Financial Intermediation, Variability and the Development Process

In this paper we have built a model of financial intermediation that explains the GDP variability pattern of an economy during the development process. In our model, per capita is more volatile in the middle-income economies than in both low and high-income economies. We show that, if the model economy is in the early or in the mature stages of development there is a unique equilibrium. However, in the middle stages of development multiple equilibria arise. Moreover, we find that in economies with imperfect credit markets, per capita output volatility tends to be higher than in economies with perfect or non-existent credit markets.Externalities, market imperfections, growth, multiple equilibria, sunspot equilibria

Collective Bargaining under Complete Information

In this paper, we build and structurally estimate a complete information bargaining model of collective negotiation for Spain. For large firms, the assumption of complete information seems a sensible one, and it matches the collective bargaining environment better than the one provided by private information models. The specification of the model with players having different discount factors allows us to measure their relative bargaining power, a recurrent question in the theory of bargaining. We find that both entrepreneurs and workers have high discount factors, and no evidence that entrepreneurs have bigger bargaining power as usually assumed.Delays, sequential bargaining, structural estimation

The determinants of changes in the organization of production: Evidence from Spanish plant-level data

In this paper we empirically examine the determinants of changes in the organization of production using detailed information on a data set from a new plant-level survey of 1003 plants covering the full range of manufacturing industries in Spain. In particular, and among many other things, survey respondents were asked how service outsourcing practices had changed in the last three years. The answer to this question is indicative of the changes in the importance of backward integration for each of the plants studied. Using other information provided in the survey, we relate the reported changes in outsourcing to changes in other relevant dimensions as possible determinants of the boundaries of the firm. These dimensions are: plant size, downstream market power, cost of inputs, price and quality of the final good and technological progress. Our findings show that outsourcing increases are strongly positively correlated with increases in market share and in market competition. We also find that outsourcing increases when plants face simultaneous increases in product quality and product prices and that it decreases when plants face simultaneous increases in market share and market competition. Finally, we find that multi-plant and one-plant firms adjust their outsourcing practices differently to outside changes. Since neither TCE nor PRT theories of vertical integration fully explain the patterns found in our data, we close this paper by following Adam Smith's claim that the extent of the market seems to be the only factor consistently limiting the degree of specialization in our setting.outsourcing; vertical integration; competition; manufacturing plants;

Competitive pressure and labor productivity: world iron ore markets in the 1980s

Does the extent of competitive pressure industries face influence their productivity? We study a natural experiment conducted in the iron ore industry as a result of the collapse in world steel production in the early 1980s. For iron ore producers, whose only market is the steel industry, this collapse was an exogenous shock. The drop in steel production differed dramatically by region: it fell by about a third in the Atlantic Basin but only very little in the Pacific Basin. Given that the cost of transporting iron ore is very high relative to its mine value, Atlantic iron ore producers faced a much greater increase in competitive pressure than did Pacific iron ore producers. In response to the crisis, most Atlantic iron ore producers doubled their labor productivity; Pacific iron ore producers experienced few productivity gains. ; This article originally appeared in the American Economic Review. (c) American Economic Association.Labor productivity ; Steel industry and trade

Is Seniority-Based Pay Used as a Motivation Device? Evidence from Plant Level Data

In this paper we use data from industrial plants to investigate if seniority-based pay is used asa motivational device for production workers. Alternatively, seniority-based pay could simplybe a wage setting rule not necessarily related to the provision of incentives. Unlike previouspapers, we use a direct measure of seniority-based pay as well as measures of monitoringdevices and piece-rates. We find that firms that offer seniority-based pay are less likely tooffer explicit incentives. They are also less likely to invest in monitoring devices. We alsofind that firms that offer seniority-based pay are more likely to engage in other humanresource management policies that result in long employment relationships. Overall theseresults suggest that seniority-based pay is indeed used as a motivation device.Human resource management practices, incentives, monitoring

Collective bargaining under complete information

In this paper, we build and structurally estimate a complete information bargaining model of collective negotiation for Spain. For large firms, the assumption of complete information seems a sensible one, and it matches the collective bargaining environment better than the one provided by private information models. The specification of the model with players having different discount factors allows us to measure their relative bargaining power, a recurrent question in the theory of bargaining. We find that both entrepreneurs and workers have high discount factors, and no evidence that entrepreneurs have bigger bargaining power as usually assumed

Is seniority-based pay used as a motivation device? Evidence from plant level data

In this paper we use data from industrial plants to investigate if seniority-based pay is used as a motivational device for production workers. Alternatively, seniority-based pay could simply be a wage setting rule not necessarily related to the provision of incentives. Unlike previous papers, we use a direct measure of seniority-based pay as well as measures of monitoring devices and piece-rates. We find that firms that offer seniority-based pay are less likely to offer explicit incentives. They are also less likely to invest in monitoring devices. We also find that firms that offer seniority-based pay are more likely to engage in other human resource management policies that result in long employment relationships. Overall these results suggest that seniority-based pay is indeed used as a motivation device