tinbergen institute
magazine 10
Fall 2004
At the helm of Tinbergen Institute An interview with Maarten Janssen On commuting Finance and inequality: Theory and evidence New column: Letters from Alumni
Tinbergen Magazine is published by
Tinbergen
Institute,
the
Institute for economic research of Erasmus Universiteit Rotterdam, Universteit van Amsterdam and Vrije Universiteit Amsterdam.
www.tinbergen.nl tinbergen institute
magazine 10
In this issue
Fall 2004
At the helm of Tinbergen Institute An interview with Maarten Janssen On commuting Finance and inequality: Theory and evidence
Up close
New column: colu,n: : Letters from Alumni
Tinbergen Magazine is published by
Tinbergen
Institute,
Up close
the
Institute for economic research of Erasmus Universiteit Rotterdam, Universteit van Amsterdam and Vrije Universiteit Amsterdam.
At the helm of Tinbergen Institute Highlighting ongoing research at Tinbergen Institute for policymakers and scientists.
An interview with Maarten Janssen Beata Bierut
3
In depth
In depth On commuting
Jos van Ommeren
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Finance and inequality Theory and evidence Enrico Perotti
10
Letters from Alumni
Letters from Alumni Harm Zebregs, IMF
In short
In short
Papers in journals
15
Discussion papers
15
Theses
17
References
References
2
14
18
Up close
By Beata Bierut
At the helm of Tinbergen Institute An interview with Maarten Janssen
Tinbergen Institute’s new General Director, Professor Maarten Janssen, has an excellent scientific record, is a highly praised pedagogue and has already demonstrated his management skills as Director of the Economics Group at Erasmus Universiteit Rotterdam. The electoral committee strongly believed that his tact and ability will be crucial in guiding the Institute through the challenges on the horizon: expanding the educational programme and obtaining the extension of the accreditation granted by the Royal Netherlands Academy of Sciences in 2000.
I would like to start by congratulating you on your appointment as the General Director of the Tinbergen Institute. I hope you will enjoy your new responsibilities, which brings me immediately to my first question: What exactly are the responsibilities of the General Director of Tinbergen Institute? How do they differ from the tasks of the Director of Graduate Studies, Jaap Abbring?
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Thank you very much. Well... The General Director is ultimately responsible for everything going on at the Institute. Having said that, I share with Jaap the responsibility for the MPhil and PhD programmes, the philosophy behind them, and their financing. Jaap deals with the daily affairs, admissions and supervision. I attend to the research institute and fellow appointments, relations
tinbergen magazine 10, fall 2004
with the three founding faculties and other external relations. What is your own vision of your new responsibilities? There are two things that I would particularly like to accomplish: to satisfy the wish of the Board of TI on the point of extending our activities beyond the fields we presently cover, and to increase the international visibility of the Institute, which I think is related to the fellows’ attitude towards TI. You will understand how much of a challenge the first issue is, once you have looked back into the history of Tinbergen Institute. Actually, business economics was part of the Institute in the early days. Then, in the ’90s, TI restricted its scope to a core programme in economics, econometrics and finance. There are several good reasons for TI to broaden its scope now, as there are more and more researchers in finance, marketing and organisation that use the same tools as in microeconomics and econometrics. Nevertheless, we must be rigorous in safeguarding excellence in teaching and research, and in exploiting synergies with the existing programme. Personally, I would also like to see a more extensive introduction of other fields of economic science that are currently only partially covered by the Tinbergen Institute (such as law and economics or health economics). I think it would benefit the Institute to offer courses on these topics and to have top researchers in these fields co-operate with us. As I mentioned earlier, there is also a second issue... What I find very important is that fellows feel as strong an association with the Tinbergen Institute as with their home faculties. TI would make an excellent focal point for economics in Europe. Look at the Institute’s research rankings, for example: the Institute itself is not ranked at the moment, while the three departments are– separately. They come out as 10th, 15th and 30th in Europe. If the publications of the departments were added up, Tinbergen Institute would rank first in Europe and 15th worldwide! By lending an ear to fellows’ wishes, I hope that I can make them feel at home here and appreciate TI as their Institute. Looking at your CV, one has to wonder whether your day has only 24 hours. You are currently involved in teaching regularly, managing the Tinbergen Institute, running the Economics Group at EUR, working as a consultant through the Erasmus Competition and Regulation Institute ECRi, organizing seminar series at the TI, supervising four PhD students, conducting your own research, etc. On top of that, you have a family with two young children. What is your secret? 4
First, management must be done efficiently: delegate, be clear what you want, and trust the people you work with, that they can do a good job in working out the details. I have an excellent team here at the Institute, and that helps... The same is true for PhD students: I have developed a certain scheme for our cooperation. In the beginning, we work together on a paper, and then gradually the students work more independently. In the last two years of their programme, we actually discuss only the ideas for papers, and they work it out themselves... With teaching, it’s all up to experience. I have now been teaching for fifteen years or so; I know students, and I understand what they may find difficult. You also mentioned consultancy... Actually, until three or four years ago I was a pure academic-not very keen to work on applied issues. At some point in 2001 the Dutch Parliament wanted to evaluate the UMTS auction (the auction of the 3G mobile telephony frequencies), which took place in the summer of 2000. Similar auctions have also taken place in other European countries, such as England and Germany. In comparison, the Dutch auction generated disappointingly low revenue. The Parliament wanted to find out whether or not the auction was badly designed. This was the first time that I applied economics to a serious real-world issue. It compelled me to find out what economic theory in fact has to say about real life, and it was a real eye-opener. My academic research has changed as a result: I’m now much keener to start off with an important real-life question, rather than with a modification of a theoretical model. The combination of research and consultancy work has been both inspiring and fruitful: my recent research still revolves around auctions. This time, we analysed the allocation of commercial radio frequencies in the Netherlands. My latest book is also about auctioning public assets. I have to ask, then: how should we auction public assets? What makes the kind of auctions I study particularly interesting is the fact that there is a market after the auction. There are two important issues that have to be considered. First, you have to consider the following: how much entry can support an efficient aftermarket? How do you organise the auction to stimulate enough entry? How do you deal with asymmetries between bidders? Usually you have a few (privileged) incumbents in the market and some newcomers. How do you give entrants a fair chance of obtaining the license? Another important issue is the specification of the goals that the government wants to achieve. Revenue is one possible goal; another might be efficiency in the after-
market. It is important to stress that these goals usually cannot go together: if you have an efficient (that is, highly competitive) aftermarket, then profits are low and you cannot get much revenue. In the case of auctioning Princes Diana’s dress, maximum revenue would be a good objective, but in the case of mobile telephony, an efficient after-market might be much more important.
My academic research has changed: I’m now much keener to start off with an important real-life question, rather than with a modification of a theoretical model.
We have been discussing your most recent work. I have looked at your professional interests, trying to see a broader pattern, and here it is: you started your career as a macroeconomist, then you became interested in the microfoundations, and finally you chose to devote yourself completely to microeconomics. Why is that? What is your story behind microfoundations?
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My interest in microfoundations came with my interest in the philosophy of science. As you probably know, I obtained a Master’s degree in the Philosophy of Economics just after I graduated with a MSc in Econometrics. In the philosophy of science there is some literature on the relation between theories at the micro-level and theories at the macrolevel. Just to give an example: in physics you have the ideal gas law, which describes properties of the gaseous state, and you also have theories on how individual molecules move and interact... You can ask a question: how is the ideal gas law related to the theories we have about the behaviour of molecules? I thought a similar problem might be of interest in economics. It seems that in economics this issue is much more complicated. First of all, the micro theories we have are sometimes not very accurate in describing the actual behaviour of individuals, contrary to physics. Then, there are many exogenous variables at the level of the economic system that affect interactions among individuals... I am somewhat pessimistic about whether we will ever be able to make the transition from micro to macro in a fully satisfactory way. I think that for the moment we should simply accept the fact that at the macro level certain regularities (which are hopefully quite stable) exist that we cannot fully track down to the behaviour of individuals– and that, on the other hand, we have theories on how people behave individually. I am acquainted with both you and Jaap, and sense that you will make an excellent team, comparable to the Coen TeulingsMaarten Lindeboom duo. Jaap has slightly more diversified international teaching experience, while you have substantial management experience. You are both brilliant scientists. It looks like a recipe for success... I couldn’t agree with you more; I think it’s a very nice team. We complement each other. You see, in a team it’s important for each member to have different areas of expertise; on the other hand, it’s important to have some overlap, so that you can communicate with each other. Jaap and I actually share interest in models with incomplete information: I am more of a theorist, while Jaap has done some applied research in that field. And as you said, I probably have more management experience, and some experience in consultancy. Jaap has an excellent international network. I think that while we can really benefit from each other’s expertise, we share enough common ground to assure smooth cooperation. Thank you.
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On commuting Jos van Ommeren
â—?
â—?
Dr J.N. (Jos) van Ommeren
is a researcher at the department of spatial economics at the Vrije Universiteit Amsterdam. Jos received a VIDI scholarship from NWO
Introduction As the activity that physically connects the residence and workplace of employees, commuting spatially links housing and labour markets. The ubiquity of commuting in our society is a relatively new phenomenon: it is a characteristic of industrialised economies in which firms employ most of the workers. Average commuting time has been quite constant over the last decades, whereas average commuting distance has been on the rise for at least a century.1 Although commuting is relatively unimportant (measured in kilometres) as a travel phenomenon (only 25% of km. travelled are due to commuting), it attracts a great deal of attention (and not only by economists) because it is the main contributor to road congestion: employees tend to commute at the same time, and workplaces tend to be spatially concentrated. Road congestion is a negative externality; car drivers thus impose time costs on each other.
in September 2004, which allows him to conduct a five-
Are commuting costs minimised?
year research programme on
The traditional (neo)classical way of thinking about commuting is that the length of the commute is the result of an employee’s choices regarding workplace and residence
how employers influence employee commuting behaviour.
