Essays on investment, growth and income distribution

In this dissertation, I examine both theoretically and empirically the relationship between stock prices and income distribution using an endogenous growth model with social status impatience.^ The theoretical part looks into how status impatience and current economic status jointly determine time preference, savings, future economic status, stock prices, growth and wealth distribution in the steady state. This work builds on Burgstaller and Karayalcin (1996).^ More specifically, I look at (i) the effects of the distribution of status impatience levels on the distribution of steady state assets, incomes and consumption and (ii) the effects of changes in relative levels of status impatience on stock prices. Therefore, from (i) and (ii), I derive the correlation between stock prices, incomes and asset distribution. Also, the analysis of the stack market is undertaken in the presence of adjustment costs to investments.^ The empirical chapter looks at (i) the correlation between income inequality and long run economic growth on the one hand and (ii) the correlation between stock market prices and income inequality on the other. The role of stock prices and social status is examined to better understand the forces that enable a country to grow overtime and to determine why output per capita varies across countries. The data are from Summers and Heston (1988), Barro and Wolf (1989), Alesina and Rodrik (1994), Global financial Database (1997) and the World Bank. Data for social status are collected through a primary sample survey on the internet. Twenty-five developed and developing countries are included in the sample.^ The model developed in this study was specified as a system of simultaneous equations, in which per capita growth rate and income inequality were endogenous variables. Additionally, stock price index and social status measures were also incorporated. The results indicate that income inequality is inversely related to economic growth. In addition, increase in income inequality arising from higher stock prices constrains growth. Moreover, where social status is determined by income levels, it influences long run growth. Therefore, these results support findings of Persson and Tabellini (1994) and Alesina and Rodrik (1994). ^

Three essays on the economics of defense contracting, output and income inequality

This dissertation analyzes both the economics of the defense contracting process and the impact of total dollar obligations on the economies of U.S. states. Using various econometric techniques, I will estimate relationships across individual contracts, state level output, and income inequality. I will achieve this primarily through the use of a dataset on individual contract obligations. ^ The first essay will catalog the distribution of contracts and isolate aspects of the process that contribute to contract dollar obligations. Accordingly, this study describes several characteristics about individual defense contracts, from 1966-2006: (i) the distribution of contract dollar obligations is extremely rightward skewed, (ii) contracts are unevenly distributed in a geographic sense across the United States, (iii) increased duration of a contract by 10 percent is associated with an increase in costs by 4 percent, (iv) competition does not seem to affect dollar obligations in a substantial way, (v) contract pre-payment financing increases the obligation of contracts from anywhere from 62 to 380 percent over non-financed contracts. ^ The second essay will turn to an aggregate focus, and look the impact of defense spending on state economic output. The analysis in chapter two attempts to estimate the state level fiscal multiplier, deploying Difference-in-Differences estimation as an attempt to filter out potential endogeneity bias. Interstate variation in procurement spending facilitates utilization of a natural experiment scenario, focusing on the spike in relative spending in 1982. The state level relative multiplier estimate here is 1.19, and captures the short run, impact effect of the 1982 spending spike. ^ Finally I will look at the relationship between defense contracting and income inequality. Military spending has typically been observed to have a negative relationship with income inequality. The third chapter examines the existence of this relationship, combining data on defense procurement with data on income inequality at the state level, in a longitudinal analysis across the United States. While the estimates do not suggest a significant relationship exists for the income share of the top ten percent of households, there is a significant positive relationship for the income share of top one percent households for an increase in defense procurement.^

Three Essays on the Economics of Defense Contracting, Output and Income Inequality

