Hiring and firing costs, adverse selection and long-term unemployment

In this paper, we present a matching model with adverse selection that explains why flows into and out of unemployment are much lower in Europe compared to North America, while employment-to-employment flows are similar in the two continents. In the model,firms use discretion in terms of whom to fire and, thus, low quality workers are more likely to be dismissed than high quality workers. Moreover, as hiring and firing costs increase, firms find it more costly to hire a bad worker and, thus, they prefer to hire out of the pool of employed job seekers rather than out of the pool of the unemployed, who are more likely to turn out to be 'lemons'. We use microdata for Spain and the U.S. and find that the ratio of the job finding probability of the unemployed to the job finding probability of employed job seekers was smaller in Spain than in the U.S. Furthermore, using U.S. data, we find that the discrimination of the unemployed increased over the 1980's in those states that raised firing costs by introducing exceptions to the employment-at-will doctrine.

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.

An economic theory of church strictness

This paper makes several contributions to the growing literatureon the economics of religion. First, we explicitly introduce spatial-location models into the economics of religion. Second, we offer a newexplanation for the observed tendency of state (monopoly) churches tolocate toward the "low-tension" end of the "strictness continuum" (ina one-dimensional product space): This result is obtained through theconjunction of "benevolent preferences" (denominations care about theaggregate utility of members) and asymmetric costs of going to a moreor less strict church than one prefers.We also derive implications regarding the relationship between religiousstrictness and membership. The driving forces of our analysis, religiousmarket interactions and asymmetric costs of membership, high-light newexplanations for some well-established stylized facts. The analysis opensthe way to new empirical tests, aimed at confronting the implications ofour model against more traditional explanations.

The struggle against creative accounting: Is "true and fair view" part of the problem or part of the solution?

Creative accounting is a growing issue of interest in Spain. In this article we argue that the concept true and fair view can limit or promote the use of creative accounting depending upon its interpretation. We review the range of meanings that true and fair view can take at an international level and compare the experience of the United Kingdom with the Australian one by analysing the use of true and fair view to limit creative accounting. Finally, we suggest lines of action to be considered by the Spanish accounting standards-setting institutions.

Finance versus costs for teaching hospitals in Spain

In this paper we analyse the observed systematic differences incosts for teaching hospitals (THhenceforth) in Spain. Concernhas been voiced regarding the existence of a bias in thefinancing of TH s has been raised once prospective budgets arein the arena for hospital finance, and claims for adjusting totake into account the legitimate extra costs of teaching onhospital expenditure are well grounded. We focus on theestimation of the impact of teaching status on average cost. Weused a version of a multiproduct hospital cost function takinginto account some relevant factors from which to derive theobserved differences. We assume that the relationship betweenthe explanatory and the dependent variables follows a flexibleform for each of the explanatory variables. We also model theunderlying covariance structure of the data. We assumed twoqualitatively different sources of variation: random effects andserial correlation. Random variation refers to both general levelvariation (through the random intercept) and the variationspecifically related to teaching status. We postulate that theimpact of the random effects is predominant over the impact ofthe serial correlation effects. The model is estimated byrestricted maximum likelihood. Our results show that costs are 9%higher (15% in the case of median costs) in teaching than innon-teaching hospitals. That is, teaching status legitimatelyexplains no more than half of the observed difference in actualcosts. The impact on costs of the teaching factor depends on thenumber of residents, with an increase of 51.11% per resident forhospitals with fewer than 204 residents (third quartile of thenumber of residents) and 41.84% for hospitals with more than 204residents. In addition, the estimated dispersion is higher amongteaching hospitals. As a result, due to the considerable observedheterogeneity, results should be interpreted with caution. From apolicy making point of view, we conclude that since a higherrelative burden for medical training is under public hospitalcommand, an explicit adjustment to the extra costs that theteaching factor imposes on hospital finance is needed, beforehospital competition for inpatient services takes place.

