Tourism productivity: incentives and obstacles to fostering growth

This paper intends firstly to estimate tourism productivity in 208 countries in the years 1990, 1995, 2000 and 2004. Secondly, it analyzes if the differential of productivity across countries could be due to some structural characteristics of the countries themselves. The study uses a stochastic production frontier approach and a technical efficiency model to analyze the determinants of efficiency across countries. Private capital and labour result to be more influential than public capital on the number of arrivals. The results suggest that the tertiary school enrolment, the level of communication technologies, the country openness to international trade all significantly contribute to efficiency.Tourism productivity; Economic growth; Labor; Public capital; Private capital

Economies of scale and efficiency measurement in Switzerland's Nursing homes

This paper examines the cost efficiency in the nursing home industry, an issue of concern to Swiss policy makers because of the explosive growth of national expenditure on elderly care and the aging of the population. A stochastic cost frontier model with a translog function has been applied to a balanced panel data of 1780 observations from 356 nursing homes operating over five years (1998-2002) in Switzerland. We compare the estimation results from different panel data econometric techniques focusing on the various methods of specification of unobserved heterogeneity across firms. In particular, the potential effects of such unobserved factors on the estimation results and their interpretation have been discussed. The paper eventually addresses three empirical issues: (1) the measurement of economies of scale in the nursing home sector, (2) the assessment of the economic performance of the firms by estimating their cost efficiency scores, and (3) the role of unobserved heterogeneity in the estimation process. The findings suggest that the economies of scale are an important potential source of cost reduction in a majority of Swiss nursing homes. Taking the size as given the efficiency performance of most individual units is practically very close to the estimated best practice. Nevertheless, the efficiency estimates suggest that some of the nursing homes can significantly reduce their costs by improving their operations.COST EFFICIENCY, ECONOMIES OF SCALE, NURSING HOMES, STOCHASTIC FRONTIER, PANEL DATA

Deregulation, Consolidation, and Efficiency: Evidence From the Spanish Insurance Industry

This paper provides new information on the effects of deregulation and consolidation in financial services markets by analyzing the Spanish insurance industry. The sample period 1989-1998 spans the introduction of the European Union’s Third Generation Insurance Directives, which deregulated the EU insurance market. Deregulation has led to dramatic changes in the Spanish insurance market; the number of firms declined by 35 percent and average firm size increased by 275 percent. We analyze the causes and effects of consolidation using modern frontier efficiency analysis to estimate cost, technical, and allocative efficiency, as well as using Malmquist analysis to measure total factor productivity change. The results show that many small, inefficient, and financially under-performing firms were eliminated from the market due to insolvency or liquidation and that acquirers in the mergers and acquisitions market prefer relatively efficient target firms. As a result, the market experienced significant growth in total factor productivity over the sample period. Consolidation reduced the number of firms operating with increasing returns to scale but also increased the number operating with decreasing returns to scale. Hence, many large firms should focus on improving efficiency rather than on further growth.

The Influence of Role Models on Immigrant Self-Employment: A Spatial Analysis for Switzerland

Theoretical and empirical research suggests a connection between the presence of role models and the emergence of entrepreneurs. Existing entrepreneurs may act as role models for self-employment candidates by providing successful examples. By explicitly considering the self-employment rates of the natives, which may influence locally the decisions of immigrants towards entrepreneurship, we develop a simple model that explains immigrant self-employment rates for a sample of 2,490 Swiss municipalities. In addition, we accommodate for the presence of spatial spillovers in the distribution of rates, and test a spatial autoregressive model which takes into account the average self-employment rates of immigrants living in nearby municipalities. Our evidence shows a significant (positive) effect of such spatial network effects, which are characterized by a quick distance decay, suggesting spatial spillovers at the household and social network level. Additionally, we show that local conditions and immigrant pool characteristics differ, with respect to self-employment choices, when examining separately urban and rural contexts.immigrants, self-employment, role models, Switzerland, spatial lag

Do opening hours and unobserved heterogeneity affect economies of scale and scope in postal outlets?

The purpose of this study is to analyze the cost structure of Swiss Post’s postal outlets. In particular, the idea is to assess economies of scale and scope in post offices and franchised postal agencies. Information on their optimal size and production structure is of importance from the policy-makers’point of view because this hypothetical situation may be a basis for calculation of reimbursements when providing the universal service. Two important novelties are introduced in this study. First, the latent class model accounts for postal outlets with different underlying production technologies, caused by unobserved factors. Second, the cost model includes standby time as an indicator of public service because regulated accessibility and negotiated opening hours that enhance public service frequently lead to opening hours that exceed the time necessary to operate the demand. Overall, this analysis confirms the existence of increasing unexploited economies of scale and scope with falling outputs in the Swiss Post office network. Furthermore, the results for the latent class model point to the existence of unobserved heterogeneity in the industry.economies of scale, economies of scope, postal outlet network, unobserved heterogeneity, latent class model, opening hours, standby time

Resource Rent Taxation and Benchmarking.A New Perspective for the Swiss Hydropower Sector

