How to Subvert Democracy: Montesinos in Peru

Which of the democratic checks and balances - opposition parties, the judiciary, a free press -is the most critical? Peru has the full set of democratic institutions. In the 1990s, the secret-police chief Vladimiro Montesinos systematically undermined them all with bribes. We quantify the checks using the bribe prices. Montesinos paid television-channel owners about 100 times what he paid judges and politicians. One single television channel’s bribe was four times larger than the total of the opposition politicians’ bribes. By revealed preference, the strongest check on the government’s power was the news media.

The returns to speaking a second language

Does speaking a foreign language have an impact on earnings? The authors use a variety of empirical strategies to address this issue for a representative sample of U.S. college graduates. OLS regressions with a complete set of controls to minimize concerns about omitted variable biases, propensity score methods, and panel data techniques all lead to similar conclusions. The hourly earnings of those who speak a foreign language are more than 2 percent higher than the earnings of those who do not. The authors obtain higher and more imprecise point estimates using state high school graduation and college entry and graduation requirements as instrumental variables.

Jeremy Corbyn’s ‘women only carriages’ proposal shows an alarming lack of understanding of the real causes of harassment

Jeremy Corbyn’s consideration of female-only carriages in public transport shows an ignorance of the causes of sexual harassment and what it may take to solve the issue, argues Paula Zoido-Oses

Variations on the adiabatic invariance: the Lorentz pendulum

We analyze a very simple variant of the Lorentz pendulum, in which the length is varied exponentially, instead of uniformly, as it is assumed in the standard case. We establish quantitative criteria for the condition of adiabatic changes in both pendula and put in evidence their substantially different physical behavior with regard to adiabatic invariance.Comment: To appear in American Journal of Physic

Aggregating governance indicators

In recent years the growing interest of academics and policymakers in governance has been reflected in the proliferation of cross-country indices measuring various aspects of governance. The authors explain how a simple variant of an unobserved components model can be used to combine the information from these different sources into aggregate governance indicators. The main advantage of this method us that it allows quantification of the precision of both individual sources of governance data and country-specific aggregate governance indicators. The authors illustrate the methodology by constructing aggregate indicators of bureaucratic quality, rule of law, and graft for a sample of 160 countries. Although these aggregate governance indicators are more informative about the level of governance than any single indicator, the standard errors associated with estimates of governance are still large relative to the units in which governance is measured. In light of these margins of error, it is misleading to offer very precise rankings of countries according to their level of governance: small differences in country rankings are unlikely to be statistically - let alone practically - significant. Nevertheless, these aggregate governance indicators are useful because they allow countries to be sorted into broad groupings according to levels of governance, and they can be used to study the causes and consequences of governance in a much larger sample of countries than previously used (see for example the companion paper by the authors,"Governance matters", Policy Research Working Paper no. 2196).Public Sector Corruption&Anticorruption Measures,Statistical&Mathematical Sciences,Scientific Research&Science Parks,Corruption&Anitcorruption Law,Decentralization,Governance Indicators,Statistical&Mathematical Sciences,Economic Policy, Institutions and Governance,Science Education,Scientific Research&Science Parks

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Universidad de Sevilla. Grado en Bellas Arte

Governance matters

In a cross-section of more than 150 countries, the authors provide new empirical evidence of a strong causal relationship from better governance to better development outcomes. They base their analysis on a new database containing more than 300 governance indicators compiled from a variety of sources. They provide a detailed description of each of these indicators and sources. Using an unobserved components methodology (described in the companion paper by the same authors,"Aggregating Governance Indicators,"Policy Research Working Paper 2195), they then construct six aggregate indicators corresponding to six basic governance concepts: voice and accountability, political instability and violence, government effectiveness, regulatory burden, rule of law, and graft. As measured by these indicators, governance matters for development outcomes.Banks&Banking Reform,Decentralization,Health Economics&Finance,Corruption&Anitcorruption Law,Public Sector Corruption&Anticorruption Measures,Health Economics&Finance,National Governance,Statistical&Mathematical Sciences,Governance Indicators,Economic Policy, Institutions and Governance

Female-only carriages: Corbyn’s proposal shows an alarming lack of understanding of the real causes of harassment

Jeremy Corbyn’s consideration of female-only carriages in public transport shows an ignorance of the causes of sexual harassment and what it may take to solve the issue, argues Paula Zoido-Oses

Corruption, public finances, and the unofficial economy

The authors found that, in post-communist economies, the unofficial economy's share of GDP is determined by the extent of control rights held by bureaucrats and politicians. Exploring in detail the role of taxation and bribery, and using data from an expanded data set of 49 Latin American, OECD, and transition economies, the authors find that the unofficial economy accounts for a larger share of GDP where there is great bureaucratic inefficiency and discretion, and where firms experience a greater tax and regulatory burden, as well as more bribery and corruption. The unofficial economy is also much larger where there is less state revenue and where the rule of law is weak. They also find that countries with a larger unofficial economy tend to grow more slowly. Thus, this framework suggests an additional channel whereby corruption and ineffective regulatory and tax administration can result in lower growth: the unofficial economy. Wealthy OECD economies and some Eastern European economies find themselves the"good equilibrium"of relatively low regulatory and tax burden (not necessarily low statutory tax rates), sizable revenue mobilization, good rule of law and control of corruption, and a small unofficial economy. Several countries in Latin America and the former Soviet Union exhibit characteristics consistent with a"bad equilibrium": the discretionary application of heavy regulatory and tax burdens, the weakrule of law, heavy bribery, and an active unofficial economy. In this large country sample (unlike in the earlier framework for transition economies only), the authors find that it is the ineffective and discretionary application of regulatory and tax regimes in many countries -- not higher tax rates by itself -- that increase the size of the unofficial economy. The tax burden reported by firms appears to be more a function of regulatory and bureaucratic inefficiency and discretion rather than of tax rates alone.Environmental Economics&Policies,Knowledge Economy,Economic Theory&Research,Public Sector Economics&Finance,Banks&Banking Reform,Environmental Economics&Policies,Economic Theory&Research,Public Sector Economics&Finance,National Governance,Governance Indicators