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locations (White, 1986). Employees thus optimally choose the commute. Now, suppose that all jobs are identical, and all residences are identical (apart from their locations). Employees with a long commute must then be compensated either in the housing market (through lower house prices) or in the labour market (through higher wages),2 and the total commuting costs in the entire economy are minimised. One theoretical result suggests that the government should address the negative externalities due to road congestion, but allow the market to determine the location of workplaces and residences. Yet, is it realistic to assume that employees optimally choose workplace and residence locations? For example, one requirement would be that employees have full information about job opportunities and can change jobs at no cost. The main difficulty here is that the dominant way of thinking nowadays about the functioning of the labour market is that search frictions are relevant: unemployed and employed job seekers have limited information about job opportunities and must search for jobs. This indicates that workers may not be in their optimal job location.
tinbergen magazine 10, fall 2004
A straightforward method to evaluate whether employees are situated in the optimal workplace location is to examine the relationship between the length of the commute and whether the employees search for another job (van Ommeren, 1998, 2000). It can be easily shown that a long commute induces on-the-job search (see Figure 1). Apparently, employees with a long commute are worse-off (they are not compensated by higher wages), and attempt to reduce the length of the commute by changing job (or moving house). The main lesson to be learnt here is that search frictions increase the commute. Figure 1. Proportion of Job Seekers as a Function of Commuting Time
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In the housing market, search frictions are probably less important. Residences are more like a standard commodity. However, the presence of residential moving costs prevents employees from relocating their residence to the optimal location (van Ommeren and Leuvensteijn, 2003). In particular, when employees have a temporary contract, or anticipate moving to another job within several years, they will not reduce their commute by relocating their residence closer to the workplace after accepting a new job. This explains why most studies conclude that commuting is both inefficient and ‘wasteful’ (Manning, 2003; Hamilton, 1982).
Personnel policy of firms Empirical research on commuting tends to focus on employee behaviour. Theoretical studies pay somewhat more attention to firms, as they determine wages and workplace locations. Nevertheless, the personnel policy of firms tends to be ignored in both theoretical and empirical studies– which is strange, since many examples illustrate the relevance of firm personnel behaviour for commuting. Job applicants who receive a job offer are frequently offered a commuting-cost reimbursement, or a reimbursement in the
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form of a company car, but other successful applicants are offered relocation-cost reimbursements to move closer to the workplace. Although firms may be financially indifferent between one-time (partial) reimbursements of relocation costs, or continuous reimbursements of commuting costs, the effect on the commute is distinct. Relocation-cost reimbursements increase the likelihood that employees move residence closer to the workplace, whereas commutingcost reimbursements decrease the odds (van Ommeren, van der Vlist and Nijkamp, 2002). In Europe, many firms offer company cars as a (fiscally attractive) fringe benefit within the compensation package. Firms are more likely to offer company cars to those employees who must travel during work hours for job-related reasons. These cars may be owned by the company or leased from a lease company. In the Netherlands, 42% of new automobiles, 12% of all automobiles, and about 20% of all automobiles on the road at any given time are company cars. During rush hours, the proportion of company cars may be even higher. Although employees driving a company car may receive a lower wage and pay additional income tax, the marginal monetary costs for the use of the car are zero. Whether this exacerbates the use of the company car for private or commuting purposes is the important research question here.3 Although the answer to this question is unknown, the Dutch tax system seems to offer the wrong incentives regarding fringe benefits: whereas the use of the company car is not taxed at its full value, relocation-cost reimbursements are taxed as income in the Netherlands (apart from a certain threshold, which is only, on average, 25% of the average moving costs for owners).
Government policy Government policies influence commuting behaviour– not only by taxing commute-related fringe benefits differently from labour income, but also in many other ways. This article focuses on two types of government policies that should receive more attention: road pricing (with its negative consequences) and zoning (assigning land to specific purposes). Although transport economists have offered several ‘solutions’ to the negative externalities of road congestion, they tend to focus on road pricing. To what extent, however, will car drivers switch to public transport as a result of road pricing?4 The commuter selects the mode that will minimise commuting costs, which consist of a monetary component and a travel-time component (other relevant items may be convenience, flexibility, etc.). Road pricing
The Dutch tax system seems to offer the wrong incentives regarding fringe benefits: whereas the use of the company car is not taxed at its full value, relocation-cost reimbursements are taxed as income in the Netherlands.
increases the variable monetary costs, but only slightly reduces time costs. Commuters seem to regard travel-time costs as relevant, whereas monetary costs seem to be relatively unimportant (van Ommeren and Dargay, 2004). Road pricing will thus have hardly any influence on the choice of the mode of travel. Improvements in public transport, however, may have an influence. This may explain why in Hasselt (a small town in Belgium), free use of the bus hardly stimulated car users to switch to the bus. However, an increase in the frequency of the bus trips (which determines the expected waiting-time costs), and in the number of routes, seemed to persuade more car drivers to switch to the bus.
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In many European countries, government policies in zoning land for housing, workplaces, leisure etc. influence the spatial structure of the economy and therefore commuting behaviour. Thus, the government and the market both determine the potential workplace and residence locations available to employees. An example in the Netherlands is Almere, a government-created town not too far from Amsterdam (and Utrecht). With 160,000 inhabitants (expected to grow to 300,000 within 20 years), Almere is a large town by Dutch standards. Many of the town’s inhabitants want to work and therefore supply labour. By creating this residential area, the government has formed a local labour supply, which is only partially met by local labour demand. The typical employee who lives in Almere therefore tends to work in neighbouring cities, such as Amsterdam. Not surprisingly, the average commute of workers living in Almere is relatively long, creating many negative externalities.5 Yet, the creation of Almere may prove to be optimal in the long run, because over time more jobs will be created in Almere, reducing the average commute (thus, jobs follow people).
tinbergen magazine 10, fall 2004
This adaptation process is extremely slow, however, and in all likelihood it will take several decades at least before local labour supply and demand are in equilibrium (Vermeulen and van Ommeren, 2004). This raises also the question to what extent people follow jobs. Empirical research shows that the population is not responsive to shifts in jobs to other regions. This result is extremely important: it demonstrates that zoning land for housing, and in particular for workplaces, is not without cost to society. One major consequence would be that the Dutch government should allow the market to decide where to locate residences and workplaces.
Notes 1 The main reason is that employees have become richer, and their value of time has increased. Workers have switched from slow but cheap modes of transport (walking) to faster, but more expensive alternatives– particularly the car. In the Netherlands, the average commuting distance (one-way) is currently about 18 kilometres, which exceeds the distance of any other European country. 2 How much additional wage would the average commuter wish to receive as compensation for one additional hour of commuting? A general conclusion is that the wage compensation for one hour commuting is much less than the hourly wage rate. Van Ommeren, van den Berg and Gorter (2000) find that the compensation for one hour of commuting is
Commuting is a phenomenon of our society with particularly important ramifications, due to its contribution to road congestion (with its negative externalities). Commuting behaviour may be influenced by government policies directly via road pricing but also indirectly by influencing firms and employees in the labour and housing markets.
about half of the hourly wage rate. This information can be used to calculate the costs of congestion for the average commuter. 3 The average commuting distance driven with a company car is about 50% longer than with the personal car. Any causal relationship between the use of company cars and commuting distance is not clear. Company cars are offered particularly to those job applicants with long commutes (van Ommeren, van der Vlist and Nijkamp, 2002).
References
4 The travel mode literature has a long history. Since
Hamilton, B.W. (1982), Wasteful commuting, Journal
the pioneering work of McFadden (1974), a number
of Political Economy 90, 1035-1053.
of studies have explored the choice of travel mode.
Manning, A. (2003), The real thin theory: Monopsony
5 Nevertheless, the creation of Almere may have
in modern labour markets, Labour Economics 10,
been a good idea from an economic point of view.
105-131.
Employees rationally choose to live in Almere, as
McFadden, D. (1974), The measurement of urban
they are compensated by lower house prices (as well
travel demand, Journal of Public Economics, vol. 3,
as by larger gardens, etc.) for their long commute.
no. 4, 303-328. Van Ommeren, J.N., G. J. van den Berg and C. Gorter (2000), Estimating the marginal willingness to pay for commuting, Journal of Regional Science, 40, 3, 541-563. Van Ommeren, J.N. and M. van Leuvensteijn (2003), New evidence of the effect of transaction costs on residential mobility, CPB discussion paper, The Hague. Van Ommeren, J.N, A. van der Vlist and P. Nijkamp (2002), Transport-related fringe benefits: Implications for commuting and relocation, Tinbergen Institute discussion paper 63, 3. Van Ommeren, J.N. and J. Dargay (2004), The optimal choice of commuting speed, Tinbergen Institute discussion paper 92, 3. Van Ommeren, J.N. (2000), Commuting and relocation of jobs and residences, Ashgate; UK, Aldershot. Van Ommeren, J.N. (1998), On-the-job search behaviour: The importance of commuting time, Land Economics 74, 4, 526-548. Vermeulen, W. and J.N. van Ommeren (2004), Interaction of regional population and employment, Tinbergen Institute discussion paper 83, 3. White, M.J. (1986), Sex differences in urban commuting patterns, American Economic Review 76,368-372.
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Finance and inequality: Theory and evidence
Enrico Perotti is Professor of International Finance at the Universiteit van Amsterdam. His wide interests range from corporate finance and the theory of the firm, to innovation theory and the political economy of finance. In this text, Professor Perotti describes some of his recent research on the political economy of financial development.
