Why Do Countries Subsidize Investment and Not Employment?

The governments of nearly all industrialised countries use subsidies to support the economic development of specific sectors or regions with high rates of unemployment. Conventional economic wisdom would suggest that the most efficient way to support these regions or sectors is to pay employment subsidies. We present evidence showing that capital subsidies are empirically much more important than employment subsidies. We then discuss possible explanations for the dominance of investment subsidies and develop a simple model with unemployment to explain this phenomenon. In our model, unemployment arises due to bargaining between unions and heterogenous firms that differ with respect to their productivity. Union bargaining power raises wage costs and leads to a socially inefficient collapse of low productivity firms and a corresponding job loss. Union-firm bargaining also gives rise to underinvestment. In this framework, it turns out that an investment subsidy dominates an employment subsidy in terms of welfare. The reason is that investment subsidies are a more efficient instrument to alleviate the underinvestment problem and to raise the number of operating firms.

Interregional Redistribution and Budget Institutions under Asymmetric Information

Empirical evidence from the U.S. and the European Union suggests that regions which contribute to interregional redistribution face weaker borrowing constraints than regions which benefit from interregional redistribution. This paper presents an argument in favor of such differentiated budgetary institutions. It develops a two-period model of a federation consisting of two types of regions. The federal government redistributes from one type of regions (contributors) to the other type (recipients). It is shown that a fiscal constitution with lax budget rules for contributors and strict budget rules for recipients solves the self-selection problem the federal government faces in the presence of asymmetric information regarding exogenous characteristics of the regions.asymmetric information, interregional redistribution, borrowing rules

Numerical Schubert calculus

We develop numerical homotopy algorithms for solving systems of polynomial equations arising from the classical Schubert calculus. These homotopies are optimal in that generically no paths diverge. For problems defined by hypersurface Schubert conditions we give two algorithms based on extrinsic deformations of the Grassmannian: one is derived from a Gr\"obner basis for the Pl\"ucker ideal of the Grassmannian and the other from a SAGBI basis for its projective coordinate ring. The more general case of special Schubert conditions is solved by delicate intrinsic deformations, called Pieri homotopies, which first arose in the study of enumerative geometry over the real numbers. Computational results are presented and applications to control theory are discussed.Comment: 24 pages, LaTeX 2e with 2 figures, used epsf.st

Tax Policy and Entrepreneurship in the Presence of Asymmetric Information in Capital Markets

This paper considers the implications of asymmetric information in capital markets for entrepreneurial entry and tax policy. In many countries, governments subsidize the creation of new firms. One possible justification for these subsidies is that capital markets for the financing of new firms do not function properly. We analyse this issue by assuming that entrepreneurs need outside financing for their projects and know more about the quality of their projects than outside investors. Entrepreneurs have the choice between carrying out their entrepreneurial projects or working as an employee. It turns out that asymmetric information in capital markets leads to too much rather than too little entrepreneurial entry. Therefore, the ptimal tax policy should discourage rather than subsidize entrepreneurial entry. We also nalyse the welfare effects of project screening and show that there is too much screening. Our policy conclusion is that subsidies for the foundation of firms must be based on reasons other than informational asymmetries in capital markets.

A Tax on Tax Revenue. The Incentive Effects of Equalizing Transfers: Evidence from Germany

Several recent studies suggest that equalizing transfers in a federal system may distort the tax policy decisions of states. We study this issue for the German federal fiscal system. In a simple theoretical model, we first identify a substitution and an income effect of equalizing transfers. Our main hypothesis is that both effects should tend to reduce tax revenue of German states. We perform various empirical tests which confirm this hypothesis.

Capital Mobility and Tax Competition: A Survey

This paper surveys the literature on the implications of international capital mobility for national tax policies. Our main issue for consideration in this survey is whether taxation of income, specifically capital income will survive, how border crossing investment is taxed relative to domestic investment and whether welfare gains can be achieved through international tax coordination. We develop a a “working horse model” of multinational investment which allows to derive many of the key results from the literature on international taxation in a unified framework. Moreover, we put special emphasis on the problem of tax competition and financial arbitrage.tax competition, capital mobility, tax policy

