Michael A. Nolan

Self-Employment Wealth and Job Creation: The Roles of Gender, Non-Pecuniary Motivation and Entrepreneurial Ability

This paper uses National Child Development Study data for a large cohort of British individuals, to explore the influence of education, inheritance and other background characteristics on the propensity to become self-employed; and also on subsequent success, as measured by job and wealth creation. For the first time, we study the effects of our regressor variables on our success measures via disaggregation of our sample by gender – and, in this way, reveal striking differences between the determinants of male and female entrepreneurial performance.

When Less is More: Distinguishing Between Entrepreneurial Choice and Performance

This paper uses NCDS data on individual characteristics to distinguish determinants of entrepreneurial choice, income and job generation. A new model of utility from self‐employment shows that relaxing liquidity constraints could inhibit performance. Empirically, we find that a range of inheritance enhances the performance of the self‐employed and increases self‐employment; while higher education also increases self‐employment income and job creation, but reduces the probability of self‐employment. Combining these choice and performance effects, we find that education has a positive net effect on job creation, as does inheritance up to a certain threshold.

Contracted Workdays and Absence

We present results of a negative binomial model on the determinants of the number of days of absence in a given year for a sample of 2049 workers drawn from three factories. We find evidence of the terms of the remuneration contract being important and we offer an interpretation of the differential effect of the company sickpay scheme on the behaviour of workers contracted to work four or five days a week.

Testing the Tunnel Effect: Comparison, Age and Happiness in UK and German Panels

In contrast to previous results combining all ages, we find positive effects of comparison income on happiness for the under 45s and negative effects for those over 45. In the UK, these coefficients are several times the magnitude of own income effects. In West Germany, they cancel out to give no effect of comparison income on life satisfaction in the whole sample when controlling for fixed effects, time-in-panel, and age-groupings. Pooled OLS estimation gives the usual negative comparison effect in the whole sample for both West Germany and the UK. The residual age-happiness relationship is hump-shaped in all three countries. Results are consistent with a simple life cycle model of relative income under uncertainty.Jel codesD10, I31, J10

So Far So Good: Age, Happiness, and Relative Income

In a simple 2-period model of relative income under uncertainty, higher comparison income for the younger cohort can signal higher or lower expected lifetime relative income, and hence either increase or decrease well-being. With data from the German Socio-Economic Panel and the British Household Panel Survey, we first confirm the standard negative effects of comparison income on life satisfaction with all age groups, and many controls. However when we split the West German sample by age we find a positive significant effect of comparison income in the under 45s, and the usual negative effect only in the over 45 group. With the same split in UK and East German data, comparison income loses significance, which is consistent with the model prediction for the younger group. Our results provide first evidence that the standard aggregation with only a quadratic control for age can obscure major differences in the effects of relative income.

Welfare Policies, Relative Income and Majority Choice

In a model with heterogeneous workers, quasi-linear utility and both intensive and extensive margins of employment, we investigate welfare with optimal linear taxes and wage subsidies under Rawlsian and utilitarian objectives, and the effects of concern for relative income. Relativity implies much higher optimal utilitarian taxes, but makes little difference to already very high optimal Rawlsian taxes. A substantial wage subsidy is generally optimal. We also consider the political economy of pairwise majority voting preferences for differing policies. Rawlsian redistribution is always defeated, though often by only a modest majority, while a constrained utilitarian policy, with equal transfers to unemployed and employed individuals—a universal basic income—wins a majority in all cases, which is robust to changes in the underlying productivity distribution.

In Defence of Labour Market Institutions

richer countries, examining whether revealed environmental preferences of voters empower their governments to address the environmental challenges of poorer countries. The role that interest groups play in this affair is also analysed. The relative ‘greening’ of the major multilateral aid agencies is the subject of discussion of Chapter 7. It documents how five multilateral agencies have been responsible for over 90 per cent of the funding that all multilaterals provided in the 1980s and 1990s. The World Bank, reviewed as a more extended case study, alone provided one-third to one-half of all multilateral environmental aid during this period. Chapter 8 turns to the issue of delegation, explaining why some countries choose to delegate much of their environmental aid to multilateral aid agencies. It demonstrates that donor governments with small or inept bilateral aid agencies or those with less power in the international fora are more likely to delegate authority to multilaterals. Naturally, multilateral agencies with a track record of good performance have a higher chance of receiving such delegation. The final chapter concludes by laying out 10 ‘principles’ which the authors believe should guide the allocation of environmental aid. These principles are not prescriptive in the sense that they are not policy options for bilateral and multilateral aid agencies, but they do offer a guiding list of values for development specialists and agencies. In summary, the contribution of this highly topical book is twofold. First, it describes and reports the results from the authors PLAID (Project-Level Aid) database project – which is the collection, standardisation, and coding of development projects from over 50 bilateral and multilateral donors to more than 170 recipient countries over two decades. Projects are classified according to how kind they are to the environment. Although the authors’ classification is understandably crude, the resulting database containing 428,000 development projects is an important and useful step for subsequent analysis. The second contribution of the book is its systematic statistical analysis of environmental aid from both bilateral and multilateral sources. Given the dearth of research on this topic, the contribution of this book and the authors’ PLAID project to future research on environmental aid is enormous.