Juin-jen Chang

Is It Worthwhile to Pay Referees

There are puzzles in refereeing scholarly articles: Why are referees willing to review a paper without payment, and is it worthwhile to pay referees in order to raise the review rate? Two interesting results are found in this article. First, when reviewing services are driven by reciprocity, the equilibrium participation of referees may exhibit the so-called self-fulfilling feature. Second, the optimal payment may not be zero if the referee receives the benefit of reputation gained by refereeing an article. In particular, this article will show that those journals whose status quo review rate is lower tend to pay reviewers more while journals whose status quo review rate is higher do not find it worthwhile to pay referees enough. This result implies that, in order to raise its quality, a journal with a low review rate is more likely to adopt a strategy to increase pay and attract a critical mass of referees.

Is the Efficiency Wage Efficient? The Social Norm and Organizational Corruption*

The effectiveness of efficiency wage incentives is often jeopardized by perverse organizational corruption. We model organizational corruption as a phenomenon of social interaction and relate the substantial psychological role characterizing the social norm to the corruption problem. We find that if the status quo bribery rate within the firm is high, social norms can no longer serve as a sufficient sanction against a corrupt supervisor; pandemic organizational corruption tends to generate a critical mass effect--the snowball effect--which intensifies the corruption effect. This intensified effect, due to the snowballing character of social norms, may more than offset the usual incentive effect of wages, resulting in more widespread shirking in the firm. Copyright 2002 by The editors of the Scandinavian Journal of Economics.

Profit sharing as a worker discipline device

Abstract A synthesis of profit-sharing and efficiency wage models is constructed to provide a preliminary account of how a firm determines its pay parameters, and why it chooses to be a profit-sharing or a fixed-wage firm. We find that the properties of the workers effort function crucially influence the firms choices between different compensation systems, and that the adoption of a profit-sharing scheme cannot guarantee the attainment of full employment. Other findings of the paper also seem to be very different from those of Weitzmans share model.

Congestion Externalities of Tourism, Dutch Disease and Optimal Taxation: Macroeconomic Implications

This article develops a dynamic optimising macro model that sheds light on two tourism stylised facts, namely, (i) the congestion externalities caused by tourism expansion and (ii) the wealth effect generated by the revenues from overseas tourism taxation. Based on the two salient characteristics, our positive analysis indicates that if tourism tax revenues are used to provide rebates to local residents, because of the wealth effect, Dutch disease cannot be cured by the consumption tax on tourists. In contrast, if tourism tax revenues are used to provide productive government services for the manufacturing sector, Dutch disease can be treated effectively by taxation tailored for tourism. In a normative analysis, we show that to simultaneously correct the distortion caused by the congestion externality of tourism and generate the revenues from overseas tourism taxation, a government should not only levy a general tax on tourism consumption, but it should also discriminate between domestic and overseas tourism consumption, so that a positive tax surcharge is imposed on foreign tourists. In addition, the key factors that govern the optimal rates of a general tax and tax surcharge are also examined in this article.

Profit sharing, worker effort, and double-sided moral hazard in an efficiency wage model

Abstract This paper develops a double-sided moral hazard model to examine the productivity and employment effects of an intensifying profit-sharing scheme. We show that, in order to obtain the productivity-enhancing and employment-expanding effects, a profit-sharing scheme needs a supportive element of true sharing by the employer. If a double moral hazard exists for the workers effort and the firms declaration of true profits, a sharing scheme involving larger profit-related pay is not necessarily an effective policy for boosting work morale and employment. However, if the firm-side moral hazard problem is absent, the favorable effects of profit sharing are achieved.

Union membership and employment dynamics with endogenous union density

Abstract Based upon an intertemporal optimizing model of trade unions, this paper proposes a plausible union density function and examines the relative level of employment between the intertemporal model and the conventional static model. We find that endogenizing union density provides an incentive for the union, that is concerned about its future membership level, to hire a lower level of employment. This opens the way to obtain the result that employment is lower in the intertemporal model than in the conventional static model. We also find that the equilibrium employment level may not display a positive linkage with union membership after endogenizing union density.

TRADE UNIONS, UNEMPLOYMENT, ECONOMIC GROWTH, AND INCOME INEQUALITY

In this paper, unemployment, growth, and income inequality are interdependent and endogenously determined in a unified model of a trade union. Analytically, we show that the effective labor force exhibits an intensive margin response, in the sense that in response to higher unionization the number of employed workers decreases, but each individual employed worker provides more working hours. This intensive margin response leads to the possibility of the coexistence of high unemployment and high growth. Moreover, unionization gives rise to an ambiguous effect on income inequality, whereas it has an unambiguously positive effect on the labor income share and growth rate. Our numerical study shows that the elasticity of substitution between labor and capital plays an important role in governing the steady-state consequences and affecting the impact of (de-) unionization. These results provide not only a plausible explanation of the empirical evidence, but also a reconciliation for the disparity in the empirical findings.

ENDOGENOUS TIME PREFERENCE, INTEREST‐RATE RULES, AND INDETERMINACY*

This paper extends the Benhabib et al. flexible‐price, money‐in‐the‐utility‐function model by considering endogenous time preference and re‐examines equilibrium indeterminacy in response to alternative interest‐rate rules. We show that either an active or a passive interest‐rate feedback rule can generate local indeterminacy even if consumption and real money balances are Edgeworth independent. This result is in sharp contrast to that in the related literature. We also find that in the presence of endogenous time preference, local indeterminacy may occur regardless of whether the monetary policy is based on the interest‐rate feedback rule or money growth‐rate targeting.

Optimal Fiscal Policies, Congestion and Over-entry

By shedding light on market imperfections and the congestion of public goods, we show that free entry in a market equilibrium will lead to excessive entry relative to the social optimum. Moreover, by specifying a generalized congestion function, it is also shown that different fiscal policies, including labor income tax, capital income tax and government expenditure, play a distinct role in terms of remedying market distortions. Specifically, optimal income taxes decrease with the degree of market imperfections in order to remove the monopoly inefficiency, while they increase with the degree of congestion in order to remedy the adverse externality caused by congestion distortion. Since a higher degree of increasing returns to an expansion in the variety of intermediate goods is found to intensify the congestion effect of government infrastructure expenditure, the optimal rule of government expenditure proposed by Barro (1990) should be modified.

Sectoral Composition of Government Spending and Macroeconomic (In)Stability

This paper examines the quantitative interrelations between sectoral composition of public spending and equilibrium (in)determinacy in a two-sector real business cycle model with positive productive externalities in investment. When government purchases of consumption and investment goods are set as constant fractions of their respective sectoral output, we show that the public-consumption share plays no role in the models local dynamics, and that a sufficiently high public-investment share can stabilize the economy against endogenous belief-driven cyclical aI uctuations. When each type of government spending is postulated as a constant proportion of the economyiI s total output, we find that there exists a trade-o§ between public consumption versus investment expenditures to yield saddle-path stability and equilibrium uniqueness.