Introduction A key controversy with regard to globalisation is whether free trade increases opportunities mainly for more productive individuals. Diffused entrepreneurial activity is an important determinant of economic renewal. Johnson et al. (2003) show that the success of new entrepreneurs determined the relative success of transition countries. Yet, while market reform proponents believe that liberalisation removes barriers for everyone to participate in broader exchange possibilities, opponents claim that reforms usually benefit a minority, and that economic inequality often increases after such reforms. If inequity further reduces access to productive opportunities, then the value of liberalisation may be brought into question.
Background In theory, an effective financial system plays a vital role in economic growth. Improved access to funding may enhance the equality of opportunities, and reduce inequity. A more developed financial sector promotes subsequent economic growth. Most financial reforms, however, do not target financial broadening (which expands access), but instead focus on financial deepening. Financial deepening emphasises formal, complex, large-scale institutions
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typical of developed economies, such as stock and bond markets, or policies maximising capital inflows– with scant attention paid to their distribution or to the promotion of greater domestic competition. These deepening reforms favour the more established producers. Particularly in inequitable societies, they offer limited access to funding, and at times produce crises that narrow access to funding still further.
Gains and losses from liberalisation What is the underlying mechanism for this effect of liberalisation? A classic view is that liberalisation initially favours firms with established comparative advantages. This appears not to be the case, however. Concentration of funding has not produced better returns. For instance, in many reforming countries losses on larger loans were much larger than for smaller loans, which suggests connected lending to powerful groups (on Mexico, see La Porta et al., 2002; on Russia, see Laeven, 2001, Gelfer and Perotti, 2000, and Perotti, 2002). While gains tend to be concentrated, losses from liberalisation are often socialised. Crises in many developing
tinbergen magazine 10, fall 2004
Why does liberalisation favour established interests?
countries have imposed heavy fiscal costs and have led to the economic disruption of society (such as in East Asia, Russia, Mexico or Argentina). Extensive misuse of bank lending often favoured well-connected individuals, while losses were shifted onto the public safety net (Halac and Schmuckler; de Silanes et al., 2002; Haber, 2004). Default costs were often funded via inflationary spending or fiscal cuts, hurting weaker social groups. The worst impact has not been on the poorest, however, who hardly participate in the formal economy and have little to lose; rather, the middle- and lower middle-income fractions of the population have been the hardest hit.
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Claessens and Perotti (2004) interpret this top-down approach to financial deregulation as a distortion introduced by established interests in countries with poor democratic scrutiny. A clue to this interpretation comes from recent evidence that initial inequality in such a country hinders the proper design and implementation of reforms. Established economic interests may block financial reform, if such a reform challenges their privileged access to capital (Rajan and Zingales, 2003; Perotti and Volpin, 2004). New theoretical work shows that even when broadening liberalisation is imposed from outside (e.g. by the IMF), established lobbies may manipulate its design and/or implementation in order to capture most of its benefits and to socialise its costs (Perotti and Feijen, 2004). The mechanism is simple: lobbying efforts for weak enforcement of investor rights lead to most poor entrepreneurs being either unable to raise enough funding, or, because they are more leveraged, more susceptible to being denied essential refinancing in a crisis. In fact, Keefer (2001) shows that liberalisation is more often followed by banking crises in countries with poor political institutions. Recent evidence has also shown shockingly high barriers to starting new businesses in poor countries. Barriers include an exorbitant number of licenses and regulatory agencies, onerous formalistic rules, high fees and taxes. Such rules appear to be designed to create opportunities for bribery (Shleifer and Vishny, 1993). Acemoglu (2003) and Perotti and Volpin (2004) show that political accountability weakens the strength of elites in blocking entry. Moreover, Klapper et al. (2004) and Djankov et al. (2003) show that entry barriers are in fact higher in more corrupt and in less democratic countries. Barriers to economic participation thus ultimately favour established interests, limit growth and increase inequality. Recent attention has also focused on measuring informal barriers (such as poor contractual enforcement) that obstruct financing, create predatory behaviour by regulators, and bias contractual enforcement
The middle- and lower middle-income fractions of the population have been the hardest hit.
tinbergen magazine 10, fall 2004
competing lobbies of potential competitors, since restricting new entry produces larger pure rents, and thus generates more resources for political contributions and bribes. The article goes on to prove that poor political accountability (which fails to constrain political abuse) and high inequality will produce lower entry rates in sectors that require more external finance. Strong evidence obtained to support the model reveals, in particular, a negative correlation between entry and poor legal enforcement. The final test shows that the quality of legal enforcement is best explained by political accountability and inequality, even after controlling for legal origin. This proves that it is neither the legal tradition nor the text of legislation that matter, but rather whether enforcement is subject to political opportunism. Graphs 1 and 2 illustrate the impact of inequality and political accountability on the quality of enforcement. These results are robust to controlling for per capita income, assuaging the concerns raised by Glaeser et al. (2004) that institutional quality increases with economic development. Political accountability, a measure of the concentration of political access, thus has a direct effect on economic development because it affects access to resources. By undermining the reliability of laws, low political accountability distorts access to finance, and can thus destroy any private contractual solution. These results echo the empirical conclusions in Acemoglu and Johnson (2003): constraints on political power have a major impact on growth, while measures of legal efficiency affect financial development, but do not directly raise growth. Thus, while the quality of financial development is critical for growth, it is endogenous; beyond proper legislation and policies, growth also requires proper enforcement, which can be undermined in corrupt, inequitable, and undemocratic regimes.
Conclusions in favour of established producers. Small entrepreneurs often escape such requirements by remaining in the informal sector, which undermines their access to finance, limits their trade opportunities, keeps them dependent on established firms and generally hinders the growthe. A key question is whether poor enforcement is simply the result of an historically poor legal structure (as in La Porta et al., 1998), or whether laws are opportunistically enforced. Perotti and Volpin (2004) prove that lobbies of established interests have a natural advantage over
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Recent evidence suggests that financial crises in developing countries often arise because of deliberately poor design and implementation of reforms– itself the consequence of a highly skewed distribution of wealth and power. In highly inequitable circumstances, top-down, deepening reforms are simply too vulnerable to abuse. The consequences create a political backlash that undermines the sustainability of valuable reforms– as is happening in Latin America. This situation does not arise because liberalisation is inappropriate, but because it is too easily captured and distorted in inequitable societies with poor governance.
tinbergen magazine 10, fall 2004
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Graph 1: Quality of legal enforcement and income inequality (R2= 0.374)
Acemoglu, D. (2003), The form of property rights:
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Nor Net Den Swe Fin Can Aut UK Ger
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barons? Governance and financing in Russian FIGs,
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Gini coefficient
Stanford University mimeo. Halac, M. and S. Schmuckler (2003), Distributional effects of crises: The role of financial transfers,
Enforcement residuals (after controlling democracy)
Graph 2: Enforcement and inequality, controlling for political accountability (R2= 0.628)
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The central role of entrepreneurs in transition economies, Journal of Economic Perspectives 16. Keefer, P. (2001), Elections, special interests and the
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fiscal costs of financial crisis, World Bank mimeo.
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ownership, The case of Russia, Journal of
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Comparative Economics 29, pp. 207-229.
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Vishny (1998), Law and Finance, Journal of Political
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Economy 106:6, pp. 1113-55.
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(2002), Related lending, Yale University, mimeo. Perotti, E. (2002), Lessons from the Russian
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45
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meltdown; The economics of soft legal constraints, International Finance 5:3, pp. 359-399.
Gini coefficient
Perotti, E. and E. Feijen (2004), The political economy of bank fragility, UvA mimeo. Perotti, E. and P. Volpin (2004), Lobbying on entry, CEPR Discussion paper, CEPR, London.
Regression on the quality of legal enforcement (48 countries)
Rajan, R.G., and L. Zingales (1998), Financial (1) Constant
(2)
(3)
(4)
(5)
(6) - IV
development and growth, American Economic Review 88: 559-586.
5.270***
12.209***
8.731***
8.619***
–1.264
7.285***
(0.372)
(0.758)
(0.941)
(1.040)
(1.198)
(1.241)
0.274***
0.285***
0.080**
0.391***
Shleifer, A., and R. Vishny (1993), Corruption, Quarterly Journal of Economics, August.
Democracy score
0.353*** (0.046)
(0.050)
(0.059)
(0.040)
(0.066)
–0.021***
–0.075***
–0.071***
–0.029**
–0.052**
(0.017)
(0.017)
(0.021)
(0.012)
(0.024)
–0.291
0.577**
–0.494
(0.473)
(0.264)
(0.469)
Commom law
1.144***
Log (Per-capita income)
(0.126) R2 N. obs
0.510
0.374
0.628
0.633
0.881
0.598
48
48
48
48
48
48
13
tinbergen magazine 10, fall 2004
Harm Zebregs, IMF
Letters from Alumni The Board of TI Magazine has decided to introduce a new feature: Letters from Alumni. Beginning with this issue, the Board will ask
When I was asked to write a letter for TI Magazine about my working experience after finishing my PhD, my mind went back to my first two years at the International Monetary Fund. During those years, I was in the Economist Program working first in the African and later in the Research Department. I started in a group of eighteen young economists, most of them with fresh PhDs. Every Thursday evening at 6:30 we would meet a few blocks from the Fund to share a beer and some pizza. We would talk about our new employer and the idiosyncrasies of living in Washington DC. Sometimes you could find us lamenting about how much time we spent doing such mundane things as fiddling with Excel spreadsheets and writing minutes, and about the many papers we had to review while being under continuous time pressure. By 8 o’clock, after a few too many beers, we would be betting who would be the first of our group to leave the Fund. Now, several years later, I can safely say that those bets were widely off the mark-perhaps no wonder, given the reputation of economists in this area.
one Alumnus to describe “life after the PhD thesis and defense”.