2009-2013 Iowa Transportation Improvement Program

The Iowa Transportation Improvement Program (Program) is published to inform Iowans of planned investments in our state's transportation system. The Iowa Transportation Commission (Commission) and Iowa Department of Transportation (Iowa DOT) are committed to programming those investments in a fiscally responsible manner. Iowa's transportation system is multi-modal; therefore, the Program encompasses investments in aviation, transit, railroads, trails, and highways. A major component of the Program is the highway section. The FY2009-2013 highway section is financially balanced and was developed to achieve several objectives. The Commission's primary highway investment objective is the safety, maintenance and preservation of Iowa's existing highway system. The Commission has allocated an annual average of $321 million to achieve this objective. This includes $185 million in 2009 and $170 million annually in years 2010-2013 for preserving the interstate system. It includes $114 million in 2009, $100 million in 2010 and $90 million annually in years 2011-2013 for non-interstate pavement preservation. It includes $38 million annually in 2009 and 2010, and $35 million annually in years 2011-2013 for non-interstate bridges. In addition, $15 million annually is allocated for safety projects. However, due to increasing construction costs, flattened revenues and overall highway systems needs, the Commission acknowledges that insufficient funds are being invested in the maintenance and preservation of the existing highway system. Another objective involves investing in projects that have received funding from the federal transportation act and/or subsequent federal transportation appropriation acts. In particular, funding is being used where it will complete a project, corridor or useable segment of a larger project. As an investment goal, the Commission also wishes to advance highway projects that address the state's highway capacity and economic development needs. Projects that address these needs and were included for completion in the previous program have been advanced into this year's Program to maintain their scheduled completion. This program also includes a small number of other projects that generally either represent a final phase of a partially programmed project or an additional segment of a partially completed corridor. The TIME-21 bill, Senate File 2420, signed by Governor Chet Culver on April 22, provides additional funding to cities, counties and the Iowa DOT for road improvements. This will result in additional revenue to the Primary Road Fund beginning in the second half of FY2009 and gradually increase over time. The additional funding will be included in future highway programming objectives and proposals and is not reflected in this highway program. The Iowa DOT and Commission appreciate the public's involvement in the state's transportation planning process. Comments received personally, by letter, or through participation in the Commission's regular meetings or public input meetings held around the state each year are invaluable in providing guidance for the future of Iowa's transportation system. It should be noted that this document is a planning guide. It does not represent a binding commitment or obligation of the Commission or Iowa DOT, and is subject to change. You are invited to visit the Iowa DOT's Web site at iowadot.gov for additional and regular updates about the department's programs and activities.

Fighting against Malaria: Prevent wars while waiting for the "miraculous" vaccine

The World Health Organization estimates that 300 million clinical cases of malaria occur annually and observed that during the 80's and part of the 90's its incidence increased. In this paper we explore the influence of refugees from civil wars on the incidence of malaria in the refugee-receiving countries. Using civil wars as an instrumental variable we show that for each 1,000 refugees there are between 2,000 and 2,700 cases of malaria in the refugee receiving country. On average 13% of the cases of malaria reported by the WHO are caused by forced migration as a consequence of civil wars.

Characterization and detection of naturally occurring antibodies against IL-1 alpha and IL-1 beta in normal human plasma.

During the development and testing of a radioreceptor assay (RRA) for human IL-1, we have detected and identified the presence of auto-antibodies to IL-1 in normal human plasma (NHP). The RRA is based on the competition between human 125I-labeled rIL-1 alpha and standard or unknown quantities of IL-1 alpha or IL-1 beta for binding to a limited amounts of IL-1 receptor (IL-1R) isolated from the EL4 mouse thymoma cell line. NHP from 20 out of 100 unselected blood donors were found to completely inhibit the binding of 125I-labeled IL-1 alpha to its receptor, suggesting the presence in these NHP samples of either abnormal amounts of IL-1 or of a factor binding to the 125I-labeled IL-1 alpha. Special care was taken to ascertain that the inhibitory factors were antibodies and not soluble IL-1 receptor antagonist. When plasma samples with inhibiting activity were incubated with labeled IL-1 alpha and chromatographed on a Sephadex G200 column, they were found to contain 125I-labeled complexes with an apparent molecular weight of 150-200kD. The IL-1 binding factor could be eliminated from plasma by incubation with protein A-Sepharose, suggesting that it consisted in IgG antibodies directed against IL-1. Furthermore, the antibody nature of the inhibiting factor was confirmed by its binding to purified rIL-1 coupled to Sepharose. Screening of 200 NHP samples by incubation with 100 pg of 125I-labeled IL-1 followed by precipitation with 12% of polyethylene glycol (PEG) confirmed that about 25% of NHP contain detectable IgG antibodies to IL-1 alpha, while only 2% of NHP contain antibodies to IL-1 beta. No correlation between the presence of these anti-IL-1 antibodies and any particular major histocompatibility complex or any pathological conditions was detected. We suggest that all serum samples assayed for IL-1 alpha or IL-1 beta content should be pretested with the PEG precipitation assay described here.

Disentangling human tolerance and resistance against HIV.

In ecology, "disease tolerance" is defined as an evolutionary strategy of hosts against pathogens, characterized by reduced or absent pathogenesis despite high pathogen load. To our knowledge, tolerance has to date not been quantified and disentangled from host resistance to disease in any clinically relevant human infection. Using data from the Swiss HIV Cohort Study, we investigated if there is variation in tolerance to HIV in humans and if this variation is associated with polymorphisms in the human genome. In particular, we tested for associations between tolerance and alleles of the Human Leukocyte Antigen (HLA) genes, the CC chemokine receptor 5 (CCR5), the age at which individuals were infected, and their sex. We found that HLA-B alleles associated with better HIV control do not confer tolerance. The slower disease progression associated with these alleles can be fully attributed to the extent of viral load reduction in carriers. However, we observed that tolerance significantly varies across HLA-B genotypes with a relative standard deviation of 34%. Furthermore, we found that HLA-B homozygotes are less tolerant than heterozygotes. Lastly, tolerance was observed to decrease with age, resulting in a 1.7-fold difference in disease progression between 20 and 60-y-old individuals with the same viral load. Thus, disease tolerance is a feature of infection with HIV, and the identification of the mechanisms involved may pave the way to a better understanding of pathogenesis.

