The macroeconomic effects of German unification: Real adjustments and the welfare state

We study the effects of German unification in a model with capital accumulation, skill differences and a welfare state. We argue that this event is similar to a mass migration of low-skilled agents holding no capital into a foreign country. Absent a welfare state, we observe an investment boom, depressed output and employment conditions. Capital owners and high-skilled agents are willing to give up to 4% of per-capita consumption to favor unification. When a welfare state exists the investment boom disappears and the recession is prolonged. Now, with unification, capital owners and high-skilled agents lose 4% of per-capita consumption.

Crossing the Rio Grande: Migrations, business cycles and the welfare state

In this paper we study the macroeconomic effects of an inflow oflow-skilled workers into an economy where there is capital accumulation and two types of agents. We find that there are substantial dynamic effects following unexpected migrations with adjustments that resemble those triggered by a sudden disruption of the capital stock. We look at the interrelations between these dynamic effects and three different fiscal systems for the redistribution of income and find that these schemes can change the dynamics and lead to prolonged periods of adjustments. Theaggregate welfare implications are sensitive to the welfare system: while there are welfare gains without redistribution, these gains may be turned into costs when the state engages in redistribution.

Optimal contracts, adverse selection and social preferences: An experiment

It has long been standard in agency theory to search for incentive-compatible mechanisms on the assumption that people care only about their own material wealth. However, this assumption is clearly refuted by numerous experiments, and we feel that it may be useful to consider nonpecuniary utility in mechanism design and contract theory. Accordingly, we devise an experiment to explore optimal contracts in an adverse-selection context. A principal proposes one of three contract menus, each of which offers a choice of two incentive-compatible contracts, to two agents whose types are unknown to the principal. The agents know the set of possible menus, and choose to either accept one of the two contracts offered in the proposed menu or to reject the menu altogether; a rejection by either agent leads to lower (and equal) reservation payoffs for all parties. While all three possible menus favor the principal, they do so to varying degrees. We observe numerous rejections of the more lopsided menus, and approach an equilibrium where one of the more equitable contract menus (which one depends on the reservation payoffs) is proposed and agents accept a contract, selecting actions according to their types. Behavior is largely consistent with all recent models of social preferences, strongly suggesting there is value in considering nonpecuniary utility in agency theory.

Markups, gaps and the welfare costs of business fluctuations

In this paper we present a simple theory-based measure of the variations in aggregate economic efficiency: the gap between the marginal product of labor and the household s consumption/leisure tradeoff. We show that this indicator corresponds to the inverse of the markup of price over social marginal cost, and give some evidence in support of this interpretation. We then show that, with some auxilliary assumptions our gap variable may be used to measure the efficiency costs of business fluctuations. We find that the latter costs are modest on average. However, to the extent the flexible price equilibrium is distorted,the gross efficiency losses from recessions and gains from booms may be large. Indeed, we find that the major recessions involved large efficiency losses. These results hold for reasonable parameterizations of the Frisch elasticity of labor supply, the coefficient of relative risk aversion, and steady state distortions.

A positive theory of geographic mobility and social insurance

This paper presents a tractable dynamic general equilibrium model thatcan explain cross-country empirical regularities in geographical mobility,unemployment and labor market institutions. Rational agents vote overunemployment insurance (UI), taking the dynamic distortionary effects ofinsurance on the performance of the labor market into consideration.Agents with higher cost of moving, i.e., more attached to their currentlocation, prefer more generous UI. The key assumption is that an agent'sattachment to a location increases the longer she has resided there. UIreduces the incentive for labor mobility and increases, therefore, thefraction of attached agents and the political support for UI. The mainresult is that this self-reinforcing mechanism can give rise to multiplesteady-states-one 'European' steady-state featuring high unemployment,low geographical mobility and high unemployment insurance, and one'American' steady-state featuring low unemployment, high mobility andlow unemployment insurance.

Policy attitudes, ideological values and social representations

This article reviews research on policy attitudes and ideological values from the perspective of social representations theory. In the first part of the paper, key features of lay political thinking are presented, its pragmatic imperative, its focus on communication and the social functions of shared knowledge. Objectification transforms abstract and group-neutral ideological values into concrete and socially useful knowledge, in particular stereotypes of value-conforming and value-violating groups. Such shared understandings of intergroup relations provide citizens with common reference knowledge which provides the cognitive and cultural basis of policy attitudes. Social representations theory further suggests that lay knowledge reflects the social context in which it has been elaborated (anchoring), an aspect which allows conceptualising aggregate-level differences in policy attitudes. In the second part of the paper, a model of lay conceptions of social order is outlined which organises four shared conceptions of social order, along with the stereotype-based thinking associated with each conception: Moral order, Free Market, Social diversity and Structural inequality. We conclude by arguing that policy attitudes are symbolic devices expressed to justify or to challenge existing social arrangements.

The Middle East in the American quest for world order : ideas of power, economics, and social development in United States foreign policy, 1953-1961

Doctoral dissertation, University of Tampere

Effects of group size and early handling on some behavioural and physiological welfare parameters in farmed blue foxes

Selostus: Ryhmäkoon ja varhaisen käsittelyn vaikutus tarhattujen sinikettujen hyvinvointiin

Gene by environment interaction: effects of a single-gene and social-environment on reproductive phenotypes of fire ant queens

1. The gene Pgm-3 (or a closely linked gene) influences the phenotype and reproductive success of queens in multiple-queen (polygynous) colonies but not single-queen (monogynous) colonies of the Fire Ant Solenopsis invicta. 2. We investigated the mechanisms of differential phenotypic expression of Pgm-3 in these alternate social forms. Mature winged queens with the homozygous genotype Pgm-3(a/a) averaged 26% heavier than queens with the genotypes Pgm-3(a/b) and Pgm 3(b/b) in the polygynous form. Heterozygotes were slightly heavier (2%) than Pgm-3(b/b) queens in this form, demonstrating that the allele Pgm-3(a) is not completely recessive in its effects on weight. 3. There was no significant difference in weight among queens of the three Pgm-3 genotypes in the monogynous form, with the mean weight of monogynous queens slightly greater than that of polygynous Pgm-3(a/a) queens. Differences in weight between queens of the two social forms and among queens of the three genotypes in the polygynous form are not evident at the pupal stage and thus appear to develop during sexual maturation of the adults. This suggests that some component of the social environment of polygynous colonies inhibits weight gains during queen maturation and that Pgm-(3a/a) queens are relatively less sensitive to this factor. 4. To test whether the high cumulative queen pheromone level characteristic of polygynous colonies is the factor responsible for the differential queen maturation, we compared phenotypes of winged queens reared in split colonies in which pheromone levels were manipulated by adjusting queen number. Queens produced in colony fragments made monogynous were heavier than those produced in polygynous fragments, a finding consistent with the hypothesis that pheromone level affects the reproductive development of queens. However, genotype-specific differences in weights of queens were similar between the two treatments, suggesting that pheromone level was not the key factor of the social environment responsible for the gene-environment interaction. 5. To test whether limited food availability to winged queens associated with the high brood/worker ratios in polygynous colonies is the factor responsible for this interaction, similar split-colony experiments were performed. Elevated brood/worker ratios decreased the weight of winged queens but there was no evidence that this treatment intensified differential weight gains among queens with different Pgm-3 genotypes. Manipulation of the amount of food provided to colonies had no effect on queen weight. 6. The combined data indicate that cumulative pheromone level and brood/worker ratio are two of the factors responsible for the differences in reproductive phenotypes between monogynous and polygynous winged queens but that these factors are not directly responsible for inducing the phenotypic effects of Pgm-3 in polygynous colonies.