I don’t think our misgivings were specific to our group or the institution we worked for. Rather, I believe it was part of a natural process we went through. After many years in university, where you can let your mind roam and are encouraged to question everything, it requires some adjustment to be suddenly transposed to an environment with short deadlines, where questioning everything all the time is simply not practical.
In this first letter, Harm Zebregs sketches a picture of his life at the IMF in Washington D.C. Harm graduated in 1998 from TI with a thesis on International Capital Movements and Technology in Economic Development.
Seven years ago, I came to the Fund expecting to be exposed to the realities of economic policymaking in countries across the world, and to have some time to write an occasional research paper. Looking back, I think my assignments have largely lived up to that expectation. I have worked on about eight different countries, each with a unique set of economic problems, and I have dealt with a broad range of topics from fiscal policy to bank restructuring, and from monetary policy to issues in foreign trade. I must say, however, that I have had less time for research than I expected, and most of the papers I have written are more applied than academic. That is a pity, because operational work often yields interesting ideas for research, and the Fund has a very active seminar and workshop program that allows you to exchange ideas with leading economists from all over the world. Nevertheless, I consider myself fortunate to work with very bright people from many different countries in an organization that brings together virtually all economies in the world. Our ‘group of eighteen’ has not been disbanded, but we no longer meet on Thursday evenings. We’ve all become busier and, perhaps more importantly, over time most of us have adjusted to our new environment. Several members, often not the ones we predicted, have left the Fund. Most have returned to academia or have joined think-tanks. Where will I be seven years from now? The best prediction is probably that I will still be at the Fund, but don’t bet your money on it.
14
tinbergen magazine 10, fall 2004
papers in journals
Behind international differences in male skill wage differentials Wage inequality differs substantially across countries, and is larger in the US than in continental European countries. This is especially the case at the bottom of the wage distribution. Economists often debate the causes of these differences. Some argue that differences in institutions (such as minimum wages, unions and employment protection) explain most of these differences, whereas others make a case for differences in demand and supply forces. Previous research has attempted to test the demand and supply explanation by constructing a skill index based on years of schooling and years of work experience. This index is used to construct skill groups and to compare the relative wages between countries. These relative wages are then contrasted with relative net supply. Following this procedure, researchers have found no relation between the relative wage position of a skill group and its relative supply.
in faulty rankings if these differences matter. Instead of using education and training outcomes, the current paper relies on information from literacy and numeracy tests that were developed with the explicit aim of being comparable across countries. Performing the analysis using this direct measurement of skill completely reverses the findings of previous research. A larger relative net supply of a skill group is associated with lower relative wages of that same skill group. More specifically, low-skilled employees are relatively worse-off in the US than their counterparts in continental Europe are– not because they lack the protective labour market institutions, but because there are so many of them. Reducing the supply of lowskilled employees may therefore– after all –be an effective means to improve their relative wages.
Edwin Leuven, Hessel Oosterbeek
the nature of political decision making, while unification allows the unified region to exploit economies of scale in the provision of government. The findings in this paper suggest that if regions have dispersed preferences, then a small region is relatively more eager to form a union, compared to a large region. The incentives of a large region to form a union increase with the level of homogeneity of its preferences, however, while the reverse holds true in the small region. The paper goes on to explore the social welfare of decisions made on the basis of majority voting in regions. The main finding: majority voting leads to excessive separation. A discussion of alternative voting systems reveals that a majority voting system supplemented with unification as a default option mitigates this social inefficiency to some extent, but still allows excessive separation as a possibility.
and Hans van Ophem (UvA), 2004, Explaining international differences in male skill wage differentials by differences in demand and supply of skill, Economic Journal, 114, 466-486.
To unite or to separate? When two regions– one large and one small –are faced by a decision to unite or to separate, their incentives may be considered in terms of a basic trade-off: separation allows each region greater influence over
When the small region is very small, the tax burden of a government is excessive; this region may then be tempted to accept unequal or unconditional union. Under this arrangement, voters of the large region alone may decide on public policy, but inhabitants of both regions pay for the public good. This arrangement– clearly of interest to the large region – will be supported by the small region only if the region is very small. Unequal union is thus possible only if the regions are of very different sizes. The paper relates these findings to empirical evidence on secession movements and outcomes of referenda (on union and separation) in different parts of the world in recent years.
The current paper argues that this procedure, which ignores differences in educational systems and post-school training systems across countries, will result
15
Sanjeev Goyal and Klaas Staal (EUR), 2004, The political economy of regionalism, European Economic Review, 48, 563-593.
discussionpapers
Information overload in monopsony markets In the economic literature, market inefficiency is often blamed on lack of information, implying that the more information, the better. However, some empirical evidence suggests that excessive information reduces the quality of decision-making, as economic agents are unable to deal efficiently with too much information. This paper argues that modernday economies may experience problems of information overload, at which point the cost of information transmission decreases sharply, and the human ability to process the growing quantity of information becomes a scarce resource. The author addresses the information overload problem in the specific situation in which many applicants compete for a job position, and employers screen applications in order to select the best applicant. The model developed here borrows standard concepts from the economics of information. A central assumption is that when infinitely many applications are processed, then each application provides no information about the ability of the corresponding applicant. Within this framework, information overload can arise as an equilibrium outcome.
tinbergen magazine 10, fall 2004
The results show that information overload indeed occurs when the cost of application is low, relative to the information-processing technology level. In this case, it is optimal behaviour for fully rational employers to neglect some applications.
By Stefano Ficco (EUR), Information overload in
outside world in terms of international trade and foreign direct investment flows. Exports and imports, for example, have increased dramatically, from about 2 percent of GDP in the early 1970s to about 24 percent today. Unfortunately, traditional statistical trade tools do not accurately identify particular periods of structural change.
monopsony markets TI 04-082/1
Dynamics of Chinese comparative advantage
The rapid development of the Chinese economy is almost daily headline news. Chinese economic growth (after correcting for international price differences) was about 7.25 percent per year in real terms in the period 19802001, implying a doubling of output every ten years. In the past two decades, China’s GDP moved from a fifth place in the world ranking of 1980 (behind the US, the Soviet Union, Japan, and Germany) to second place (behind the US) in 2004. Relative to American GDP, Chinese GDP rose from about 25 percent in 1980 to about 62 percent in 2004. What caused this rapid development? A broad consensus argues that tremendous structural changes within the Chinese economy are the primary economic forces enabling China’s rapid economic development. These include, in particular, the way China is interacting with the
16
Such periods of structural change may be identified using another method, however: calculating the recently introduced Harmonic Mass index to trace over time the distribution of comparative advantage for a country’s industries. Application of this technique to China (and to two other Chinese economies, Taiwan and Hong Kong) reveals two important years regarding structural change: 1980, when China started to open up to international trade flows, and 1985, when the start of foreign direct investments initiated the rise in technology-intensive exports. During this period the composition of Chinese exports changed structurally towards more unskilledlabour-intensive and technology-intensive exports, while there was a drastic decline in the export of primary products.
By Jeroen Hinloopen (UvA) and Charles van Marrewijk (EUR), Dynamics of Chinese comparative advantage
infected by the problem of non-response. This paper analyses how problematic non-response can be in the analysis of unemployment duration. Using a unique dataset that combines survey information of workers with administrative records of the same workers, the paper examines the bias caused by non-response. The findings provide evidence for bias in results that are based on survey data alone. In this case, failing to account for survey non-response leads to a downward bias of the exit rate out of unemployment and an overly optimistic estimation of duration dependence. What is behind this downward bias? The paper explores the data variation in the timing of the moment of exit out of unemployment relative to the survey date in order to distinguish between two explanations: selectivity and causal effect. Selectivity occurs if unobserved determinants of unemployment duration are related to non-response behaviour. The causal effect arises when the fact that workers move to employment before the survey date increases the probability that they become non-respondent. The findings suggest that both selectivity and causal effects play a role in such a bias. This result has devastating implications for the efficacy of standard methods to handle non-response bias (imputation, weighting, instrumental variables).
TI04-034/2 By Gerard J. van den Berg and
Survey non-response and unemployment duration
Maarten Lindeboom (VU), and Peter J. Dolton (University-uponTyne, and Centre for Economic Policy, LSE),
Social surveys are the starting point of a great deal of empirical research in social sciences. However, the datasets compiled from the surveys are generally
Survey non-response and unemployment duration TI 04-094/3
tinbergen magazine 10, fall 2004
theses Two approaches to vehicle and crew scheduling Due to heightened competition in the public transport market and the pressure on governments to cut expenses, cost reductions in public transportation have been receiving increased attention. Since the main resources used in public transportation are vehicles and crews, the production of efficient vehicle and crew schedules is an important issue. This thesis considers two variants of the vehicle and crew scheduling problem: the integrated approach and the dynamic approach. In the integrated variant, vehicle and crew scheduling problems have been solved simultaneously, while in the dynamic variant a sequence of optimization problems has been solved. The stochastic nature of the travel times has also been taken into account in the dynamic vehicle and crew scheduling problem.
vehicle and crew scheduling problem. Computational tests demonstrate that the integrated approach significantly outperformed the sequential approach, where first the vehicle scheduling problem, and afterwards the crew scheduling problem, is solved.
seem not only to have moderately prolonged working life, but also to have increased uncertainty about the future.
Thesis: ‘Retirement, expectations and realizations. Essays of the Netherlands and Italy’, by Mauro Mastrogiacomo Published in the Tinbergen
Finally, the thesis considers the executions of the planned schedules at the day of operation. If predetermined schedules are executed on a certain day, many things can go wrong. A delay at a particular moment can cause hold-ups in other trips assigned to the same vehicle, which leads to a ‘snowball’ effect. To prevent this possibility, a dynamic approach has been suggested; this has resulted in the development of several approaches to improve service to the passengers and reduce the number of delays, while the costs remain equal.