This dissertation analyzes both the economics of the defense contracting process and the impact of total dollar obligations on the economies of U.S. states. Using various econometric techniques, I will estimate relationships across individual contracts, state level output, and income inequality. I will achieve this primarily through the use of a dataset on individual contract obligations. The first essay will catalog the distribution of contracts and isolate aspects of the process that contribute to contract dollar obligations. Accordingly, this study describes several characteristics about individual defense contracts, from 1966-2006: (i) the distribution of contract dollar obligations is extremely rightward skewed, (ii) contracts are unevenly distributed in a geographic sense across the United States, (iii) increased duration of a contract by 10 percent is associated with an increase in costs by 4 percent, (iv) competition does not seem to affect dollar obligations in a substantial way, (v) contract pre-payment financing increases the obligation of contracts from anywhere from 62 to 380 percent over non-financed contracts. The second essay will turn to an aggregate focus, and look the impact of defense spending on state economic output. The analysis in chapter two attempts to estimate the state level fiscal multiplier, deploying Difference-in-Differences estimation as an attempt to filter out potential endogeneity bias. Interstate variation in procurement spending facilitates utilization of a natural experiment scenario, focusing on the spike in relative spending in 1982. The state level relative multiplier estimate here is 1.19, and captures the short run, impact effect of the 1982 spending spike. Finally I will look at the relationship between defense contracting and income inequality. Military spending has typically been observed to have a negative relationship with income inequality. The third chapter examines the existence of this relationship, combining data on defense procurement with data on income inequality at the state level, in a longitudinal analysis across the United States. While the estimates do not suggest a significant relationship exists for the income share of the top ten percent of households, there is a significant positive relationship for the income share of top one percent households for an increase in defense procurement.

Three essays on entrepreneurial entry, serial entrepreneurship, and labor turnover

This study explores two important aspects of entrepreneurship — liquidity constraints and serial entrepreneurs, with an additional analysis of occupational choice among wage workers. In the first essay, I revisit the question of whether entrepreneurs face liquidity constraints in business formation. The principle challenge is that wealth is correlated with unobserved ability, and adequate instruments are often difficult to identify. This paper uses the son's birth order as an instrument for household wealth. I exploit the data available in the Korean Labor and Income Panel Study, and find evidence of liquidity constraints associated with self-employment in South Korea. The second essay develops and tests a model that explains entry into serial entrepreneurship and the performance of serial entrepreneurs as the result of selection on innate ability. The model supposes that agents establish businesses with imperfect information about their entrepreneurial ability and the profitability of business ideas. Agents continually observe signals with which they update their beliefs, and this process eventually determines their next business choice. Selection on ability induces a positive correlation between entrepreneurial experience (measured by previous business earnings and founding experience) and serial business formation, as well as its subsequent performance. The predictions in the model are tested using panel data from the NLSY79. The analysis permits a distinction to be made between selection on innate ability and learning by doing. Motivated by previous empirical findings that white-collar workers had higher turnover rates than blue-collar workers during firm expansion, the third essay further examines job turnover among workers with or without specific skills. I present a search-matching model, which predicts that when firm growth is driven by technological advance, workers whose skills are specific to the obsolete technology show a higher tendency to separate from their jobs. This hypothesis is tested with data from the PSID. I find supportive evidence that in the context of technological change, having an occupation requiring specific skills, such as computer specialists or engineers, increases the odds of job separation by nearly eight percent. ^

Education policy and national income distribution: New evidence from recent cross -country data

In the mid 19th century, Horace Mann insisted that a broad provision of public schooling should take precedence over the liberal education of an elite group. In that regard, his generation constructed a state sponsored common schooling enterprise to educate the masses. More than 100 years later, the institution of public schooling fails to maintain an image fully representative of the ideals of equity and inclusion. Critical theory in educational thought associates the dominant practice of functional schooling with maintenance of the status quo, an unequal distribution of financial, political, and social resources. This study examined the empirical basis for the association of public schooling with the status quo using the most recent and comparable cross-country income inequality data. Multiple regression analysis evaluated the possible relationship between national income inequality change over the period 1985-2005 and variables representative of national measures of education supply in the prior decade. The estimated model of income inequality development attempted to quantify the relationship between education supply factors and subsequent income inequality developments by controlling for economic, demographic, and exogenous factors. The sample included all nations with comparable income inequality data over the measurement period, N = 56. Does public school supply affect national income distribution? The estimated model suggested that an increase in the average years of schooling among the population age 15 years or older, measured over the period 1975-1985, provided a mechanism that resulted in a more equal distribution of income over the period 1985-2005 among low and lower-middle income nations. The model also suggested that income inequality increased less or decreased more in smaller economies and when the percentage of the population age < 15 years grew more slowly over the period 1985-2000. In contrast, this study identified no significant relationship between school supply changes measured over prior periods and income inequality development over the period 1985-2005 among upper-middle and high income nations.

