Evaluating the impact of public subsidies on a firm's performance: A quasi-experimental approach

Many regional governments in developed countries design programs to improve the competitiveness of local firms. In this paper, we evaluate the effectiveness of public programs whose aim is to enhance the performance of firms located in Catalonia (Spain). We compare the performance of publicly subsidised companies (treated) with that of similar, but unsubsidised companies (non-treated). We use the Propensity Score Matching (PSM) methodology to construct a control group which, with respect to its observable characteristics, is as similar as possible to the treated group, and that allows us to identify firms which retain the same propensity to receive public subsidies. Once a valid comparison group has been established, we compare the respective performance of each firm. As a result, we find that recipient firms, on average, change their business practices, improve their performance, and increase their value added as a direct result of public subsidy programs.

An empirical analysis of wealth taxation: equity Vs.tax compliance

Capital taxation is currently under debate, basically due to problems of administrative control and proper assessment of the levied assets. We analyze both problems focusing on a capital tax, the annual wealth tax (WT), which is only applied in five OECD countries, being Spain one of them. We concentrate our analysis on top 1% adult population, which permits us to describe the evolution of wealth concentration in Spain along 1983-2001. On average top 1% holds about 18% of total wealth, which rises to 19% when tax incompliance and under-assessment is corrected for housing, the main asset. The evolution suggests wealth concentration has risen. Regarding WT, we analyze whether it helps to reduce wealth inequality or, on the contrary, it reinforces vertical inequity (due to especial concessions) and horizontal inequity (due to the de iure and to de facto different treatment of assets). We analyze in detail housing and equity shares. By means of a time series analysis, we relate the reported values with reasonable price indicators and proxies of the propensity to save. We infer net tax compliance is extremely low, which includes both what we commonly understand by (gross) tax compliance and the degree of under-assessment due to fiscal legislation (for housing). That is especially true for housing, whose level of net tax compliance is well below 50%. Hence, we corroborate the difficulties in taxing capital, and so cast doubts on the current role of the WT in Spain in reducing wealth inequality.

Decomposing differences in total factor productivity across firm size

This paper investigates the extent to which the gap in total factor productivity between small and large firms is due to differences in the endowment of factors determining productivity and to the returns associated with these factors. We place particular emphasis on the contribution of differences in the propensity to innovate and in the use of skilled labor across firms of different size. Empirical evidence from a representative sample of Spanish manufacturing firms corroborates that both differences in endowments and returns to innovation and skilled labor significantly contribute to the productivity gap between small and large firms. In addition, it is observed that the contribution of innovation to this gap is caused only by differences in quantity, while differences in returns have no effect; in the case of human capital, however, most of the effect can be attributed to increasing differences in returns between small and large firms.

Job losses, outsourcing and relocation: Empirical evidence using microdata

Using microdata, we analyse the determinants of firm relocation and conventional outsourcing decisions as a way to reduce employment. The results for a sample of 32 countries show the relevance of factors not considered previously in the literature. Firms that are below average in quality or innovation have a higher propensity to externalise part of their production through outsourcing, while lower relative profitability and longer time to market for new products each imply a higher probability of relocation.

A Salience Theory of Choice Errors

We study a psychologically based foundation for choice errors. The decision maker applies a preference ranking after forming a 'consideration set' prior to choosing an alternative. Membership of the consideration set is determined both by the alternative specific salience and by the rationality of the agent (his general propensity to consider all alternatives). The model turns out to include a logit formulation as a special case. In general, it has a rich set of implications both for exogenous parameters and for a situation in which alternatives can a¤ect their own salience (salience games). Such implications are relevant to assess the link between 'revealed' preferences and 'true' preferences: for example, less rational agents may paradoxically express their preference through choice more truthfully than more rational agents.

Genetics of decayed sexual traits in a parasitoid wasp with endosymbiont-induced asexuality.

Trait decay may occur when selective pressures shift, owing to changes in environment or life style, rendering formerly adaptive traits non-functional or even maladaptive. It remains largely unknown if such decay would stem from multiple mutations with small effects or rather involve few loci with major phenotypic effects. Here, we investigate the decay of female sexual traits, and the genetic causes thereof, in a transition from haplodiploid sexual reproduction to endosymbiont-induced asexual reproduction in the parasitoid wasp Asobara japonica. We take advantage of the fact that asexual females cured of their endosymbionts produce sons instead of daughters, and that these sons can be crossed with sexual females. By combining behavioral experiments with crosses designed to introgress alleles from the asexual into the sexual genome, we found that sexual attractiveness, mating, egg fertilization and plastic adjustment of offspring sex ratio (in response to variation in local mate competition) are decayed in asexual A. japonica females. Furthermore, introgression experiments revealed that the propensity for cured asexual females to produce only sons (because of decayed sexual attractiveness, mating behavior and/or egg fertilization) is likely caused by recessive genetic effects at a single locus. Recessive effects were also found to cause decay of plastic sex-ratio adjustment under variable levels of local mate competition. Our results suggest that few recessive mutations drive decay of female sexual traits, at least in asexual species deriving from haplodiploid sexual ancestors.