Thesis: ‘Integrated and dynamic vehicle and crew scheduling’, by Dennis Huisman Published in the Tinbergen Institute Research Series #325
Retirement, expectations and realizations. Essays of the Netherlands and Italy
To show that the integrated approach can also be applied to solve instances with more than one depot, and in some real-world applications, several models and algorithms have been developed. These are extensions and/or improvements of the models and algorithms suggested earlier in the literature for the single-depot integrated
presents summary statistics for Italy that show that, at the end of the 1990s, approximately only 30% of the over-60 pater familias were still active. In the Netherlands, this figure is even lower: about 15%. Only 30 years ago, however, the participation of the elderly was comparable to the
Most economically developed countries face the challenge of aging populations. The two countries analysed in this study, the Netherlands and Italy, are no exceptions. If the demographic picture is worrying, the economic outlook is even worse. In both Italy and the Netherlands, the labour market participation of older workers has diminished drastically. This thesis
17
Institute Research Series #336
participation of the other age groups: in the 1970s, 80% of the males over 55 years of age were employed. The literature has paid a great deal of attention to household retirement. This thesis specifies and estimates retirement models for singles and married couples. These models, which are estimated on data from the Dutch Social Economic Panel and the Italian Survey on Household Income and Wealth, postulate that financial incentives are a determinant of retirement. For the Netherlands, the recent policy developments for the old-age pension regulations (AOW) were found to have the unintended effect of lowering female labour market participation, when women cohabit with an older partner. Many Dutch people also fear an unexpected shock in their financial situation around retirement. The study’s findings suggest that their fears may be unjustified. In Italy, where data concerning retirement expectations are also available, pension reforms
Theses
337 EIKO KENJOH (29/06/2004), Balancing Work and Family Life in Japan and Four European
333 MATTHIJS VAN VEELEN (20/04/2004), Survival
Countries: Econometric Analyses on Mothers’
of the Fair; Modelling the Evolution of Altruism,
Employment and Timing of Maternity.
Fairness and Morality. 338 ANGELIQUE H. BRUMMANS (24/06/2004), 334 ROMDEJ PHISALAPHONG (08/04/2004), The
Adoption and Diffusion of EDI in Multilateral
Impact of Economic Integration Programs on Inward
Networks of Organizations.
Foreign Direct Investment. 340 ROBERT MOSCH (07/10/2004), The Economic 335 ANNA NÖTEBERG (08/10/2004), The Medium
Effects of Trust. Theory and Empirical Evidence.
Matters: The Impact of Electronic Communication Media and Evidence Strength on Belief Revision
341 FELIX ESCHENBACH (01/10/2004), The Impact
during Auditor-Client Inquiry.
of Banks and Asset Markets on Economic Growth and Fiscal Stability.
336 MAURO MASTROGIACOMO (17/06/2004), Retirement, Expectations and Realizations. Essays of
342 DEYUAN LI (14/10/2004), On Extreme Value
the Netherlands and Italy.
Approximation to Tails of Distribution Functions.
Papers in TI-ranked journals and chapters in books published by TI Fellows AA – ranked journals
Berg, G.J. van den, B. van der Klaauw and J.C. van
Goeree, J.K. and T. Offerman, 2004, The Amsterdam
Ours, 2004, Punitive sanctions and the transition
auction, Econometrica 72, 281-294.
rate from welfare to work, Journal of Labor Economics 22(1): 211-41.
Plug, E., 2004, Estimating the effect of mother’s schooling on children’s schooling using a sample of
Birdsall, N., S. Claessens and I. Diwan, 2003, Policy
adoptees, American Economic Review, 94(1): 358-68.
selectivity forgone: Debt and donor behavior in Africa, World Bank Economic Review 17(3): 409-35.
Plug, E. and W. Vijverberg, 2003, Schooling, family background, and adoption: Is it nature or is it
Ferrer-i-Carbonell, A. and P. Frijters, 2004, How
nurture?, Journal of Political Economy 111(3):
important is methodology for the estimates of the
611-41.
determinants of happiness?, Economic Journal 14(497): 641-59.
Teulings, C.N. and P.A. Gautier, 2004, The right man for the job, Review of Economic Studies 71(2):
Francois, J.F. and W. Martin, 2004, Commercial
553-80.
policy variability, bindings, and market access, European Economic Review 48(3): 665-79.
A – ranked journals Abadir, K.M. and A. Lucas, 2004, A comparison of
Gerxhani, K., 2004, Tax evasion in transition:
minimum MSE and maximum power for the nearly
Outcome of an institutional clash? Testing Feige’s
integrated non-Gaussian model, Journal of
conjecture in Albania, European Economic Review
Econometrics 119(1): 45-71.
48(4): 729-45.
18
tinbergen magazine 10, fall 2004
Goeree, J.K. and C.A. Holt, 2004, A model of noisy
Bartelsman, E.J., 2004, Firm dynamics and
introspection, Games and Economic Behavior 46(2):
innovation in the Netherlands– A comment on
365-82.
Baumol, De Economist, 152(3): 353-363.
Goeree, J.K. and T. Offerman, 2003, Competitive
Beetsma, R.M.W.J. and H. Jensen, 2004, Mark-up
bidding in auctions with private and common
fluctuations and fiscal policy stabilization in a
values, Economic Journal 113(489): 598-613.
monetary union, Journal of Macroeconomics special issue 26(2): 357-76.
Goeree, J.K. and T. Offerman, 2003, Winner’s curse without overbidding, European Economic Review
Berkhout, P.H.G., A. Ferrer-i-Carbonell and J.
47(4): 625-44.
Muskens, 2004, The ex-post impact of an energy tax on household energy demand, Energy Economics
Goyal, S. and K. Staal, 2004, The political economy
26(3): 297-317.
of regionalism, European Economic Review 48(3): 563-93.
Beugelsdijk, S., H.L.F. de Groot and A.B.T.M. van Schaik, 2004, Trust and economic growth:
Goyal, S. and S. Joshi, 2003, Networks of
A robustness analysis, Oxford Economic Papers
collaboration in oligopoly, Games and Economic
56(1): 118-34.
Behavior 43(1): 57-85. Boumans, M.J., 2004, Review of ‘Marshall’s Groen, J.J.J. and F. Kleibergen, 2003, Likelihood-
tendencies: What can economists know?’ (J. Sutton
based cointegration analysis in panels of vector
2000), Economica 71, (281), 177-178.
error-correction models, Journal of Business and Economic Statistics 21(2): 295-318.
Brandts, J., T. Saijo and A.J.H.C. Schram, 2004, A four-country comparison of spite and co-operation
Janssen, M.A., J.M. Anderies and B.H. Walker, 2004,
in public goods games, Public Choice 119, 381-424.
Robust strategies for managing rangelands with multiple stable attractors, Journal of Environmental
Brannas, K. and J.G. de Gooijer, 2004, Asymmetries
Economics and Management 47(1): 140-62.
in conditional mean and variance: Modelling stock returns by asMA-asQGARCH, Journal of Forecasting
Klaauw, B. van der and J.C. van Ours, 2003, From
23(3): 155-71.
welfare to work: Does the neighborhood matter?, Journal of Public Economics 87(5-6): 957-85.
Bun, M.J.G. and J.F. Kiviet, 2003, On the diminishing returns of higher-order terms in asymptotic
Kleibergen, F., 2004, Testing subsets of structural
expansions of bias, Economics Letters 79(2): 145-52.
parameters in the instrumental variables regression model, Review of Economics and Statistics 86(1):
Butter, F.A.G. den and E. van Gameren, 2004,
418-23.
Employment policy in a dynamic labour market: Simulations using a multifirm flow model, Journal
Leuven, E. and H. Oosterbeek, 2004, Evaluating the
of Economic Behavior and Organization 53(2):
effect of tax deductions on training, Journal of
283-301.
Labor Economics 22(2): 461-88. Butter, F.A.G. den and R.H.J. Mosch, 2003, The Dutch Leuven, E., H. Oosterbeek and H. van Ophem, 2004,
miracle: Institutions, networks, and trust, Journal of
Explaining international differences in male skill
Institutional and Theoretical Economics 159(2):
wage differentials by differences in demand and
362-91.
supply of skill, Economic Journal 114(495): 466-86. Claessens, S. and L. Laeven, 2004, What drives bank Sandor, Z. and P. Andras, 2004, Alternative sampling
competition? Some international evidence, Journal
methods for estimating multivariate normal
of Money, Credit, and Banking, Part 2, 36(3): 563-83.
probabilities, Journal of Econometrics 120(2): 207-34.
Claessens, S., 2004, The case for GDP-indexed bonds: Discussion, Economic Policy 0(38): 208-10.
B – ranked journals Adegbidi, A., E. Gandonou and R. Oostendorp, 2004,
Clements, M.P, P.H. Franses and N.R. Swanson, 2004,
Measuring the productivity from indigenous soil
Forecasting economic and financial time-series with
and water conservation technologies with
non-linear models, International Journal of
household fixed effects: A case study of hilly
Forecasting special issue 20(2): 169-83.
mountainous areas of Benin, Economic Development and Cultural Change 52(2): 313-46.
Diks, C., 2003, Detecting serial dependence in tail events: A test dual to the BDS test, Economics Letters
Asheim, G.B., W. Buchholz and C. Withagen, 2003, The Hartwick rule: Myths and facts, Environmental and Resource Economics 25(2): 129-50.
19
79(3): 319-24.
tinbergen magazine 10, fall 2004
Driessen, J., P. Klaassen and B. Melenberg, 2003, The
Groenewegen, J., 2004, Who should control the
performance of multi-factor term structure models
firm? Insights from new and original institutional
for pricing and hedging caps and swaptions, Journal
economics, Journal of Economic Issues 38(2): 353-61.
of Financial and Quantitative Analysis 38(3): 635-72. Groot, F., C. Withagen and A. de Zeeuw, 2003, Driessen, J., B. Melenberg and T. Nijman, 2003,
Strong time-consistency in the cartel-versus-fringe
Common factors in international bond returns,
model, Journal of Economic Dynamics and Control
Journal of International Money and Finance 22(5):
28(2): 287-306.