Regional growth, structural change, and natural disaster

Hurricanes, earthquakes, floods, and other serious natural hazards have been attributed with causing changes in regional economic growth, income, employment, and wealth. Natural disasters are said to cause; (1) an acceleration of existing economic trends; (2) an expansion of employment and income, due to recovery operations (the so-called silver lining); and (3) an alteration in the structure of regional economic activity due to changes in "intra" and "inter" regional trading patterns, and technological change.^ Theoretical and stylized disaster simulations (Cochrane 1975; Haas, Cochrane, and Kates 1977; Petak et al. 1982; Ellson et al. 1983, 1984; Boisvert 1992; Brookshire and McKee 1992) point towards a wide scope of possible negative and long lasting impacts upon economic activity and structure. This work examines the consequences of Hurricane Andrew on Dade County's economy. Following the work of Ellson et al. (1984), Guimaraes et al. (1993), and West and Lenze (1993; 1994), a regional econometric forecasting model (DCEFM) using a framework of "with" and "without" the hurricane is constructed and utilized to assess Hurricane Andrew's impact on the structure and level of economic activity in Dade County, Florida.^ The results of the simulation exercises show that the direct economic impact associated with Hurricane Andrew on Dade County is of short duration, and of isolated sectoral impact, with impact generally limited to construction, TCP (transportation, communications, and public utilities), and agricultural sectors. Regional growth, and changes in income and employment reacted directly to, and within the range and direction set by national economic activity. The simulations also lead to the conclusion that areal extent, infrastructure, and sector specific damages or impacts, as opposed to monetary losses, are the primary determinants of a disaster's effects upon employment, income, growth, and economic structure. ^

Financial aid and the persistence of associate of arts graduates transferring to a senior university

This study examined the effects of financial aid on the persistence of associate of arts graduates transferring to a senior university in one of four consecutive fall semesters (1998-2001). Situated in an international metropolitan area in the southeastern United States, the institution where the study was conducted is a large public research university identified as a Hispanic Serving Institution. Archival databases served as the source of information on the academic and social background of the 4,669 participants in the study. Data from institutional financial aid records were pooled with the data in the student administrative system.^ For purposes of this study, persistence was defined as ongoing progress until completing the baccalaureate degree. Student social background variables used in the study were gender, ethnicity, age, and income, with GPA and part-time or full-time enrollment status being the academic variables. Amount and type of aid, including grants, loans, scholarships, and work study were incorporated in the models to determine the effect of financial aid on the persistence of these transfer students. Because the dependent variable persistence had three possible outcomes (graduated, still enrolled, dropped out) multinomial logistic regression was the appropriate technique for analyzing the data; four multinomial models were employed in the analysis.^ Findings suggest that grants awarded based on the financial need of students and loans were effective in encouraging the persistence of students, but scholarships and work study were not effective.^

Norm-based comparison of SF -12 physical and mental health scale scores for a sample of employees of Broward County

