Applied Economics

"In this paper, we analyze firms' pricing behavior using a full informative micro dataset that accounts for a large part of Italian firms. In our view, “the black boxes” to examine are the relations between price setting, market structure and spatial disparities. The paper aims to extend the empirical literature in several directions. A first goal of the research is to investigate the link between heterogeneity in price changes and spatial dependence. Besides, we compare the price dynamics among sectors, namely manufacturing vs. service. It is irrefutable that prices stickiness is linked to good market rigidities. Consequently, these issues have extremely important policy implications; for instance, the Monetary Authority considers the macro price indexes in order to determine the right policy to stabilize the economy and to improve social welfare. However, the Central Bank does not distinguish the likely aggregation bias source from the cross sector–region–country heterogeneities.

Overall, the purpose of this paper is to provide an analysis of survey data that allows us to collect important aspects for Economic Policy analysis, which could not be drawn from analysis with “mesoeconomic” or aggregate data. Finally, we provide empirical evidence that price dynamic heterogeneity across geographical areas, as well as disparities across industries, are statistically significant in our microeconometric models. Indeed, the probability that industries in the backward areas change prices is 30% less than in more developed regions (Northeast). In addition, we find that sectoral diversity counts especially across goods and service industries, even if this outcome is not always robust across microeconometric specifications."

This paper empirically tests Levine's [1] endogenous growth model, which suggests that stock market and tax policy jointly affect economic growth. Following Levine [1], tax or impeding financial market activities have the potential to lower per capita growth rate. Using monthly data from 1980 to 2008, the relationship between tax revenue, stock market as proxies by direct tax revenue and KLCI respectively and economic growth in Malaysia is modeled using the Granger causality and VECM framework. Results support Levine's theory and reveal that over the sample period both tax revenue and stock market affect pattern of economic growth in Malaysia. These findings indicate that strong growth can be achieved through booming of stock market activities and the high revenue collection. Fiscal policy authorities in Malaysia will find these results useful.

The article first describes characteristics of major infrastructure projects. Second, it documents a much neglected topic in economics: that ex ante estimates of costs and benefits are often very different from actual ex post costs and benefits. For large infrastructure projects the consequences are cost overruns, benefit shortfalls, and the systematic underestimation of risks. Third, implications for cost–benefit analysis are described, including that such analysis is not to be trusted for major infrastructure projects. Fourth, the article uncovers the causes of this state of affairs in terms of perverse incentives that encourage promoters to underestimate costs and overestimate benefits in the business cases for their projects. But the projects that are made to look best on paper are the projects that amass the highest cost overruns and benefit shortfalls in reality. The article depicts this situation as ‘survival of the unfittest’. Fifth, the article sets out to explain how the problem may be solved, with a view to arriving at more efficient and more democratic projects, and avoiding the scandals that often accompany major infrastructure investments. Finally, the article identifies current trends in major infrastructure development. It is argued that a rapid increase in stimulus spending, combined with more investments in emerging economies, combined with more spending on information technology is catapulting infrastructure investment from the frying pan into the fire.

The Environmental Stewardship Scheme (ESS) provides payments to farmers for the provision of environmental services based on forgone agricultural income. Consequently, farmers with a relatively low opportunity cost of agricultural land will be particularly attracted to apply for entry into the ESS within a given payment region. This article tests whether there exists a significant relationship between Higher Level Stewardship (HLS) Scheme entry and agricultural yields. Empirically, HLS participation is found to be negatively related to cereal yields at the farm level. This could be associated with ‘auspicious selection’ of land into the Scheme, with greater ‘value for money’ provided by the higher entry of land with lower agricultural forgone income but higher environmental benefit within the region.

This study examines the general influence of collective bargaining on inter-industry wage differentials drawing on an unique data set on industry minimum wages for Spain. Our novel evidence confirms the untested hypothesis that inter-industry wage premia are driven by industry minimum wages in corporatist countries with centralized collective bargaining systems, but suggests that a compressed inter-industry wage structure needs not to be a feature of such systems

The aim of this article is to use dynamic panel data cointegration technique to determine elasticities of tourist arrivals to Australia, using income, real exchange rates, and airfares as demand determinants. Annual data from 1991 to 2007 for arrivals from the 10 main markets are used. Previous studies that applied dynamic panel data sets in the tourism context have used the Arellano—Bond estimation technique. Because this technique produces biased and inconsistent estimates in samples with a small time span, this article uses the corrected least square dummy variable technique to generate unbiased and efficient parameter estimates. The results obtained show that demand is inelastic with respect to its determinants in the short run and elastic in the long run. The main implications of these results are that maintaining destination price competitiveness and consumer satisfaction should be rated very high in the priorities of the Australian tourism industry.