Negative social media and its influence on athlete\u27s performance

This study aimed to investigate the potential impact of negative social media content on athletes\u27 cortisol levels and subsequent performance. The study focused on the change in cortisol levels and differences in free throw performance, based on previous research findings. We hypothesized that negative social media postings would increase the stress experienced by student-athletes, resulting in elevated cortisol levels and decreased performance. Additionally, participants (n = 8) completed a questionnaire to examine the interaction between preexisting fear and the biological stress response. Contrary to expectations, there was no significant change in stress response, and negative postings did not have a significant negative influence on performance. Fear of negative evaluation did not interact with cortisol levels or correlate with performance outcomes. The results indicate potential complexities in the relationship between social evaluation, cortisol response, and athletic performance. In conclusion, this study highlights the need for further investigation into the influence of negative social media on athletic performance. Given the significant impact of social media in today\u27s society, it is crucial to assess the potential adverse effects and develop strategies to protect athletes from these potential threats

E-procurement Structures in Purchasing Consortia: Towards a Conceptual Framework

In the literature there has been little empirical research investigation into purchasing consortium issues focusing on a detailed analysis of information and communication technology (ICT) based procurement strategies. While some anecdotal accounts of such advances in supply chain management can be found, there is a need to relate the term electronic purchasing consortia (EPC) to academic literature, thus empowering clearer theoretical analysis. EPC enable purchasing organisations to varying degrees, to electronically conduct tasks that are necessary for the management of demand aggregation of two or more legal entities, provide efficient ICT-based communication infrastructures and rely more on electronic communication than face-to-face contact. An overall statement was developed for the study of EPC: ‘Effective participation in electronic purchasing consortia can have the potential to enhance competitive advantage. EPC implementation is dependent upon a clear and detailed understanding of the major process enablers and drivers. This understanding requires the development of a taxonomy and a conceptual framework to EPC. One practical use of this taxonomy is the assessment of feasibility in given industry sectors’ This overall statement is assessed by the exploration of academic literature, five multiple case studies and two surveys. 128 purchasing organisations as will as 43 e-Marketplaces/procurement service providers (PSPs) in the automotive and electronics industry sectors participated in the surveys. By adopting methodological pluralism and triangulation techniques, key factors and structures that affect the adoption and diffusion of EPC, based upon the technology-organisation –environment framework, and the performance impact of adoption are investigated. The findings suggest that only 7% of purchasing organisations take advantage of EPC, but 44% of e-Marketplaces /PSPs offer them to date. Organisation size, purchasing maturity and technological competence are strongly associated with adoption of EPC, while the level of industry fragmentation, pressures from the business context, purchasing spend, intensity of multi sourcing strategies and product pooling potential are not. EPC can enhance competitive advantage and have generated on average net reductions in purchasing costs of over 5% and a return on investment of over 70%. However, EPC do not necessarily lead to a higher level of purchasing effectiveness and efficiency, a lower level of maverick purchasing or a reduction in the number of suppliers. More conflict with EPC can arise in the automotive industry due to it OEM concentration, cultural and structural impediments (e.g. overcapacity, vertical integration) and technical factors (e.g. high level of modularised assembly). Sophisticated employment of EPC is still very much at a developmental stage. The empirically derived original model for EPC represents a valuable starting point of EPC research within which to comprehend its current state and the directions for future studies

The need for wider supply chain management adoption:empirical results from Ireland

Purpose - This paper aims to provide empirical results which suggest that there is a need for more widespread adoption of supply chain management among Irish firms. Design/methodology/approach - The Republic of Ireland is a small, open, trade-dependent economy and is one of the fastest growing economies in the developed world. However, due to rising costs, there is an increasing trend in Ireland to outsource lower function manufacturing processes to lower-cost locations but to retain high-skill functions (such as R&D). This trend, together with other factors such as its peripheral location, suggests that supply chain management is critical from an Irish perspective. In order to gain unique insights of current levels of awareness/adoption of SCM and the potential impact SCM could have on competitiveness, a survey was conducted among 776 Irish firms. Findings - Overall, the findings suggest that many firms in Ireland pay lip-service to the importance of SCM elements and objectives but the majority of firms, about two thirds, have only a passing understanding of what constitutes SCM. Only 25 per cent adopt SCM programmes and only 9 per cent of Irish companies have a specialised SCM or logistics manager. The gaps in their understanding of SCM are matched by the gaps in their awareness of key costs (e.g. 59 per cent of companies do not know their total supply chain costs). While there are supply chain management adopters in Ireland that are already well up the s-curve of innovation transfer, it is the larger group of less aware companies that must become better at how they manage their supply chains. Originality/value - The paper offers a useful insight into supply chain management and its role in Irish industry