In the new health paradigm, the connotation of health has extended beyond the measures of morbidity and mortality to include wellness and quality of life. Comprehensive assessments of health go beyond traditional biological indicators to include measures of physical and mental health status, social role-functioning, and general health perceptions. To meet these challenges, tools for assessment and outcome evaluation are being designed to collect information about functioning and well-being from the individual's point of view.^ The purpose of this study was to profile the physical and mental health status of a sample of county government employees against U.S. population norms. A second purpose of the study was to determine if significant relationships existed between respondent characteristics and personal health practices, lifestyle and other health how the tools and methods used in this investigation can be used to guide program development and facilitate monitoring of health promotion initiatives.^ The SF-12 Health Survey (Ware, Kosinski, & Keller, 1995), a validated measure of health status, was administered to a convenience sample of 450 employees attending one of nine health fairs at an urban worksite. The instrument has been utilized nationally which enabled a comparative analysis of findings of this study with national results.^ Results from this study demonstrated that several respondent characteristics and personal health practices were associated with a greater percentage of physical and/or mental scale scores that were significantly "worse" or significantly "better" than the general population. Respondent characteristics that were significantly related to the SF-12 physical and/or mental health scale scores were gender, age, education, ethnicity, and income status. Personal health practices that were significantly related to SF-12 physical and/or mental scale scores were frequency of vigorous exercise, presence of chronic illness, being at one's prescribed height and weight, eating breakfast, smoking and drinking status. This study provides an illustration of the methods used to analyze and interpret SF-12 Health Survey data, using norm-based interpretation guidelines which are useful for purposes of program development and collecting information on health at the community level. ^

The relationship between job structure, burnout, and coping methods among public school county bus drivers, bus aides, mechanics, and clerical workers

The purpose of this study was to examine the relationship between the structure of jobs and burnout, and to assess to what extent, if any this relationship was moderated by individual coping methods. This study was supported by the Karasek's (1998) Job Demand-Control-Support theory of work stress as well as Maslach and Leiter's (1993) theory of burnout. Coping was examined as a moderator based on the conceptualization of Lazarus and Folkman (1984). ^ Two overall overarching questions framed this study: (a) what is the relationship between job structure, as operationalized by job title, and burnout across different occupations in support services in a large municipal school district? and (b) To what extent do individual differences in coping methods moderate this relationship? ^ This study was a cross-sectional study of county public school bus drivers, bus aides, mechanics, and clerical workers (N = 253) at three bus depot locations within the same district using validated survey instruments for data collection. Hypotheses were tested using simultaneous regression analyses. ^ Findings indicated that there were statistically significant and relevant relationships among the variables of interest; job demands, job control, burnout, and ways of coping. There was a relationship between job title and physical job demands. There was no evidence to support a relationship between job title and psychological demands. Furthermore, there was a relationship between physical demands, emotional exhaustion and personal accomplishment; key indicators of burnout. ^ Results showed significant correlations between individual ways of coping as a moderator between job structure, operationalized by job title, and individual employee burnout adding empirical evidence to the occupational stress literature. Based on the findings, there are implications for theory, research, and practice. For theory and research, the findings suggest the importance of incorporating transactional models in the study of occupational stress. In the area of practice, the findings highlight the importance of enriching jobs, increasing job control, and providing individual-level training related to stress reduction.^

Perceiving Spanish in Miami: The Interaction of Dialect and National Labeling

The current study implements a speech perception experiment that interrogates local perceptions of Spanish varieties in Miami. Participants (N=292) listened to recordings of three Spanish varieties (Peninsular, Highland Colombian, and Post-Castro Cuban) and were given background information about the speakers, including the parents’ country of origin. In certain cases, the parents’ national-origin label matched the country of origin of the speaker, but otherwise the background information and voices were mismatched. The manipulation distinguishes perceptions determined by bottom-up cues (dialect) from top-down ones (social information). Participants then rated each voice for a range of personal characteristics and answered hypothetical questions about the speakers’ employment, family, and income. Results show clear top-down effects of the social information that often drive perceptions up or down depending on the traits themselves. Additionally, the data suggest differences in perceptions between Hispanic/non-Hispanic and Cuban/non-Cuban participants, although the Cuban participants do not drive the Hispanic participants’ perceptions.