Policy Labels and Investment Decision-making

Much attention in recent years has turned to the potential of behavioural insights to improve the performance of government policy. One behavioural concept of interest is the effect of a cash transfer label on how the transfer is spent. The Winter Fuel Payment (WFP) is a labelled cash transfer to offset the costs of keeping older households warm in the winter. Previous research has shown that households spend a higher proportion of the WFP on energy expenditures due to its label (Beatty et al., 2011). If households interpret the WFP as money for their energy bills, it may reduce their willingness to undertake investments which help achieving the same goal, such as the adoption of renewable energy technologies. In this paper we show that the WFP has distortionary effects on the renewable technology market. Using the sharp eligibility criteria of the WFP in a Regression Discontinuity Design, this analysis finds a reduction in the propensity to install renewable energy technologies of around 2.7 percentage points due to the WFP. This is a considerable number. It implies that 62% of households (whose oldest member turns 60) would have invested in renewable energy but refrain to do so after receiving the WFP. This analysis suggests that the labelling effect spreads to products related to the labelled good. In this case, households use too much energy from sources which generate pollution and too little from relatively cleaner technologies.

Social isolation causers mortality by disrupting energy homeostrasis in ants

Social deprivation can have negative effects on the lives of social animals, including humans, yet little is known about the mechanisms by which social withdrawal affects animal health. Here we show that in the carpenter ant Camponotus fellah, socially isolated workers have a greatly reduced life span relative to ants kept in groups of ten individuals. By using a new tracking system, we found that social isolation resulted in important behavioral changes and greatly increased locomotor activity. The higher activity of single ants and their increased propensity to leave the nest to move along the walls suggested that the increased mortality of isolated ants might stem from an imbalance of energy income and expenditure. This view was supported by the finding that while isolated ants ingested the same amount of food as grouped ants, they retained food in the crop, hence preventing its use as an energy source. Moreover, the difference in life span between single and grouped individuals vanished when ants were not fed. This study thus underlines the role of social interactions as key regulators of energy balance, which ultimately affects aging and health in a highly social organism.

Optimal Universal and Categorical Benefits with Classification Errors and Imperfect Enforcement

We determine he optimal combination of a universal benefit, B, and categorical benefit, C, for an economy in which individuals differ in both their ability to work - modelled as an exogenous zero quantity constraint on labour supply - and, conditional on being able to work, their productivity at work. C is targeted at those unable to work, and is conditioned in two dimensions: ex-ante an individual must be unable to work and be awarded the benefit, whilst ex-post a recipient must not subsequently work. However, the ex-ante conditionality may be imperfectly enforced due to Type I (false rejection) and Type II (false award) classification errors, whilst, in addition, the ex-post conditionality may be imperfectly enforced. If there are no classification errors - and thus no enforcement issues - it is always optimal to set C>0, whilst B=0 only if the benefit budget is sufficiently small. However, when classification errors occur, B=0 only if there are no Type I errors and the benefit budget is sufficiently small, while the conditions under which C>0 depend on the enforcement of the ex-post conditionality. We consider two discrete alternatives. Under No Enforcement C>0 only if the test administering C has some discriminatory power. In addition, social welfare is decreasing in the propensity to make each type error. However, under Full Enforcement C>0 for all levels of discriminatory power. Furthermore, whilst social welfare is decreasing in the propensity to make Type I errors, there are certain conditions under which it is increasing in the propensity to make Type II errors. This implies that there may be conditions under which it would be welfare enhancing to lower the chosen eligibility threshold - support the suggestion by Goodin (1985) to "err on the side of kindness".

Employment effects of service offshoring: evidence from matched firms

This paper studies the effects of service offshoring on the level and skill composition of domestic employment, using a rich data set of Italian firms and propensity score matching techniques. The results show that service offshoring has no effect on the level of employment but changes its composition in favor of high skilled workers.

Selective and powerful stress gene expression in Arabidopsis in response to malondialdehyde.

The provenance, half-life and biological activity of malondialdehyde (MDA) were investigated in Arabidopsis thaliana. We provide genetic confirmation of the hypothesis that MDA originates from fatty acids containing more than two methylene-linked double bonds, showing that tri-unsaturated fatty acids are the in vivo source of up to 75% of MDA. The abundance of the combined pool of free and reversibly bound MDA did not change dramatically in stress, although a significant increase in the free MDA pool under oxidative conditions was observed. The half-life of infiltrated MDA indicated rapid metabolic turnover/sequestration. Exposure of plants to low levels of MDA using a recently developed protocol powerfully upregulated many genes on a cDNA microarray with a bias towards those implicated in abiotic/environmental stress (e.g. ROF1 and XERO2). Remarkably, and in contrast to the activities of other reactive electrophile species (i.e. small vinyl ketones), none of the pathogenesis-related (PR) genes tested responded to MDA. The use of structural mimics of MDA isomers suggested that the propensity of the molecule to act as a cross-linking/modifying reagent might contribute to the activation of gene expression. Changes in the concentration/localisation of unbound MDA in vivo could strongly affect stress-related transcription.