The political economy of employment protection

This paper develops a model of job creation and job destruction in agrowing economy with embodied technical progress, that we use toanalyze the political support for employment protection legislationssuch as the ones that are observed in most European countries.We analyze the possibility of Condorcet cycles due to the fact thatworkers about to become unemployed prefer both an increase and areduction in firing costs over the status quo. Despite this problem, we show the existence of local, and sometimes global majority winners.In voting in favour of employment protection, incumbent employeestrade off lower living standards (because employment protectionmaintains workers in less productive activities) against longer job duration. We show that the gains from, and consequently the politicalsupport for employment protection (as defined by maximunjob tenure) are larger, the lower the rate of creative destruction and the largerthe worker's bargaining power. Numerical simulations suggest a hump-shaped response of firing costs to these variables, as well as negative impact of exogeneous turnover on employment protection.

The impact of firing costs on turnover and unemployment: Evidence from the Colombian labour market reform

Reductions in firing costs are often advocated as a way of increasingthe dynamism of labour markets in both developed and less developed countries. Evidence from Europe and the U.S. on the impact of firing costs has, however, been mixed. Moreover, legislative changes both in Europe and the U.S. have been limited. This paper, instead, examines the impact of the Colombian Labour Market Reform of 1990, which substantially reduced dismissal costs. I estimate the incidence of a reduction in firing costs on worker turnover by exploiting the temporal change in the Colombian labour legislation as well as the variability in coverage between formal and informal sector workers. Using a grouping estimator to control for common aggregate shocks and selection, I find that the exit hazard rates into and out of unemployment increased after the reform by over 1% for formal workers (covered by the legislation) relative to informal workers (uncovered). The increase of the hazards implies a net decrease in unemployment of a third of a percentage point, which accounts for about one quarter of the fall in unemployment during the period of study.

Conglomeration with bankruptcy costs: Separate or joint financing?

The paper analyzes the determinants of the optimal scope of incorporation in the presenceof bankruptcy costs. Bankruptcy costs alone generate a non-trivial tradeoff between thebenefit of coinsurance and the cost of risk contamination associated to joint financing corporate projects through debt. This tradeoff is characterized for projects with binary returns,depending on the distributional characteristics of returns (mean, variability, skewness, heterogeneity, correlation, and number of projects), the bankruptcy recovery rate, and the taxrate advantage of debt relative to equity. Our testable predictions are broadly consistentwith existing empirical evidence on conglomerate mergers, spin-offs, project finance, andsecuritization.

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.

Estimates of patient costs related with population morbidity: Can indirect costs affect the results?

A number of health economics works require patient cost estimates as a basic information input.However the accuracy of cost estimates remains in general unspecified. We propose to investigate howthe allocation of indirect costs or overheads can affect the estimation of patient costs in order to allow forimprovements in the analysis of patient costs estimates. Instead of focusing on the costing method, thispaper proposes to highlight changes in variance explained observed when a methodology is chosen. Wecompare three overhead allocation methods for a specific Spanish population adjusted using the ClinicalRisk Groups (CRG), and we obtain different series of full-cost group estimates. As a result, there aresignificant gains in the proportion of the variance explained, depending upon the methodology used.Furthermore, we find that the global amount of variation explained by risk adjustment models dependsmainly on direct costs and is independent of the level of aggregation used in the classification system.

Bioactivity of Indonesian mahogany, Toona sureni (Blume) (Meliaceae), against the red flour beetle, Tribolium castaneum (Coleoptera, Tenebrionidae)

Bioactivity of Indonesian mahogany, Toona sureni (Blume) (Meliaceae), against the red flour beetle, Tribolium castaneum (Coleoptera, Tenebrionidae). The insecticidal activity of Toona sureni (Blume) Merr. was evaluated considering repellency, mortality and progeny production of F1 adults of Tribolium castaneum (Herbst, 1797) (Coleoptera, Tenebrionidae). Dried extract of seeds of T. sureni was dissolved in acetone to prepare solution of various concentrations (0.5, 1.0, 2.5 and 5.0%). To test for repellency, the insects were exposed to treated filter paper. Mortality of larvae, pupae and adults was evaluated by the treatment of spraying the insects with different concentrations of T. sureni extract. Residual effect of the extract was also evaluated considering the production of progeny of F1 adults. The highest repellency (93.30%) of T. castaneum occurred at the highest concentration (5.0% suspension of T. sureni); while the lowest (0.0%) repellency occurred at 0.5% suspension after 1 day of treatment. The highest mortality against adults (86.71%), larvae (88.32%) and pupae (85%) occurred at 5% suspension at 8 days after application. There was a negative correlation between the concentrations of T. sureni and the production of F1 adult's progeny of T. castaneum. The highest number of progeny (147) of T. castaneum occurred in the control at 7 days after treatment; and the lowest number of progeny (43) occurred at 5.0% concentration in 1 day after treatment. The results show that T. sureni is toxic to T. castaneum and has the potential to control all stages of this insect in stored wheat.