629-56. Groot, H.L.F. de, 2004, Institutional determinants of Dijk, D. van and P.H. Franses, 2003, Selecting a
bilateral trade patterns, Kyklos 57(1): 103-23.
nonlinear time series model using weighted tests of equal forecast accuracy, Oxford Bulletin of
Hamelink, F., 2003, Systematic patterns before and
Economics and Statistics supplement 65(0): 727-44.
after large price changes: Evidence from high
Dijk, H.K. van, 2004, Twentieth century shocks,
Forecasting 22(6-7): 533-49.
frequency data from the Paris Bourse, Journal of trends and cycles in industrialized nations, De Economist, 152(2): 211-232.
Harmon, C., H. Oosterbeek and I. Walker, 2003, The returns to education: Microeconomics, Journal of
Ferrer-i-Carbonell, A. and J.C.J.M. van den Bergh,
Economic Surveys 17(2): 115-55.
2004, A micro-econometric analysis of determinants of unsustainable consumption in the Netherlands,
Hartog, J. and R. Winkelmann, 2003, Comparing
Environmental and Resource Economics 27(4): 367-89.
migrants to non-migrants: The case of Dutch migration to New Zealand, Journal of Population
Fischer, C., C. Withagen and M. Toman, 2004,
Economics 16(4): 683-705.
Optimal investment in clean production capacity, Environmental and Resource Economics 28(3): 325-45.
Hinloopen, J., 2004, The market for knowledge brokers, Small Business Economics 22, (5), 407-415.
Franses, P.H., R. Paap and B. Vroomen, 2004, Forecasting unemployment using an autoregression
Hochguertel, S., 2003, Precautionary motives and
with censored latent effects parameters,
portfolio decisions, Journal of Applied Econometrics
International Journal of Forecasting special issue
18(1): 61-77.
20(2): 255-71. Jacobs, B., 2004, The lost race between schooling Gerlagh, R. and M.A. Keyzer, 2004, Path-dependence
and technology, De Economist, 152(1): 47-78.
in a Ramsey model with resource amenities and limited regeneration, Journal of Economic Dynamics
Janssen, M.C.W. and S. Roy, 2004, On the nature of
and Control, 28(6): 1159-84.
the lemons problem in durable goods markets, Canadian Journal of Economics 37 (3), 552-589.
Giersbergen, N.P.A. van, 2003, A note on bootstrapping unit root tests in the presence of a
Kawasaki, Y. and P.H. Franses, 2004, Do seasonal
non-zero drift, Economics Letters 78(2): 259-65.
unit roots matter for forecasting monthly industrial production?, Journal of Forecasting 23(2): 77-88.
Gondzio, J., R. Kouwenberg and T. Vorst, 2003, Hedging options under transaction costs and
Kobberling, V. and P. Wakker, 2004, Simple tool for
stochastic volatility, Journal of Economic Dynamics
qualitatively testing, quantitatively measuring, and
and Control 27(6): 1045-68.
normatively justifying Savage’s subjective expected utility, Journal of Risk and Uncertainty 28(2):
Gooijer, J.G. de and A. Vidiella-i-Anguera, 2004,
135-45.
Forecasting threshold cointegrated systems, International Journal of Forecasting special issue
Laan, G. van der and C. Withagen, 2003, Quasi-
20(2): 237-53.
equilibrium in economies with infinite dimensional commodity spaces: A truncation approach, Journal
Goovaerts, M.J, R. Kaas, J. Dhaene and Q. Tang,
of Economic Dynamics and Control 27(3): 423-44.
2004, Some new classes of consistent risk measures, Insurance: Mathematics and Economics
Marquering, W. and M. Verbeek, 2004, The economic
34(3): 505-16.
value of predicting stock index returns and volatility, Journal of Financial and Quantitative
Graaff, T. de and P. Rietveld, 2004, ICT and
Analysis 39(2): 407-29.
substitution between out-of-home and at-home work: The importance of timing, Environment and
Noailly, J., J.C.J.M. van den Bergh and C.A. Withagen,
Planning A 36(5): 879-96.
2003, Evolution of harvesting strategies: Replicator and resource dynamics, Journal of Evolutionary Economics 13(2): 183-200.
20
tinbergen magazine 10, fall 2004
Ommeren, J. van, 2003, The unemployed
Sandor, Z. and K. Train, 2004, Quasi-random
individual’s marginal willingness to pay for the
simulation of discrete choice models,
remaining entitlement period, Labour 17(2): 271-83.
Transportation Research: Part B: Methodological 38(4): 313-27.
Ossokina, I.V. and O.H. Swank, 2003, Polarization, political instability and active learning,
Smit, H.T.J., 2003, Infrastructure investment as a
Scandinavian Journal of Economics 105(1): 1-14.
real options game: The case of European airport expansion, Financial Management 32(4): 27-57.
Pels, E. and E.T. Verhoef, 2004, The economics of airport congestion pricing, Journal of Urban
Sonnemans, J., C. Hommes, J. Tuinstra and H. van
Economics 55(2): 257-77.
de Velden, 2004, The instability of a heterogeneous cobweb economy: A strategy experiment on
Perotti, E.C. and L. Vesnaver, 2004, Enterprise
expectation formation, Journal of Economic Behavior
finance and investment in listed Hungarian firms,
and Organization 54, 453-481.
Journal of Comparative Economics 32(1): 73-87. Strachan, R.W. and H.K. van Dijk, 2003, Bayesian Plug, E. and P. Berkhout, 2004, Effects of sexual
model selection with an uninformative prior, Oxford
preferences on earnings in the Netherlands, Journal
Bulletin of Economics and Statistics supplement
of Population Economics 17(1): 117-31.
65(0): 863-76.
Rietveld, P. and R. Vickerman, 2004, Transport in
Verhoef, E.T. and K.A. Small, 2004, Product
regional science: The “death of distance” is
differentiation on roads: Constrained congestion
premature, Papers in Regional Science 83(1): 229-48.
pricing with heterogeneous users, Journal of Transport Economics and Policy, 38(1): 127-56.
Sa, C., R.J.G.M. Florax and P. Rietveld, 2004, Determinants of the regional demand for higher education in the Netherlands: A gravity model approach, Regional Studies 38(4): 375-92.
(Chapters in) TI-ranked books published by TI Fellows: Bornstein, G., A. Schram and J. Sonnemans, 2004,
Turner, R.K., J.C.J.M. van den Bergh and R. Brouwer,
Do democracies breed chickens?, Contemporary
eds., 2003, Managing Wetlands: An Ecological
Psychological Research on Social Dilemmas, by R.
Economics Approach, Cheltenham, U.K. and
Suleiman, D. Budescu, I. Fischer and D. Messick
Northampton, MA: Elgar, xiii, 318o.
(eds.). Cambridge University Press, 248-268.
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tinbergen magazine 10, fall 2004
Discussion papers
04-065/1 Klaas J. Beniers and Robert Dur, Erasmus
Institutions and Decision Processes
Universiteit Rotterdam and CESifo, Politicians’ Motivation, Political Culture, and Electoral Competition
04-031/1 Andrea Galeotti, Erasmus Universiteit Rotterdam,
04-068/1
One-way Flow Networks: The Role of Heterogeneity
Maarten C.W. Janssen, Erasmus Universiteit Rotterdam, José Luis Moraga-González, Erasmus
04-033/1
Universiteit Rotterdam and CESifo, and Matthijs R.
