The effectiveness of urban policies facing spatial polarization

This paper intends to find whether cities can significantly exert an influence on their future and partly break away from the constraints with which they have to cope. The ability of key-actors, in charge of urban development, to solve the difficulties and the various urban uncertainties which are thwarting urban growth will consequently be analysed. First the means available for strategic urban plans will be pointed out as specific tools in order to reduce urban uncertainties, such as the growth rate of taxes for firms and households, or the thorny task of attracting and anchoring productive activities for instance. Therefore, contractual urban policies, the non-fulfilment and the indecisiveness of which entail the recourse to conventional tools, will provide urban actors with a special kind of spatial insurance. This latter will be stressed as the main result of such metropolitan policies. Thus the two major shapes that this insurance may take will be detailed in the second part of this paper : the first one (assurantial) will convey the advantage to dispose of a large number of heterogeneous people so that the various potential risks may be easily tackled. The second one (organizational) will underline the "internal" solutions to deal with such risks that local cooperations and synergies (within a city) may embody. Dividing risks or cooperating to face them : this manichean dilemma will be challenged, considering the results of an econometric analysis hinting that both exogeneous and endogeneous patterns may exert an influence in uncertainties lessening, and accordingly in urban growth enhancing. This will finally lead us to highlight the specific context in which urban policies are embedded, defining it merely with two facets : the diminution of the strategic importance of transportation costs compared with sunk costs, and the existence of economies of scale. Therefore, the misleading relevance of public policies making people and information movements easier will be raised. Urban policies, however exerting sometimes an unvoluntary enhancing of spatial polarization, will nevertheless emerge as useful (though partial) tools, which will underline above all the leading influence of the acuteness of urban elites.

The Impact of the Unemployment Benefit System on International Spillover Effects

Based on a two-country model it is scrutinized how the structure of the unemployment benefit system affects the consequences of idiosyncratic labor market shocks on real wages and unemployment in other countries. International spillover effects are caused by changes in world real income. The paper provides new insights on how changes in world real income affect labor demand and the wage bargaining process. The analysis of the interaction of shock spillovers and benefit system focuses on two-tier as well as pure earnings-related and flat-rate benefit systems. Im Rahmen eines Zweiländermodells wird untersucht, wie die Auswirkungen idiosynkratischer Arbeitsmarkschocks auf Reallöhne und Beschäftigung in anderen Ländern vom System der Arbeitslosenunterstützung beeinflusst werden. Es werden Systeme mit ausschließlich lohnabhängiger oder pauschaler Arbeitslosenunterstützung sowie zweistufige Systeme betrachtet. Der Übertragungsmechanismus länderspezifischer Arbeitsmarktschocks beruht auf der mit den Schocks einhergehenden Veränderung des realen Welteinkommens. Die vorliegende Arbeit macht deutlich, in welcher Weise Arbeitsnachfrage und Lohnsetzungsprozess von Änderungen des realen Welteinkommens berührt werden

Optimal Contracts for Lenient Supervisors

We consider a situation where an agent's effort is monitored by a supervisor who cares for the agent's well being. This is modeled by incorporating the agent's utility into the utility function of the supervisor. The first best solution can be implemented even if the supervisor's preferences are unknown. The corresponding optimal contract is similar to what we observe in practice: The supervisor's wage is constant and independent of his report. It induces one type of supervisor to report the agent's performance truthfully, while all others report favorably independent of performance. This implies that overstated performance (leniency bias) may be the outcome of optimal contracts under informational asymmetries

The effects of size on local banks´ funding costs

Motivated by the recent discussion of the declining importance of deposits as banks´ major source of funding we investigate which factors determine funding costs at local banks. Using a panel data set of more than 800 German local savings and cooperative banks for the period from 1998 to 2004 we show that funding costs are not only driven by the relative share of comparatively cheap deposits of bank´s liabilities but among other factors especially by the size of the bank. In our empirical analysis we find strong and robust evidence that, ceteris paribus, smaller banks exhibit lower funding costs than larger banks suggesting that small banks are able to attract deposits more cheaply than their larger counterparts. We argue that this is the case because smaller banks interact more personally with customers, operate in customers´ geographic proximity and have longer and stronger relationships than larger banks and, hence, are able to charge higher prices for their services. Our finding of a strong influence of bank size on funding costs is also in an in- ternational context of great interest as mergers among small local banks - the key driver of bank growth - are a recent phenomenon not only in European banking that is expected to continue in the future. At the same time, net interest income remains by far the most important source of revenue for most local banks, accounting for approximately 70% of total operating revenues in the case of German local banks. The influence of size on funding costs is of strong economic relevance: our results suggest that an increase in size by 50%, for example, from EUR 500 million in total assets to EUR 750 million (exemplary for M&A transactions among local banks) increases funding costs, ceteris paribus, by approximately 18 basis points which relates to approx. 7% of banks´ average net interest margin

Legume Pick ‘n’ Mix

In Spring 2009, ORC set up a legume trial on an organic farm, Barrington Park in Gloucestershire, as part of a large research project called Legume LINK. One of its aims is to compare the performance of several legume and grass species for use in fertility building leys. ORC researchers Thomas Döring and Oliver Crowley report that the trial shows the advantage of mixing species grows over time