Genital human papillomavirus: Women's knowledge and attitudes of this sexually transmitted disease

The purpose of this study was to investigate women's knowledge and attitudes regarding genital human papillomavirus (n=100). Using a descriptive design, the Health Education Questionnaire was administered to 100 female patients (Mean Age = 33, SD = 7.17) at a physicians office in South Florida. The results indicated a lack of knowledge regarding genital human papillomavirus with 21 patients (21%) reported having knowledge and 79 (79%) having never heard of this disease. In addition, the group familiar with genital human papillomavirus also possessed a low level of knowledge with only 57% acknowledging an association of genital human papillomavirus and cervical cancer, 52% aware that a pap smear can detect the virus, 42% knowing that antibiotics can not treat the disease and 57% aware that it is not associated with a family history. An association was found between attitudes and health seeking behaviors. Subjects stating that they would take all measures to prevent genital human papillomavirus, were more likely to have a pap smear within the last year (Chi-square (1) = 4.33, p < .05). Higher levels of education and income were associated with increased knowledge regarding genital human papillomavirus when subjects were categorized according to sociodemographic characteristic (Chi-square (1) =9.45, p < .05; Chi-square (1) = 6.75, p < .05). There was no significant correlation between knowledge and ethnicity, marital status or age. Findings indicated the need for improved education and promotion of positive attitudes regarding human papillomaviurs in order to improve health seeking behaviors among women.

The Relationship between Job Structure, Burnout, and Coping Methods among Public School county Bus Drivers, Bus Aides, Mechanics, and Clerical Workers

The purpose of this study was to examine the relationship between the structure of jobs and burnout, and to assess to what extent, if any this relationship was moderated by individual coping methods. This study was supported by the Karasek's (1998) Job Demand-Control-Support theory of work stress as well as Maslach and Leiter's (1993) theory of burnout. Coping was examined as a moderator based on the conceptualization of Lazarus and Folkman (1984). Two overall overarching questions framed this study: (a) what is the relationship between job structure, as operationalized by job title, and burnout across different occupations in support services in a large municipal school district? and (b) To what extent do individual differences in coping methods moderate this relationship? This study was a cross-sectional study of county public school bus drivers, bus aides, mechanics, and clerical workers (N = 253) at three bus depot locations within the same district using validated survey instruments for data collection. Hypotheses were tested using simultaneous regression analyses. Findings indicated that there were statistically significant and relevant relationships among the variables of interest; job demands, job control, burnout, and ways of coping. There was a relationship between job title and physical job demands. There was no evidence to support a relationship between job title and psychological demands. Furthermore, there was a relationship between physical demands, emotional exhaustion and personal accomplishment; key indicators of burnout. Results showed significant correlations between individual ways of coping as a moderator between job structure, operationalized by job title, and individual employee burnout adding empirical evidence to the occupational stress literature. Based on the findings, there are implications for theory, research, and practice. For theory and research, the findings suggest the importance of incorporating transactional models in the study of occupational stress. In the area of practice, the findings highlight the importance of enriching jobs, increasing job control, and providing individual-level training related to stress reduction.

The effect of the business cycle on the performance of socially responsible equity mutual funds