Guido Fioretti, University of Siena, and Bauke Visser,
Wildenbeest, Erasmus Universiteit Rotterdam,
Erasmus Universiteit Rotterdam, A Cognitive
A Note on Costly Sequential Search and Oligopoly
Approach to Organizational Complexity
Pricing
04-035/1
04-069/1
Silvia Dominguez Martinez and Otto H. Swank,
René van den Brink and Gerard van der Laan, Vrije
Erasmus Universiteit Rotterdam, Polarization,
Universiteit Amsterdam, and Valeri Vasil’ev, Sobolev
Information Collection and Electoral Control
Institute of Mathematics, Novosibirsk, Russia, On the Extreme Points of Two Polytopes associated with a
04-037/1
Digraph and Applications to Cooperative Games
Phongthorn Wrasai and Otto H. Swank, Erasmus Universiteit Rotterdam, Policy Makers, Advisors, and
04-071/1
Reputation
Maarten C.W. Janssen, Erasmus Universiteit Rotterdam, and José Luis Moraga-González Erasmus
04-041/1
Universiteit Rotterdam and CESifo, Consumer Search
Jordi Brandts, Institut d’Análisi Económica (CSIC),
and Oligopolistic Pricing: An Empirical Investigation
Barcelona, and Arno Riedl and Frans van Winden, CREED, Universiteit van Amsterdam, Competition
04-075/1
and Well-Being
Andrea Galeotti, Erasmus Universiteit Rotterdam, Consumers Networks and Search Equilibria
04-042/1 Otto H. Swank and Bauke Visser, Erasmus
04-076/1
Universiteit Rotterdam, Sharing Information
Andrea Galeotti, Erasmus Universiteit Rotterdam,
through Delegation and Collaboration
and Miguel Meléndez, University of Alicante, and University of Málaga, Exploitation and Cooperation
04-043/1
in Networks
P. Jean-Jacques Herings, Universiteit Maastricht, Gerard van der Laan, Vrije Universiteit Amsterdam
04-077/1
and Dolf Talman, Tilburg University, The Socially
Stefano Ficco and Vladimir A. Karamychev, Erasmus
Stable Core in Structured Transferable Utility Games
Universiteit Rotterdam, Information Overload in Multi-Stage Selection Procedures
04-044/1 Simon Gächter, University of St. Gallen, CESifo, and
04-082/1
IZA, and Arno Riedl, CREED, Universiteit van
Stefano Ficco, Erasmus Universiteit Rotterdam,
Amsterdam, Dividing Justly in Bargaining Problems
Information Overload in Monopsony Markets
with Claims 04-095/1 04-046/1
René van den Brink, Gerard van der Laan and Vitaly
Robert Dur, Erasmus Universiteit Rotterdam and
Pruzhansky, Vrije Universiteit Amsterdam, Harsanyi
CESifo, and Amihai Glazer, University of California,
Power Solutions for Graph-restricted Games
Irvine, CA, USA, Optimal Incentive Contracts when Workers envy their Boss
04-098/1 Ernesto Reuben and Frans van Winden, Universiteit
04-060/1
van Amsterdam, Reciprocity and Emotions when
Josse Delfgaauw, Erasmus Universiteit Rotterdam,
Reciprocators Know Each Other
and Robert Dur, Erasmus Universiteit Rotterdam, and CESifo, Incentives and Workers’ Motivation in the
04-099/1
Public Sector
Gershon Ben-Shakhar and Gary Bornstein, Hebrew University of Jerusalem, and Astrid Hopfensitz and
04-063/1
Frans van Winden, Universiteit van Amsterdam,
Pieter A. Gautier, Erasmus Universiteit Rotterdam,
Reciprocity and Emotions: Arousal, Self-Reports, and
and José L. Moraga-González, Erasmus Universiteit
Expectations
Rotterdam and CESifo, Strategic Wage Setting and Coordination Frictions with Multiple Applications
22
tinbergen magazine 10, fall 2004
04-101/1
04-057/2
Sandra Maximiano, Randolph Sloof and Joep
Karen Watkins, Dick van Dijk and Jaap Spronk,
Sonnemans, Universiteit van Amsterdam, Gift
Erasmus Universiteit Rotterdam, Macroeconomic
Exchange in a Multi-worker Firm
Crisis and Individual Firm Performance: The Mexican Experience
04-108/1 Peter Rodenburg, Universiteit van Amsterdam,
04-058/2
Multiple Causation and the Measurement of
Joseph F. Francois, Erasmus Universiteit Rotterdam
Unemployment
and CEPR, Assessing the Impact of Trade Policy on Labor Markets and Production
04-111/1 Peter Rodenburg, Universiteit van Amsterdam,
04-059/2
Models as Measuring Instruments
Julia Wörz, Erasmus Universiteit Rotterdam and Vienna Institute for International Economic Studies,
04-112/1
Skill Intensity in Foreign Trade and Economic Growth
Gerard van der Laan, Vrije Universiteit Amsterdam, Dolf Talman, Tilburg University, and Zaifu Yang,
04-066/2
Yokohama National University, Solving Discrete Zero
Jeroen Hinloopen, Universiteit van Amsterdam, and
Point Problems
Charles van Marrewijk, Erasmus Universiteit Rotterdam, Locating Economic Concentration
Financial and International Markets
04-084/2 Han T.J. Smit and Ward A. van den Berg, Erasmus
04-032/2
Universiteit Rotterdam, and Wouter De Maeseneire,
Jan Frederik Slijkerman, David J.C. Smant and
Ghent University and Erasmus Universiteit
Casper G. de Vries, Erasmus Universiteit Rotterdam,
Rotterdam, Acquisitions as a Real Options Bidding
Credit Rationing Effects of Credit Value-at-Risk
Game
04-034/2
04-086/2
Jeroen Hinloopen, Universiteit van Amsterdam, and
Joseph F. Francois, Erasmus Universiteit Rotterdam
Charles van Marrewijk, Erasmus Universiteit
and CEPR, and Hugo Rojas-Romagosa, Erasmus
Rotterdam, Dynamics of Chinese Comparative
Universiteit Rotterdam, Household Inequality,
Advantage
Welfare, and the Setting of Trade Policy
04-039/2
04-088/2
Felix Eschenbach, Erasmus Universiteit Rotterdam,
Enrico C. Perotti, Universiteit van Amsterdam and
Finance and Growth: A Survey of the Theoretical and
CEPR, and Paolo Volpin, London Business School and
Empirical Literature
CEPR, Lobbying on Entry
04-049/2
04-090/2
Joseph F. Francois, Erasmus Universiteit Rotterdam
Ana Ferreira, ISA, Technical University of Lisbon,
and CEPR, and Dean Spinanger, Institute for World
Portugal, and Casper G. de Vries, Erasmus
Economics, Kiel, Regulated Efficiency, World Trade
Universiteit Rotterdam, Optimal Confidence
Organization Accession, and the Motor Vehicle Sector
Intervals for the Tail Index and High Quantiles
in China 04-091/2 04-050/2
Enrico C. Perotti, Universiteit van Amsterdam and
Joseph F. Francois, Erasmus Universiteit Rotterdam
CEPR, and Ernst-Ludwig von Thadden, Université de
and CEPR, and Ian Wooton, Strathclyde University
Lausanne and CEPR, The Political Economy of
and CEPR, Market Structure in Services and Market
Dominant Investors
Access in Goods 04-093/2 04-051/2
Carmen Fillat, Universidad de Zaragoza, and Joseph
Joseph F. Francois, Erasmus Universiteit Rotterdam
F. Francois, Erasmus Universiteit Rotterdam and
and CEPR, and Hugo Rojas-Romagosa, Erasmus
CEPR, National and International Income Dispersion
Universiteit Rotterdam, Trade Policy and the
and Aggregate Expenditures
Household Distribution of Income 04-102/2 04-055/2
Jaap L. Geluk and Casper G. de Vries, Erasmus
John B. Davis, Universiteit van Amsterdam, Identity
Universiteit Rotterdam, Weighted Sums of
and Commitment: Sen’s Conception of the Individual
Subexponential Random Variables and Asymptotic Dependence between Returns on Reinsurance Equities
23
tinbergen magazine 10, fall 2004
04-103/2
04-061/3
Sandra Poncet, Erasmus Universiteit Rotterdam,
Carla SĂĄ, University of Minho, Raymond J.G.M.
A Fragmented China
Florax, Vrije Universiteit Amsterdam and Purdue University, and Piet Rietveld, Vrije Universiteit
Labour, Region and Environment
Amsterdam, Does Accessibility to Higher Education Matter? Choice Behavior of High School Graduates in
04-036/3
the Netherlands
Joost van Acht, Institute of Innovation Research, Hitotsubashi University, Joop Stam and Roy Thurik,
04-062/3
Erasmus Universiteit Rotterdam, and Ingrid Verheul,
Michiel Evers, Ruud A. de Mooij, and Herman R.J.
EIM Business and Policy Research, Business
Vollebergh, Erasmus Universiteit Rotterdam, Tax
Ownership and Unemployment in Japan
Competition under Minimum Rates: The Case of European Diesel Excises
04-038/3 Jan Rouwendal and Arianne T. de Blaeij,
04-064/3
Vrije Universiteit Amsterdam, Inconsistent and
Bas van der Klaauw, Vrije Universiteit Amsterdam,
Lexicographic Choices in Stated Preference Analysis
Aico van Vuuren, Erasmus Universiteit Rotterdam, and Peter Berkhout, Universiteit van Amsterdam,
04-040/3
Labor Market Prospects, Search Intensity and the
Miguel Portela, Minho University, Rob Alessie,
Transition from College to Work
Utrecht University, and Coen Teulings, Erasmus Universiteit Rotterdam, Measurement Error in
04-070/3
Education and Growth Regressions
Chiara M. Travisi, Polytechnic of Milan, and Peter Nijkamp, Vrije Universiteit Amsterdam, Willingness
04-045/3
to Pay for Agricultural Environmental Safety
Jos van Ommeren, Vrije Universiteit Rotterdam, The Commuting Distribution
04-073/3 Hans Hoogeveen, World Bank, Bas van der Klaauw,
04-047/3
Vrije Universiteit Amsterdam and CEPR, and Gijsbert
Cees van Beers, Delft University of Technology,
van Lomwel, Tilburg University, On the Timing of
Jeroen C.J.M. van den Bergh, Vrije Universiteit
Marriage, Cattle and Weather Shocks
Amsterdam, AndrĂŠ de Moor, National Institute for Public Health and the Environment, and Frans
04-074/3
Oosterhuis, Vrije Universiteit Amsterdam,
Marco Alderighi, CERTeT - Bocconi University,
Determining the Environmental Effects of Indirect
Alessandro Cento, KLM Royal Dutch Airlines,
Subsidies
Revenue Management Dept, Milan, and Peter Nijkamp and Piet Rietveld, Vrije Universiteit
04-048/3
Amsterdam, The Entry of Low-Cost Airlines: Price
Jeroen C.J.M. van den Bergh, Vrije Universiteit
Competition in the European Airline Market
Amsterdam, Evolutionary Analysis of the Relationship between Economic Growth,
04-078/3
Environmental Quality and Resource Scarcity
J. Joseph Beaulieu, Board of Governors of the Federal Reserve System, Washington DC, and Eric J.
04-052/3
Bartelsman, Vrije Universiteit Amsterdam,
Mauro Mastrogiacomo, Vrije Universiteit Amsterdam
Integrating Expenditure and Income Data: What to
and CPB Netherlands Bureau for Economic Policy
do with the Statistical Discrepancy?
