firm). The traditional firm ischaracterized by its many "marginal" employees that work shortdays, receive flat wages and are incompletely informed about the innovation. The lean firm is small in number of employees,engages in complete information sharing among members, that are paid with stock option schemes. We find that the lean firm is superior to the traditional firm when technological entry costsare low and when the sector is immature.

Transfers, social safety nets and economic growth

The role of social safety nets in the form of redistributional transfersand wage subsidies is analyzed using a simple model of criminal behavior. Itis argued that public welfare programs act as a crime--preventing ordisruption--preventing devices because they tend to increase the opportunitycost of engaging in crime or disruptive activities. It is shown that, in thepresence of a leisure choice, wage subsidies may be better than pure transfers. Using a simple growth model, it is shown that it is not optimal for the governmentto try to fully eliminate crime. The optimal size of the public welfare programis found and it is argued that public welfare should be financed with income(not lump--sum) taxes, despite the fact that income taxes are distortionary.The intuition for this result is that income taxes act as a user fee oncongested public goods and transfers can be thought of as {\it productive}public goods {\it subject to congestion}. Finally, using a cross-section of 75 countries, the partial correlation betweentransfers and growth is shown to be significantly positive.

Productividad, competencia e innovación en la banca privada española (1900-1914)

This study investigates the productivity differences and its sourcesacross a set of banks during the last years of the liberal era of theSpanish banking system (1900-1914). These years were characterised bymajor qualitative and quantitative changes in the banking industry includinga sharp increase in the size of the system, in the number of firms, andin its regional distribution. Employing DEA productivity analysis andthe Malmquist index, we discover that these changes were accompanied bya generalised increase in the efficiency of least productive banks. Also,we observe that the crisis of some regional banking groups, like theCatalan, can be linked with its low productivity levels. In consequence,in the light of our productivity evidence, we conclude that the increasein competition was beneficial for the system because helped to the successof the most efficient banks.

Financial intermediation and equity investment with costly monitoring

This paper studies the efficiency of equilibria in a productive OLG economy where the process of financial intermediation is characterized by costly state verification. Both competitive equilibria and Constrained Pareto Optimal allocations are characterized. It is shown that market outcomes can be socially inefficient, even when a weaker notion than Pareto optimality is considered.

Análisis del comportamiento de los resultados en 'full' y 'direct costing'

In this paper we perform a mathematical analyse of profits and losses indirect and full costing. They are compared in different situations, mainlythe utilisation of productive capacity and the existence of beginninginventories. Direct costing was conceived as a system of cost accountingwhich would show profits as a function of sales. In full costing profitsdepend on available combinations of sales, production, costs of beginninginventories, etc., and information displayed in financial statements displayappears incongruent. Differences in profits with full and direct costingincrease when full costing allocates fixed costs according to normalproduction, in some cases differences, and financial statements would showmore incongruent performance. It is concluded about the importance thatprofit and loss statement expresses profits in both costing systems.

Informational matching

This paper analyzes the problem of matching heterogeneous agents in aBayesian learning model. One agent gives a noisy signal to another agent,who is responsible for learning. If production has a strong informationalcomponent, a phase of cross-matching occurs, so that agents of low knowledgecatch up with those of higher one. It is shown that:(i) a greater informational component in production makes cross-matchingmore likely;(ii) as the new technology is mastered, production becomes relatively morephysical and less informational;(iii) a greater dispersion of the ability to learn and transfer informationmakes self-matching more likely; and(iv) self-matching leads to more self-matching, whereas cross-matching canmake less productive agents overtake more productive ones.

Assesing the political viability of labour market reform: The case of employment protection

We analyze the political support for employment protection legislation.Unlike my previous work on the same topic, this paper pays a lot ofattention to the role of obsolescence in the growth process.In voting in favour of employment protection, incumbent employeestrade off lower living standards (because employment protectionmaintains workers in less productive activities) against longer jobduration. The support for employment protection will then depend onthe value of the latter relative to the cost of the former. Wehighlight two key deeterminants of this trade-off: first, the workers'bargaining power, second, the economy's growth rate-more preciselyits rate of creative destruction.

Failure to collude in the presence of asymmetric information

In this paper, we design the optimal contract when two agents can collude under asymmetric information. They have correlated types, produce complementary inputs and are protected by limited liability. Therefore, a joint manipulation of reports allows them to internalize informational and productive externalities. We show that by taking advantage of the transaction costs created by asymmetric information, even though they collude, the principal can achieve the outcome without collusion regardless of the sign and the degree of correlation. In particular, the principal can implement a non-monotonic quantity schedule in a collusion-proof way while this is impossible if collusion occurs under complete information.

Organizational capital and employment fluctuations

In this paper I present a model in which production requires two types of labor inputs: regular productive tasks and organizational capital, which is accumulated by workers performing organizational tasks. By allocating more workers from organizational to productive tasks, firms can temporarily increase production without hiring. The availability of this intensive margin of labor adjustment, in combination with adjustment costs along the extensive margin (search frictions, firing costs, training costs), makes it optimal to delay employment adjustments. Simulations indicate that this mechanism is quantitatively important even if only a small fraction of workers perform organizational tasks, and explains why the hiring rate is persistent and why employment is slow to recover after the end of a recession.