Below is Lei Chen’s opinion piece on manufacturing in the U.S.
PhD graduate Lei Chen published an article in the Hartford Courant outlining Connecticut’s benefits to the manufacturing industry.
Recent graduate James Boudreau, advised by Vicki Knoblauch, will publish the paper “Stratification and Growth in Agent-Based Matching Markets” in the Journal of Economic Behavior and Organization. The relationship between economic mobility and growth has long been a focus of economists’ attention, and James’ paper contributes to that literature by emphasizing the dynamic impacts of two-sided matching.
The model economy in the paper features heterogeneous agents that compete in an intergenerational match game for employment. Agents known as workers make productivity-enhancing investments, using their endowed wealth to add to pre-existing ability levels as they compete to match with other agents known as firms. A novel feature of the model is its use of the market’s matching process as an evolutionary fitness selection mechanism. Workers that are unable to find a match drop out of the population and thus do not contribute to current or future productive capacity. Those that do match are able to pass on their attributes, but in a manner that is not fully deterministic. Because of the stochastic element to inheritance, results are arrived at by way of agent-based simulations. Even with perfect information and substantial variety in both offspring and entrants, two-sided matching inevitably causes the population to evolve into stratified groups. Corrective measures are possible to improve mobility, but by altering the path of market evolution, a policy may have unintended impacts on growth and inequality.
In a rare coincidence, all three lead articles on the Indian Economic Review, a top journal in India, have a UConn connection. The first is authored by Rangan Gupta (IDEAS) a 2005 PhD alumnus very recently promoted to full professor at the University of Pretoria: Financial Liberalization and a Possible Growth-Inflation Trade-Off. The second is authored by Basab Dasgupta, a 2005 PhD alumnus: Endogenous Growth in the Presence of Informal Credit Markets in India: A Comparative Analysis Between Credit Rationing and Self-Revelation Regimes. And the third is authored by Prof. Ray, currently faculty at UConn: Are Indian Firms too Small? A Nonparametric Analysis of Cost Efficiency and the Optimal Organization of the Indian Manufacturing Industry.
Both Gupta and Dasgupta were advised by Prof. Zimmermann (IDEAS). The first article is also available as a University of Pretoria working paper, and the latter two articles as UConn working papers: 1, 2, 3.
A new edition of a popular health economics textbook, “Health Economics: Theory, Insights, and Industry Studies,” written by two of the Department’s former Ph.D. Students, Rexford Santerre (PhD, 1983) and Stephen Neun (PhD, 1988), will be published this June by South-Western/Cengage Learning.
Formerly a Professor of Economics at Bentley College, Rex Santerre (IDEAS) is now a Professor of Finance and Healthcare Management in the UConn School of Business. He has published extensively in the fields of health economics, local public finance, and industrial organization.
Steve Neun is currently the Academic Dean at Anna Maria College in Paxton, Massachusetts. Prior to that he served as Professor Economics, Assistant VP for Academic Affairs, and Dean of the School of Graduate and Extended Studies at Utica College in upstate New York.
Elsevier recently announced that an article by Rangan Gupta (IDEAS) in the Journal of Economics and Business was among the most downloaded on its site. Tax evasion and financial repression was one of the chapters of his UConn PhD dissertation under the supervision of Prof. Zimmermann (IDEAS).
Using an overlapping generation model, Gupta studies how tax evasion interacts with financial repression, as expressed by a high reserve deposit ratio requirement in banks. Applied to southern European countries, he finds that a higher degree of tax evasion, resulting from lower penalty rates and higher corruption, produces in a social optimum higher degrees of financial repression. However, higher degrees of tax evasion, due to lower tax rates, tend to reduce the optimal degree of financial repression. Thus, there are asymmetries in the relationship between reserve requirements and tax evasion. More importantly, tax evasion and financial repression are positively correlated if and only if the change in the former results from an alteration in the penalty rate or the level of corruption.
From the UConn Advance:
For workers losing jobs due to mass layoffs in the current economic downturn, the bad news is that more people than ever are looking for work right now, making it the toughest job market in at least two decades.
But for those lucky enough to find another job, there is more bad news: they will likely suffer lower wages for many years compared to similar workers who are not laid off.
A new study (pdf) from UConn and the Connecticut Department of Labor shows how the business cycle plays a determining role in the extent of wage losses for workers let go in mass layoffs and plant closings.
The study finds that for workers losing jobs during a recession, the damage to their earnings can linger for years. By contrast, for workers who lose jobs as part of a mass layoff or plant closure in more favorable times, long-term earnings losses are negligible.
Kenneth Couch (IDEAS), an associate professor of economics in the College of Liberal Arts and Sciences, teamed up with researchers at the Connecticut Department of Labor, economist Nicholas Jolly (MA, PhD) and analyst Dana Placzek, for the study.
Read more in the UConn Advance
Recent graduate Nicholas Shunda (IDEAS), advised by Vicki Knoblauch (IDEAS), will publish the paper “Auctions with a Buy Price: The Case of Reference-Dependent Preferences” in the journal Games and Economic Behavior. The paper contributes to a theoretical literature on rationales for the hybrid selling mechanism known as an auction with a buy price. In an auction with a buy price, a seller provides bidders with an option to forgo the auction and transact at a fixed price. The most well-known example of an auction with a buy price is eBay’s “Buy-It-Now” feature. The paper demonstrates that sellers can enhance revenues by adding a buy price to their auctions if bidders evaluate auction and purchase outcomes on the bases of surplus and comparison to a reference point depending upon the auction’s reserve and buy price. In contrast to alternative explanations for auctions with buy prices, such as risk aversion and impatience, which predict bidding behavior that is independent of the auction’s parameters, bidders with reference-dependent preferences submit bids that vary directly with the existence and size of the auction’s reserve and buy prices, behavior extensively documented in laboratory and field experimental auctions.
Current Ph.D. student Marina-Selini Katsaiti (IDEAS) and recent graduates Philip Shaw (IDEAS) and Marius Jurgilas (IDEAS), all advised by Christian Zimmermann (IDEAS), will publish a paper entitled “Corruption and Growth Under Weak Identification” in the journal Economic Inquiry. This paper reviews the recent literature in econometrics that focuses on identification and statistical inference when a researcher has weakly correlated instruments variables. In light of this recent theoretical work in econometrics, it analyses a highly influential article in economics and finds that the original results of this article are misleading. It then updates the original analysis and shows that there is no relationship between corruption and economic growth or investment, which is contrary to the results of the original article. The paper also suggests that the problem of weak instruments in the corruption literature may not be isolated to a single article but instead the entire empirical literature that tries to find a causal link between corruption and economic growth or investment. The paper contributes also to the literature by demonstrating how researchers can “deal” with the problem of weak identification.