The current study applies a two-state switching regression model to examine the behavior of a hypothetical portfolio of ten socially responsible (SRI) equity mutual funds during the expansion and contraction phases of US business cycles between April 1991 and June 2009, based on the Carhart four-factor model, using monthly data. The model identified a business cycle effect on the performance of SRI equity mutual funds. Fund returns were less volatile during expansion/peaks than during contraction/troughs, as indicated by the standard deviation of returns. During contraction/troughs, fund excess returns were explained by the differential in returns between small and large companies, the difference between the returns on stocks trading at high and low Book-to-Market Value, the market excess return over the risk-free rate, and fund objective. During contraction/troughs, smaller companies offered higher returns than larger companies (ci = 0.26, p = 0.01), undervalued stocks out-performed high growth stocks (h i = 0.39, p <0.0001), and funds with growth objectives out-performed funds with other objectives (oi = 0.01, p = 0.02). The hypothetical SRI portfolio was less risky than the market (bi = 0.74, p <0.0001). During expansion/peaks, fund excess returns were explained by the market excess return over the risk-free rate, and fund objective. Funds with other objectives, such as balanced funds and income funds out-performed funds with growth objectives (oi = −0.01, p = 0.03). The hypothetical SRI portfolio exhibited similar risk as the market (bi = 0.93, p <0.0001). The SRI investor adds a third criterion to the risk and return trade-off of traditional portfolio theory. This constraint is social performance. The research suggests that managers of SRI equity mutual funds may diminish value by using social and ethical criteria to select stocks, but add value by superior stock selection. The result is that the performance of SRI mutual funds is very similar to that of the market. There was no difference in the value added among secular SRI, religious SRI, and vice screens.

Challenge to Managers: Changing Hotel Work from a Secondary Choice to career Development

In his discussion - Challenge To Managers: Changing Hotel Work from a Secondary Choice to Career Development - by Leonidas Chitiris, Lecturer in Management, Piraeus Graduate School of Industrial Studies, Athens, Greece, Chitiris marginally alludes at the outset: “Surveys and interviews with hotel employees in Greece with regard to why individuals work for hotels and to what extent their rationale to join the hotel industry affects hotel productivity revealed that the choice to work in hotels is a secondary preference and reflects the opportunity structure in the economy at any given time and the greater the number of those who work in hotels when there are no other employment opportunities, the less likely the chances for overall improved performance. Given the increase in the proportion of unskilled, unmotivated workers, the level of hotel productivity consequently decreases! The author interprets the findings in terms of the economic and employment conditions in the Greek hotel industry. To enhance the rationale of his thesis statement, Chitiris offers with citation: “Research on initial entry into the labor force has shown that new employees reflect idealized expectations and are frequently not very satisfied with their jobs and roles in the work settings.” Chitiris advances the thought even further by saying: “Research on job satisfaction, motivation, and production purports that management can initiate policies that develop job satisfaction and may improve productivity.” The author outlines components within the general category of the hotel industry to label and quantify exactly why there may be a lag between employee expectations and the delivery of a superior level of service. Please keep in mind that the information for this essay is underpinned by the hotel industry in Greece, exclusively. Demographic information is provided. One example of the many factors parsed in this hotel service discussion is the employee/guest relationship. “The quality of service in hotels is affected to a great extent by the number of guests a hotel employee has to serve,” Chitiris offers. Additionally, Chitiris’ characterization of the typical hotel employee in Greece is not flattering, but it is an informed and representative view of that lodging labor pool. The description in and of itself begs to explain at least some of why the hotel industry in Greece suffers a consequently diminished capacity of superior service. Ill equipped, under-educated, over-worked, and under-paid are how Chitiris describes most employees in the Hellenist hospitality field. Survey based studies, and formulaic indices are used to measure variables related to productivity; the results may be inconclusive industry wide, but are interesting nonetheless. Also, an appealing table gauges the reasons why hotel workers actually employ themselves in the lodging industry. Chirtiris finds that salary expectations do not rate all that high on the motivational chart and are only marginal when related to productivity. In closing, Chirtiris presents a 5-phase development plan hotels should look to in improving performance and productivity at their respective properties.

Global Pricing Strategy for a Quick-Service Restaurant Chain

The purpose of this paper is to compare prices for a popular quick-service restaurant chain (i.e. McDonalds’) across countries throughout the world using the “Big Mac Index” published by “The Economist.” The index was originally developed to measure the valuation of international currencies against the U.S. dollar. The analysis in this study examines the relationship between the price of a Big Mac and other variables such as the cost of beef, price elasticity, and income. Finally, these relationships are reviewed to draw inferences concerning the use of demand, costs, and competition in setting prices.