Analysis, On Expectations, Realizations and Partial Retirement
04-079/3 Maria Abreu, Henri L.F. de Groot, and Raymond
04-053/3
J.G.M. Florax, Vrije Universiteit Amsterdam, Spatial
Bernard M.S. van Praag, Universiteit van Amsterdam,
Patterns of Technology Diffusion: An Empirical
The Connexion between Old and New Approaches to
Analysis using TFP
Financial Satisfaction 04-080/3 04-054/3
Joop Hartog, Hans van Ophem, and Simona Maria
Simonetta Longhi and Peter Nijkamp,
Bajdechi, Universiteit van Amsterdam, How Risky is
Vrije Universiteit Amsterdam, and Jacques Poot,
Investment in Human Capital?
University of Waikato, Spatial Heterogeneity and the Wage Curve Revisited
04-081/3 Thomas de Graaff and Henri L.F. de Groot, Vrije Universiteit Amsterdam, Ethnic Concentration and Human Capital Formation
24
tinbergen magazine 10, fall 2004
04-083/3
04-106/3
Wouter Vermeulen, Vrije Universiteit Amsterdam
Simon Parker, Durham University, and Mirjam van
and CPB Netherlands Bureau for Economic Policy
Praag, SCHOLAR, Universiteit van Amsterdam,
Analysis, and Jos van Ommeren, Vrije Universiteit
Schooling, Capital Constraints and Entrepreneurial
Amsterdam, Interaction of Regional Population and
Performance
Employment 04-107/3 04-085/3
Marco van Herpen, Groningen University and BCG,
Jan Rouwendal, Vrije Universiteit Amsterdam, and
Kees Cools, Groningen University and BCG, and
John Pommer, Connekt, An Indirect Utility Model of
Mirjam van Praag, SCHOLAR, Universiteit van
Multiple Car Ownership and Use
Amsterdam, Wage Structure and the Incentive Effect of Promotions
04-087/3 Gerrit M端ller, Erasmus Universiteit Rotterdam, and
04-109/3
Erik Plug, Universiteit van Amsterdam, Estimating
Jos van Ommeren, Vrije Universiteit Amsterdam,
the Effect of Personality on Male-Female Earnings
and Giovanni Russo, Utrecht University, Faculty of Social Sciences, Sequential or Non-sequential
04-089/3
Recruitment?
Ghebreegziabiher Debrezion, Eric Pels, and Piet Rietveld, Vrije Universiteit Amsterdam, The Effects
04-110/3
of Railway Investments in a Polycentric City
Erik T. Verhoef, Vrije Universiteit Amsterdam, Second-best Congestion Pricing Schemes in the
04-092/3
Monocentric City
Jos van Ommeren, Vrije Universiteit Amsterdam, and Joyce Dargay, ESRC Transport Studies Unit,
Econometrics
University College London, The Optimal Choice of Commuting Speed: Consequences for Commuting
04-030/4
Time, Distance and Costs
Marc J. Goovaerts, Universiteit van Amsterdam, Cath. University of Leuven, Center for Risk and
04-094/3
Insurance Studies, Rob Kaas, Roger J.A. Laeven and
Gerard J. van den Berg, Vrije Universiteit
Qihe Tang, Universiteit van Amsterdam,
Amsterdam, IFAU-Uppsala, CEPR, IZA, and INSEE-
A Co-monotonic Image of Independence for Additive
CREST, Maarten Lindeboom, Vrije Universiteit
Risk Measures
Amsterdam, and Peter J. Dolton, University-uponTyne and Center for Economic Policy, LSE, Survey
04-056/4
Non-response and Unemployment Duration
Agnes S. Joseph and Jan F. Kiviet, Universiteit van Amsterdam, Viewing the Relative Efficiency of IV
04-096/3
Estimators in Models with Lagged and Instantaneous
Morten Marott Larsen, University of Copenhagen
Feedbacks
and Institute of Local Government Studies, Ninette Pilegaard, Danish Transport Research Institute,
04-067/4
Lyngby, and Jos van Ommeren, Vrije Universiteit
Martin Martens, Dick van Dijk and Michiel de Pooter,
Amsterdam, Congestion and Residential Moving
Erasmus Universiteit Rotterdam, Modeling and
Behaviour
Forecasting S&P 500 Volatility: Long Memory, Structural Breaks and Nonlinearity
04-097/3 Jacob J. de Vries, Peter Nijkamp and Piet Rietveld,
04-072/4
Vrije Universiteit Amsterdam, Exponential or Power
Yebin Cheng and Jan G. de Gooijer, Universiteit van
Distance-decay for Commuting? An Alternative
Amsterdam, On the u-th Geometric Conditional
Specification
Quantile
04-104/3 Justin van der Sluis and Mirjam van Praag, SCHOLAR, Universiteit van Amsterdam, and Arjen van Witteloostuijn, University of Groningen and University of Durham, Comparing the Returns to Education for Entrepreneurs and Employees 04-105/3 Ruta Aidis, University College London, and Mirjam van Praag, SCHOLAR, Universiteit van Amsterdam, Illegal Entrepreneurship Experience
25
tinbergen magazine 10, fall 2004
Colophon Tinbergen Magazine is published by the Tinbergen Institute, an economic research institute operated jointly by the Economics and Econometrics faculties of three Dutch universities: Erasmus Universiteit Rotterdam, Universiteit van Amsterdam and Vrije Universiteit Amsterdam. Tinbergen Magazine highlights on-going research at the Tinbergen Institute and is published twice a year.
Photographs Henk Thomas, Amsterdam Levien Willemse, Rotterdam Editorial services JB Editing, Breda Design Crasborn Grafisch Ontwerpers bno, Valkenburg a.d. Geul Printing Drukkerij Tonnaer, Kelpen ISSN 1566-3213 Addresses Tinbergen Institute Amsterdam Roetersstraat 31 1018 WB Amsterdam The Netherlands Telephone: +31 (0)20 551 3500 Fax: +31 (0)20 551 3555 Tinbergen Institute Rotterdam Burg. Oudlaan 50 3062 PA Rotterdam The Netherlands Telephone: +31 (0)10 408 8900 Fax: +31 (0)10 408 9031 e-mail: tinbergen@tinbergen.nl http://www.tinbergen.nl
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tinbergen magazine 10, fall 2004
Tinbergen Research Institute Four themes distinguish Tinbergen Institute’s research programme: I. Institutions and Decision Analysis II. Financial and International Markets III. Labour, Region and the Environment IV. Econometrics and Operations Research Each theme covers the whole spectrum of economic analysis, from theoretical to empirical research. Stimulating discussions on theories, methodologies and empirical results arise from the interaction of the Institute’s faculty– comprised of approximately a hundred research fellows. These fellows are faculty members with excellent track records in economic research, active in organising research activities, teaching graduate courses and supervising Ph.D. students. Discussion Papers Research is pre-published in the institute’s own Discussion Paper Series. Download discussion papers at http://www.tinbergen.nl (section ‘Publications’). E-mail address for correspondence: tinbergen-magazine@tinbergen.nl Tinbergen Graduate School The Tinbergen Institute offers a five-year graduate programme, consisting of two years of intensive graduate coursework in its Master of Philosophy (M.Phil.) in Economics programme and three years of Ph.D. thesis research. The M.Phil. programme is a two-year research master in economics, econometrics, and finance that leads to an M.Phil. degree in economics. Due to the demanding nature of the programme, the M.Phil. is open only to a rigorously selected group of students. An excellent preparation for Ph.D. thesis research, the M.Phil. programme is connected to three-year Ph.D. positions in the economics departments of the Erasmus Universiteit Rotterdam, the Universiteit van Amsterdam, and the Vrije Universiteit Amsterdam. The M.Phil. in Economics has been accredited by the Dutch and Flemish Accreditation Organization for higher education (NVAO), and eligible students can claim two years of financial aid (“studiefinanciering”). In addition, the Tinbergen Institute allocates a limited number of scholarships each year based on academic merit.
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Detailed information on the institute’s graduate programme and the application procedure can be found in the Graduate School section of www.tinbergen.nl. Please direct any questions to Ms. Carien de Ruiter at applications@tinbergen.nl. Board A.G.Z. Kemna (Chair), J.-W. Gunning, H. Oosterbeek, J.J.M. Kremers, C.G. de Vries. General Director M.C.W. Janssen Director of Graduate Studies J. Abbring Research Programme Co-ordinators Institutions and Decision Analysis: O.H. Swank, G. van der Laan Financial Economics and International Markets: F.C.J.M. de Jong, J.-M. Viaene Labour, Region and the Environment: J.C.J.M. van den Bergh, H. Oosterbeek Econometrics: R. Dekker, S.J. Koopman Scientific Council D.W. Jorgenson (Harvard University, Chair), M. Dewatripont (CORE), P. de Grauwe (Leuven University), D.F. Hendry (Oxford University), R.C. Merton (Harvard University), D. Mortensen (Northwestern University), S. Nickell (Oxford University), T. Persson (Stockholm University), L. Wolsey (CORE) Social Advisory Council C.A.J. Herkströter (Chair), R.G.C. van den Brink (ABN-AMRO), H.J. Brouwer (DNB), M.J. Cohen (Mayor of Amsterdam), F.J.H. Don (CPB), C. Maas (ING), F.A. Maljers, I.W. Opstelten (Mayor of Rotterdam), A.H.G. Rinnooy Kan (ING), H. Schreuder (DSM), R.J. in ’t Veld, P.J. Vinken, L.J. de Waal (FNV) Editorial Board Tinbergen Magazine B.K. Bierut, T.R. Daniëls, M.C.W. Janssen, R. Mendes, F. Ravazzolo How to subscribe? Address for correspondence/ subscriptions: Tinbergen Institute Rotterdam Burg. Oudlaan 50 3062 PA Rotterdam the Netherlands E-mail: tinbergen-magazine@tinbergen.nl. Address changes may be sent to the above e-mail address.
In this issue
At the helm of Tinbergen Institute An interview with Maarten Janssen
On commuting
Finance and inequality: Theory and evidence
New column: Letters from Alumni
Publications and References