Informality and Development

We establish five facts about the informal economy in developing countries. First, it is huge, reaching about half of the total in the poorest countries. Second, it has extremely low productivity compared to the formal economy: informal firms are typically small, inefficient, and run by poorly educated entrepreneurs. Third, although avoidance of taxes and regulations is an important reason for informality, the productivity of informal firms is too low for them to thrive in the formal sector. Lowering registration costs neither brings many informal firms into the formal sector, nor unleashes economic growth. Fourth, the informal economy is largely disconnected from the formal economy. Informal firms rarely transition to formality, and continue their existence, often for years or even decades, without much growth or improvement. Fifth, as countries grow and develop, the informal economy eventually shrinks, and the formal economy comes to dominate economic life. These five facts are most consistent with dual models of informality and economic development.Economic

Human capital and regional development

We investigate the determinants of regional development using a newly constructed database of 1569 sub-national regions from 110 countries covering 74 percent of the world’s surface and 97 percent of its GDP. We combine the cross-regional analysis of geographic, institutional, cultural, and human capital determinants of regional development with an examination of productivity in several thousand establishments located in these regions. To organize the discussion, we present a new model of regional development that introduces into a standard migration framework elements of both the Lucas (1978) model of the allocation of talent between entrepreneurship and work, and the Lucas (1988) model of human capital externalities. The evidence points to the paramount importance of human capital in accounting for regional differences in development, but also suggests from model estimation and calibration that entrepreneurial inputs and possibly human capital externalities help understand the data.Human Capital, Development, Regional Economics.

The Law and Economics of Self-Dealing

We present a new measure of legal protection of minority shareholders against expropriation by corporate insiders: the anti-self-dealing index. Assembled with the help of Lex Mundi law firms, the index is calculated for 72 countries based on legal rules prevailing in 2003, and focuses on private enforcement mechanisms, such as disclosure, approval, and litigation, governing a specific self-dealing transaction. This theoretically-grounded index predicts a variety of stock market outcomes, and generally works better than the commonly used index of anti-director rights.

Hadronic light-by-light scattering contribution to the muon magnetic anomaly: constituent quark loops and QCD effects

The hadronic light-by-light scattering contribution to the muon anomalous magnetic moment can be estimated by computing constituent quark loops. Such an estimate is very sensitive to the numerical values of the constituent quark masses. These can be fixed by computing the hadronic vacuum polarization contribution to the muon magnetic anomaly within the same model. In this Letter, we demonstrate the stability of this framework against first-order perturbative QCD corrections.Comment: 4 pages, 1 figur

Lepton anomalous magnetic moments - a theory update

Standard Model contributions to the electron, muon, and tau lepton anomalous magnetic moments, a_l=(g_l-2)/2, are reviewed and updated. The fine structure constant is obtained from the electron g_e-2 and used to refine the QED contribution to the muon g_mu-2. Recent advances in electroweak and hadronic effects on g_mu-2 are summarized. Examples of ``New Physics'' probed by the a_mu Brookhaven experiment E821 are outlined. The prediction for a_tau is also given.Comment: 8 pages; invited talk at the 5th International Workshop on Tau Lepton Physics (Tau'98), September 1998, Santander, Spai

Good News for Value Stocks: Further Evidence on Market Efficiency

This paper examines the hypothesis that the superior return to so-called value stocks is the result of expectational errors made by investors. We study stock price reactions around earnings announcements for value and glamour stock over a 5 year period after portfolio formation. The announcement returns suggest that a significant portion of the return difference between value and glamour stocks is attributable to earnings surprises that are systematically more positive for value stocks. The evidence is inconsistent with a risk-based explanation for the return differential.Economic

Present Status of the Muon Anomalous Magnetic Moment

These pages, based on my talk at the Montpellier 14th International Conference in QCD, provide us with a short update of the Standard Model contributions to the Muon Anomalous Magnetic Moment

Hadronic Contributions to the Muon Anomaly in the Constituent Chiral Quark Model

The hadronic contributions to the anomalous magnetic moment of the muon which are relevant for the confrontation between theory and experiment at the present level of accuracy, are evaluated within the same framework: the constituent chiral quark model. This includes the contributions from the dominant hadronic vacuum polarization as well as from the next--to--leading order hadronic vacuum polarization, the contributions from the hadronic light-by-light scattering, and the contributions from the electroweak hadronic $Z\gamma\gamma$ vertex. They are all evaluated as a function of only one free parameter: the constituent quark mass. We also comment on the comparison between our results and other phenomenological evaluations.Comment: Several misprints corrected and a clarifying sentence added. Three figures superposed and two references added. Version to appear in JHE

Constraining 2HDM by Present and Future Muon(g-2) Data

Constraints on the general 2HDM ("Model II") are obtained from the existing $(g-2)_{\mu}$ data including limits on Higgs bosons masses from LEP I data. We consider separately two cases: with a light scalar $h$ and with a light pseudoscalar $A$, assuming ${M_{h}+M_{A}} \ge {M_{Z}}$. The charged Higgs contribution is also included. It is found that already the present $(g-2)_{\mu}$ data improve limits obtained recently by ALEPH collaboration on \tb for the mass of the pseudoscalar below \mr 2 GeV. The improvement in the accuracy by factor 20 in the forthcoming E821 experiment may lead to more stringent, than provided by ALEPH group, limits up to $M_A\sim$ 30 GeV if the mass difference between $h$ and $A$ is $\sim M_Z$. Similar results should hold for a light scalar scenario as well.Comment: 19 pages, including 5 figure