Jarle Møen

Lean and Hungry or Fat and Content? Entrepreneurs' Wealth and Start-Up Performance

If entrepreneurs are liquidity constrained and not able to borrow to operate on an efficient scale, economic theory predicts that entrepreneurs with more personal wealth should do better than those with less wealth. We test this hypothesis using a novel data set covering a large panel of start-ups from Norway. Consistent with liquidity constraints, we find a positive relation between founder prior wealth and start-up size. The relationship between prior wealth and start-up performance, as measured by profitability on assets, increases in the first three wealth quartiles. In the top wealth quartile, however, profitability drops sharply in wealth. Our findings are consistent with a luxury good interpretation of entrepreneurship and that higher wealth may induce a less alert or a less dedicated management. We conclude that an abundance of resources might do more harm than good for start-ups.

Trade and Development: Is South-South Co-operation a Feasible Strategy?

The first part of this article gives a brief overview of the main problems facing the developing countries in the present international trading system, and reviews the debate on import substitution vs. export promotion. Towards this background the main part of the article discusses South-South co-operation as an alternative or complementary development strategy. Global South-South co-operation and collective self-reliance is largely dismissed as an ideologically motivated policy recommendation, overlooking the large number of conflicting interests among developing countries. The areas of joint interest are greater at regional or subregional levels, and a number of South-South integration schemes have been signed during the last decade. There are several potential gains associated with these integration processes, but substantial economic and political barriers have to be overcome. When geographically and politically possible, North-South integration schemes may have larger advantages than pure South-South arrangements.

Publication Bias in the Returns to R&D Literature

The returns to R&D literature is large and has been surveyed on several occasions. We complement previous surveys by using formal meta analytic techniques to analyse publication bias. We find evidence consistent with a strong positive bias in the part of the literature that controls for unobserved firm fixed effects. The reason may be that fixed effects specifications are particularly susceptible to measurement errors and therefore have a high probability of producing implausibly low return estimates. Implausible estimates are likely to be filtered out before being reported, and our analysis suggest that 26 % of a hypothetical complete literature is missing. Future reviews should take into account that the full effect of negative specifications biases may be masked by reporting and publication bias.

Job Loss and Regional Mobility

We study the migration behavior of displaced workers and find that job displacement increases regional mobility. We find, however, that noneconomic factors, such as family ties, are very important for the migration decision and that there is strong heterogeneity in outcomes. We find large income losses for workers who move to regions where they have family or to rural areas, while, for example, rural to urban movers realize a significant long-term earnings increase. We also find that life events related to fertility, divorce, and new relationships correlate with mobility after job loss and may partly explain the large income losses.

Effects of taxes and subsidies on media services

We start out reviewing the justification for press subsidies. The social value of journalism can be larger than what the newspapers are able to extract because of knowledge externalities, public good characteristics of investigative journalism and nonappropriability of consumer surplus. A free market will then underinvest in journalism. Problems related to economies of scale and scope further imply that the number of newspapers and their circulations may be too small, while advertising can give newspapers too strong incentives to aim for the mass market. According to the media economics literature, a preferential VAT regime provides higher differentiation incentives for existing newspapers, while a tax deduction for editorial expenses is well suited to increase journalistic investments. Micro economic theory further indicates that fixed transfers is the most efficient instrument to reduce entry barriers and avoid newspaper mortality, and that a subsidy per copy sold will increase circulation. We end the article by summarizing empirical evidence on the effects of media support.

A Simple Improvement of the IV Estimator for the Classical Errors-in-Variables Problem

Two measures of an error-ridden explanatory variable make it possible to solve the classical errors-in-variable problem by using one measure as an instrument for the other. It is well known that a second IV estimate can be obtained by reversing the roles of the two measures. We explore a simple estimator that is the linear combination of these two estimates, that minimizes the asymptotic mean squared error. In a Monte Carlo study we show that the gain in precision is significant compared to using only one of the original IV estimates. The proposed estimator also compares well with full information maximum likelihood under normality.