Who pays for job training?

This paper addresses a puzzle in the UK labour market. Why is not there enough investment in job training when there is a high skill premium? We model this as a coordination game between firms and workers. Using a social planning model as a baseline, the paper demonstrates that while it is socially beneficial to invest in job training, the private sector may fail to internalize these benefits in a wide range of economies. The chance of this coordination failure is greater in economies with a higher inequality in the skill distribution and a higher rate of time preference.Creation-Date: 2008-11

Uninsured Risks, Loan Contracts and the Declining Equity Premium

Using a two period model with moral hazard and uninsured risk, we argue that the decline in equity premium from its historically high level is due to a gradual elimination of barriers to universal banking. The loan contracts set up by financial intermediaries became more complete in nature with the advent of universal banking in the 90s following the Gramm-Leach-Billy Act. Hence, it is the nature of the loan contracts, not just the borrowing constraint and uninsured risks that is more fundamental in explaining the size of the equity premium.

Liquid State Machine with Dendritically Enhanced Readout for Low-power, Neuromorphic VLSI Implementations

In this paper, we describe a new neuro-inspired, hardware-friendly readout stage for the liquid state machine (LSM), a popular model for reservoir computing. Compared to the parallel perceptron architecture trained by the p-delta algorithm, which is the state of the art in terms of performance of readout stages, our readout architecture and learning algorithm can attain better performance with significantly less synaptic resources making it attractive for VLSI implementation. Inspired by the nonlinear properties of dendrites in biological neurons, our readout stage incorporates neurons having multiple dendrites with a lumped nonlinearity. The number of synaptic connections on each branch is significantly lower than the total number of connections from the liquid neurons and the learning algorithm tries to find the best 'combination' of input connections on each branch to reduce the error. Hence, the learning involves network rewiring (NRW) of the readout network similar to structural plasticity observed in its biological counterparts. We show that compared to a single perceptron using analog weights, this architecture for the readout can attain, even by using the same number of binary valued synapses, up to 3.3 times less error for a two-class spike train classification problem and 2.4 times less error for an input rate approximation task. Even with 60 times larger synapses, a group of 60 parallel perceptrons cannot attain the performance of the proposed dendritically enhanced readout. An additional advantage of this method for hardware implementations is that the 'choice' of connectivity can be easily implemented exploiting address event representation (AER) protocols commonly used in current neuromorphic systems where the connection matrix is stored in memory. Also, due to the use of binary synapses, our proposed method is more robust against statistical variations.Comment: 14 pages, 19 figures, Journa

Relationship Banking, State Co-Ordination and Long-Term Debt: Reinterpreting the Big Push

We develop a lending game in which relationship-specific investments by firms benefit banks and vice versa. We show that even if all firms and banks prefer high-tech relationship loans under the first-best, asymmetric information and investment non-contractibility make them choose low-tech transaction loans. However, governments with intermediate risk ratings can use Groves subsidies for a concerted switch to long-term relationship loans. To avoid premature liquidation, they finance the scheme with long-term foreign debt. Thus, we try to explain the positive correlation between subsidies and long-term domestic and foreign debt, which was a salient feature of the East Asian development experience.Relationship Banking; Groves Subsidies; Intermediate Rating; Long-term Debt