Does grade retention affect achievement? Some evidence from PISA

Grade retention practices are at the forefront of the educational debate. In this paper, we use PISA 2009 data for Spain to measure the effect of grade retention on students’ achievement. One important problem when analyzing this question is that school outcomes and the propensity to repeat a grade are likely to be determined simultaneously. We address this problem by estimating a Switching Regression Model. We …find that grade retention has a negative impact on educational outcomes, but we confi…rm the importance of endogenous selection, which makes observed differences between repeaters and non-repeaters appear 14.6% lower than they actually are. The effect on PISA scores of repeating is much smaller (-10% of non-repeaters’ average) than the counterfactual reduction that non-repeaters would suffer had they been retained as repeaters (-24% of their average). Furthermore, those who repeated a grade during primary education suffered more than those who repeated a grade of secondary school, although the effect of repeating at both times is, as expected, much larger.

Action of pentoxifylline on experimental cutaneous leishmaniasis due to Leishmania (Leishmania) amazonensis

In the animal model of leishmaniasis caused by Leishmania (Leishmania) amazonensis there is a complex mechanism of the host-parasite interaction. The present study was performed to interfere with the inflammatory reaction to the parasites, through immune modulation. Female C5BL/6 isogenic mice were used, some of which were inoculated on the right ear and others on the right footpad with 3.10(6) stationary phase promastigotes of the MHOM/BR/PH8 strain of L. (L.) amazonensis, and were allocated in three groups: the first received pentoxifylline 8mg/kg every 12 h, since the first day; the second one received the same dose since the 40th day of infection and a control group that did not receive any treatment. All the ears excised were analyzed to determine the variation in weight between both ears and for histopathological analyses. A quantification of the parasites was done using the limiting dilution assay. A significant reduction of the number of parasites, was observed among the animals treated which had an accordingly significant reduction on the weight of the ears. Pentoxifylline reduced the macrophages propensity to vacuolation and induced a more effective destruction of the parasites by these cells. Moreover, the group that began the treatment later did not show the same effectiveness.

Impact of neoadjuvant chemoradiotherapy on postoperative outcomes after esophageal cancer resection: results of a European multicenter study.

OBJECTIVES: To assess the impact of neoadjuvant chemoradiotherapy (NCRT) on anastomotic leakage (AL) and other postoperative outcomes after esophageal cancer (EC) resection. BACKGROUND: Conflicting data have emerged from randomized studies regarding the impact of NCRT on AL. METHODS: Among 2944 consecutive patients operated on for EC between 2000 and 2010 in 30 European centers, patients treated by NCRT after surgery (n = 593) were compared with those treated by primary surgery (n = 1487). Multivariable analyses and propensity score matching were used to compensate for the differences in some baseline characteristics. RESULTS: Patients in the NCRT group were younger, with a higher prevalence of male sex, malnutrition, advanced tumor stage, squamous cell carcinoma, and surgery after 2005 when compared with the primary surgery group. Postoperative AL rates were 8.8% versus 10.6% (P = 0.220), and 90-day postoperative mortality and morbidity rates were 9.3% versus 7.2% (P = 0.110) and 33.4% versus 32.1% (P = 0.564), respectively. Pulmonary complication rates did not differ between groups (24.6% vs 22.5%; P = 0.291), whereas chylothorax (2.5% vs 1.2%; P = 0.020), cardiovascular complications (8.6% vs 0.1%; P = 0.037), and thromboembolic events (8.6% vs 6.0%; P = 0.037) were higher in the NCRT group. After propensity score matching, AL rates were 8.8% versus 11.3% (P = 0.228), with more chylothorax (2.5% vs 0.7%; P = 0.030) and trend toward more cardiovascular and thromboembolic events in the NCRT group (P = 0.069). Predictors of AL were high American Society of Anesthesiologists scores, supracarinal tumoral location, and cervical anastomosis, but not NCRT. CONCLUSIONS: Neoadjuvant chemoradiotherapy does not have an impact on the AL rate after EC resection (NCT 01927016).

Pre-Election Positions and Voting Behaviour in Parliament: Consistency among Swiss MPs

This article examines the determinants of positional incongruence between pre-election statements and post-election behaviour in the Swiss parliament between 2003 and 2009. The question is examined at the individual MP level, which is appropriate for dispersion-of-powers systems like Switzerland. While the overall rate of political congruence reaches about 85%, a multilevel logit analysis detects the underlying factors which push or curb a candidate's propensity to change his or her mind once elected. The results show that positional changes are more likely when (1) MPs are freshmen, (2) individual voting behaviour is invisible to the public, (3) the electoral district magnitude is not small, (4) the vote is not about a party's core issue, (5) the MP belongs to a party which is located in the political centre, and (6) if the pre-election statement dissents from the majority position of the legislative party group. Of these factors, the last one is paramount.