Este trabajo tiene tres objetivos fundamentales. En primer lugar, ofrecer delimitaciones alternativas de los mercados locales de trabajo para el conjunto de España mediante la explotación de los datos de movilidad residencia-trabajo procedentes del Censo de Población 2001. Se utiliza para ello la última versión del procedimiento empleado en el Reino Unido para la elaboración de las Travel-to-Work Areas, el conjunto oficial de mercados locales de trabajo de aquel país. En segundo lugar, se ha diseñado y aplicado un procedimiento que permite solucionar los problemas de discontinuidad que surgen cuando se utilizan gran parte de de los algoritmos de delimitación de áreas funcionales. Por último, se proponen diversas medidas que permiten evaluar la adecuación de una propuesta concreta de áreas funcionales, y se muestra su aplicación a una de las delimitaciones presentadas.

Questo articolo individua nella scarsa esperienza lavorativa dei giovani rispetto agli adulti la causa principale delle difficoltà che essi sperimentano nel mercato del lavoro sia in termini di prospettive occupazionali che salariali. Gli economisti si sono divisi sul come interpretare le cause e, naturalmente, su come porre rimedio all’inesperienza lavorativa dei giovani. I più ritengono che il mercato debba risolvere la difficoltà dei giovani offrendo un salario d’ingresso più basso a conferma della loro minore produttività, maggiore flessibilità in modo da permettere più facilmente di passare da un lavoro all’altro fino a trovare quello giusto e, in particolare, lavori temporanei che sono l’unico modo per accumulare l’esperienza lavorativa di cui hanno bisogno. Altri, invece, criticano la flessibilità in entrata e i lavori temporanei. La prima funziona solo se accompagnata da strumenti aggiuntivi, altrimenti finisce con il favorire coloro che già hanno una maggiore motivazione e un livello d’istruzione più alto. Il lavoro temporaneo permette di accumulare esperienza lavorativa generica, ma non specifica al posto di lavoro. La soluzione è invece un policy mix nel quale la flessibilità sia accompagnata da un sistema d’istruzione e di formazione professionale più efficiente ed equo, oltre che fondato sul principio duale.

Started in May 1992, the Polish Labour Force Survey (PLFS) is one of the most important data sources to study the labour market dynamics in Eastern Europe. It is a typical rotating panel with a 2-2-2 rotation scheme. Similar to any other longitudinal survey, panel attrition, also due to measurement errors, is one the main shortcomings of the PLFS. This paper contributes to the analysis of panel attrition in longitudinal survey data in three ways. First, it shows that albeit limited at about 6.5%, attrition in the PLFS is systematic. Second, it shows that panel attrition can cause biased estimates of transitions in the labour market, giving the fake impression of low numerical flexibility. Third, it studies the determinants of attrition. A logistic estimate of the probability of panel selection across the November 1995 and November 1996 rounds of the survey shows that the probability of failing to match consecutive observations is higher among young highly educated men residing in the lowest unemployment regions of the country. Further problems might arise because of unobservables. This is suggestive of the need to take the due caveats when analysing information coming from rotating panels.

"Immigration can potentially influence tourism flows. However, in spite of the vast number of studies on tourism demand modelling, the immigration-tourism linkage has not received much attention in the empirical literature. This paper seeks to address this gap. A dynamic demand model is developed and estimated using data from 1980 to 2008 for the 15 main markets of Australia. The explanatory variables included are income, own price, price of a substitute destination, airfare and immigration. The estimation results empirically establish the connection between immigration and inbound tourism. The short-run and long-run immigration elasticities generated are 0.028 and 0.09 respectively. Additionally this paper demonstrates that omission of prices of substitutes affects the value of the own price elasticity of demand. The results have implications for future research and for stakeholders who can improve the efficiency of their planning exercises by taking into account additional information on immigration trends.


Keywords: Immigration, Tourism Demand, Dynamic Panel Data, Price of Substitutes, Australia."

Airfare elasticities are crucial for policy instruments for the stakeholders of tourism industry. Modellers attempting to estimate these elasticities face several challenges in the absence of microeconomic data on consumer preferences. The aim of this paper is to offer a critical analysis of the practice of computing airfare elasticities from tourism demand studies. It identifies and discusses potential sources of measurement errors in the data and drawbacks that investigators face and assesses their implications for the estimated parameters in the respective models. The use of price of crude oil and distance between origin and destination as proxies for transportation costs are evaluated. It is recommended that authors be more systematic in reporting their results. They need to comment on the limitations of their elasticity estimates since these have repercussions on policy recommendations made based on their results.

This paper looks at regional unemployment inequality using individual-level data. We find that higher unemployment regions are those with higher inflow rates to unemployment rather than higher durations of unemployment. This indicates that high unemployment is related to high rates of destruction of job-worker matches in Poland. Econometric analysis of the probability of flowing into unemployment from a job reinforces this impression, showing how middle-aged workers in particular and also those in manufacturing are much more likely to enter unemployment if they live in high unemployment counties. These results are evidence against theories of regional unemployment, which work through variations in the rate of job-finding.