Robert Rowthorn

Centralisation, Employment and Wage Dispersion

This paper is about bargaining institutions and their influence on wage dispersion and employment. Using novel statistical measures, it compares labor-market performance in seventeen OECD countries since 1973. It concludes that countries with highly centralized wage bargaining have generally achieved the best performance, combining high employment with low wage dispersion, thereby avoiding certain major inequalities prevalent elsewhere. The paper also presents a formal model of bargaining based on the work of L. Calmfors and J. Driffill (1988). Simulations are used to illustrate how this model generates the kind of outcomes described in the empirical part of the paper. Copyright 1992 by Royal Economic Society.

Optimal control of epidemics in metapopulations.

Little is known about how best to deploy scarce resources for disease control when epidemics occur in different but interconnected regions. We use a combination of optimal control methods and epidemiological theory for metapopulations to address this problem. We consider what strategy should be used if the objective is to minimize the discounted number of infected individuals during the course of an epidemic. We show, for a system with two interconnected regions and an epidemic in which infected individuals recover and can be reinfected, that equalizing infection in the two regions is the worst possible strategy in minimizing the total level of infection. Treatment should instead be preferentially directed at the region with the lower level of infection, treating the other subpopulation only when there is resource left over. The same strategy holds with preferential treatments of regions with lower levels of infection when quarantine is introduced.

Efficiency Wages And Wage Dispersion

The efficiency wage hypothesis has normally been used to generate an equilibrium level of unemployment. The authors use it, instead, to generate an equilibrium wage distribution. This paper starts by generalizing the previous work of R. M. Solow in this area. They then use their results on effort-wage elasticities to derive a model of wage dispersion. The wage rate is shown to be an increasing function of the damage potential of workers; that is, workers with the highest damage potential receive the highest wage. The analysis of the equilibrium of the wage distribution provides interesting qualitative insights into the nature of actual wage differentials. Copyright 1991 by The London School of Economics and Political Science.

Transnational corporations and the global economy

Preface - Notes on the Contributors - Introduction: TNCs and the Global Economy R.Kozul-Wright & R.Rowthorn - PART 1: GLOBALISATION IN PERSPECTIVE - Globalisation Myths: Some Historical Reflections on Integration, Industrialisation and Growth in the World Economy R.Kozul-Wright & P.Bairoch - The Limits of Globalisation W.Milberg - Multinational Corporations: An Historical Analysis M.Wilkins - Transnational Service Corporations in the Process of Globalisation P.Petit - Direct Foreign Investment, Transnational Corporations and Growth: Some Empirical Evidence and a North-South Model A.Dutt PART 2: TRANSNATIONAL CORPORATIONS, THE STATE AND ECONOMIC DEVELOPMENT - TNCs and Third World States: From the Old Internationalisation to the New P.Evans - TNCs and Industrial Strategy H-J.Chang - TNCs and the Nation State M.Panic - PART 3: LESSONS FROM RECENT EXPERIENCE - New Trends in Japanese Trade and FDI: Post-Industrial Transformation and Policy Challenges Y.Akyuz - Internationalization of Industrial Firms: Implications for Domestic Growth and Industrial Structure in Small Open Economies P.Braunehjelm & P.Yla-Antilla - Transnational Corporations in Central and Eastern Europe and in the Former Soviet Union: A Return or a New Beginning? M.Simai - International Trade, Outsourcing and Labour: A View from the Developing Countries E.Amadeo - TNCs and Industrial Restructuring: The Case of the Mexican Automobile Industry: M.Mortimer - Index

Democracy and efficiency in the economic enterprise

The collapse of central planning was hailed as evidence of the economic and moral superiority of capitalism over any possible alternative. The essays in this book challenge that claim. The case for more democratic forms of enterprise management is considered from a variety of viewpoints. One chapter deals with the philosophical justification for enterprise democracy. The remaining chapters are devoted to the question of efficiency, which has been central to economic debates about ownership and control. The orthodox belief amongst economists is that any shift to more democratic forms of enterprise control would be unworkable. The essays in this book provide a thorough theoretical and empirical critique of this orthodoxy.

Kalecki Centenary Lecture: The Political Economy of Full Employment in Modern Britain

This paper examines the regional aspects of structural change and unemployment in the UK. Manufacturing decline has severely hit the industrial conurbations of the North. Although reflecting long-run trends, this decline has been exacerbated by poor macroeconomic management. New service jobs have been created but most of these are in the South. This growing North-South divide is reflected in a southward drift of population. The extent of the northern decline is masked by government expenditures that help to maintain employment in depressed areas. But this is only a temporary solution. As population drifts away from the depressed areas, public expenditures will eventually be cut, causing further loss of employment and population in these areas. Using a simple export base model, the paper quantifies the underlying decline of the northern economy. In relative terms, this decline has been almost as fast in the 1990s as in the previous decade of industrial crisis.

PROCEDURAL RATIONALITY AND EQUILIBRIUM TRUST

This article examines the determinants of steady state trust in a population of principals and agents, where the former learn from experience using boundedly rational procedures. For any distribution of agent types, the long-run distribution of principal behaviour is characterised. Heterogeneity in the behaviour of principals persists under both the sampling procedure ( Osborne and Rubinstein, 1998 ) and the maximum average procedure ( Rustichini, 2003 ). Despite its greater sophistication, the maximum average procedure can result in poorer performance than the sampling procedure, both from the perspective of the principal and also with respect to aggregate payoffs. Copyright

Returns to Scale and the Economic Impact of Migration

Abstract This paper is concerned with the impact of international migration on a regional economy. It is based on the assumption that immigration causes the population of the region to grow, thereby increasing the cost of living for existing residents. In one version of the model, the government responds by increasing wages in the public sector so as to help offset the higher cost of living. The private sector follows suit. In another version of the model, wages are determined by supply and demand. The paper investigates what happens to living standards, unemployment and the location of the native population under different assumptions about returns to scale.

The optimal treatment of an infectious disease with two strains.

This paper explores the optimal treatment of an infectious disease in a Susceptible-Infected-Susceptible model, where there are two strains of the disease and one strain is more infectious than the other. The strains are perfectly distinguishable, instantly diagnosed and equally costly in terms of social welfare. Treatment is equally costly and effective for both strains. Eradication is not possible, and there is no superinfection. In this model, we characterise two types of fixed points: coexistence equilibria, where both strains prevail, and boundary equilibria, where one strain is asymptotically eradicated and the other prevails at a positive level. We derive regimes of feasibility that determine which equilibria are feasible for which parameter combinations. Numerically, we show that optimal policy exhibits switch points over time, and that the paths to coexistence equilibria exhibit spirals, suggesting that coexistence equilibria are never the end points of optimal paths.

The Economics of Social Stratification in Premodern Societies

We present a microeconomic model of social stratification, which includes an endogenous fertility component. In the model, egalitarian and stratified societies coexist. The latter are divided into 2 hereditary classes: a warrior elite and a productive class. The model entails that the extra cost warriors must incur to train and equip their children for war determines the relative sizes of both classes and the degree of economic inequality. Higher costs of warrior children imply a greater economic advantage for warriors and a smaller ratio of warriors to producers. These results are consistent with the historical evidence. Finally, we explore conditions under which the social contributions of the warrior elite could discourage a revolution.