The electricity generation in Switzerland is mainly based on hydropower (55% of total production). The exploitation of water in the hydropower sector can generate significant so-called resource rents. These are defined by the surplus return above the value of capital, labor, materials and energy used to exploit hydropower. In Switzerland, hydropower producers pay to the State a fixed fee per kW gross capacity. With this system the substantial differences in costs, revenues and in the production characteristics of the hydropower plants are not taken into account. In this context, the following paper has two main goals: 1) To discuss the introduction in the Swiss hydropower sector of a new payment system based on a resource rent tax; 2) To propose a combination of a RRT system with a benchmarking analysis of the production cost obtained through the estimation of a stochastic frontier variable cost function. We estimate a true random effects stochastic frontier variable cost function using panel data in order to overcome the asymmetric information problem. In addition, using the information on cost efficiency of the single companies, we show how to introduce in the RRT scheme a benchmark system which gives incentives to minimize the production costs.Resource Rent Taxation; Hydropower; Efficiency

The Role of Job Satisfaction in Transitions into Self-Employment

As observed in many advanced economies experiencing an increase of self-employment rates since the late 1970s, a flourishing small- and medium-size enterprise sector is traditionally associated with positive economic development and growth. In the regional context, areas benefiting from an established entrepreneurial culture are in general more successful and innovative, as well as better equipped to sustain structural changes and to contrast unemployment. It is therefore important to investigate the reasons why individuals choose self-employment, and why they do it despite lower protection, higher risks, and possibly more effort than what is offered in a comparable wage employment position. Existing research identifies better prospects of entrepreneurial earnings as compared to wages as a major attraction towards self-employment. However, beside pecuniary motivations, other factors may be considered when it comes to occupational choice, as, among others, displacement, uncertainty, (the threat of) unemployment, and (dis-)satisfaction. Building on a job quits model, we propose a representation of transition behaviour from wage to self-employment which includes subjective evaluations of pecuniary and nonpecuniary satisfaction on the previous job. Individual microdata are drawn from the Swiss Household Panel (SHP), and cover the time period 1999–2008. Additionally, we focus on the dynamics of job satisfaction in order to highlight the role played by shocks in subjective evaluations, and introduce their interaction with levels to control for threshold effects.self-employment, job satisfaction, job transition, Switzerland

Electoral Competition as a Determinant of Fiscal Decentralization

Fiscal decentralization is high on the agenda in policy fora. This paper empirically investigates the underlying causes of Â…fiscal decentralization, based on the predictions of a simple political economy model. We argue that the likeliness that a central government engages in devolution of powers depends in important ways on the political forces that it faces, the theoryÂ’'s main insight being that the central governmentÂ’'s electoral strength should, all else being equal, decrease that governmentÂ’'s share of spending. Consistent with the model'Â’s predictions, empirical results from a panel of democracies support the relevance of political factors as determinants of fiÂ…scal decentralization. The relationship between central government electoral strength and both expenditure and revenue centralization emerges as negative and non-linear.Fiscal decentralization; Fiscal federalism; Vertical interactions; Partial Decentralization; Elections

Characteristics of Foreign R&D Strategies of Swiss Firms: Implications for Policy

The aim of the paper is, firstly, to identify a number of strategies Swiss firms pursue by performing foreign R&D, expecting that firms, in many instances, are driven by a combination of several motives (mixed strategies). Secondly, we ask whether foreign and domestic R&D are substitutes or complements. Thirdly, we draw some policy conclusions based on results for direct and indirect home-country effects of foreign R&D. By applying cluster analysis, we identified four specific patterns of motives of foreign R&D. In a second step, we investigated whether these clusters effectively may be interpreted as specific types of R&D strategies. To this end, the clusters were characterised in terms of a large number of variables, which, according to the OLI paradigm of FDI, determine foreign R&D. We found that the patterns of the four clusters systematically differ with respect to these theory-related variables. Some clusters represent, in terms of motives, broad-based mixed strategies, whereas others are strongly focused. It turns out that foreign R&D strategies that primarily aim at exploiting capabilities of the domestic headquarters dominate, whereas cost-reducing strategies are of very minor importance. In case of the other two strategies knowledge sourcing is a constituent element, in the first one, knowledge sourcing is at the core, in the second case it is an important element in the frame of a broad-based strategy. The relative importance of the four strategies implies that, on balance, foreign and domestic R&D are complements. Notwithstanding this positive result, it is sensible to take policy actions supporting the economy to capitalise even more on outward FDI in R&D. Policy basically should aim at securing the attractiveness of Switzerland as a location for R&D-intensive headquarters of firms performing foreign R&D, and at enhancing knowledge spillovers from headquarter companies to other domestic firms. The five categories of measures we recommend are part of a framework-oriented policy design rather than of a more interventionist concept.Internationalisation of R&D; Motives of foreign R&D; Foreign R&D strategies; Knowledge spillovers; Home-country effects of outward FDI in R&D

Pension Benefit Insurance and Pension Plan Portfolio Choice

Pension benefit guarantee policies have been introduced in several countries to protect private pension plan members from the loss of income that would occur if a plan was underfunded when the sponsoring firm terminates a plan. Most of these public insurance schemes face financial difficulty and consequently policy reforms are being discussed or implemented. Economic theory suggests that such schemes will face moral hazard and adverse selection problems. In this note we test a specific theoretical prediction: insured plans will invest more heavily in risky assets. Our test exploits differences in insurance arrangements across Canadian jurisdictions. We find that insured plans invest about 5 percent more in equities than do similar plans without benefit guarantees.Pensions, benefit guarantee, moral hazard