Yochanan Shachmurove

Why is China so Competitive? Measuring and Explaining China's Competitiveness

This paper evaluates factors responsible for the competitiveness of China in the world economy and relative to its East Asian rivals. China has been highly successful in capturing world export markets. Chinese competitiveness is not just a matter of an undervalued exchange rate and extremely low labour costs. It reflects the coincidence of favourable cost conditions with improvements in Chinas ability to produce products that meet world market specififications. These improvements are closely related to foreign participation in Chinas economy through foreign direct investment and joint venture enterprises.

Entrepreneurial Ventures and Wage Differentials Between Germans and Immigrants

This paper focuses on the entrepreneurial undertaking of immigrants and natives in Germany. We first study factors that affect the sorting of individuals into self-employment and then we investigate whether self-employment has a differential effect on the wages of individual workers and can lead them to economic success. We employ recent data from the German Socioeconomic Panel that allow us to identify and compare four distinct groups: West Germans, East Germans, guestworkers, and ethnic Germans. We find that the probability of self-employment increases significantly with age for all groups. For immigrants, the years-since-migration exhibits a U-shape. During the first years since migration the likelihood of self-employment decreases over time. However, when immigrants have accumulated more years of residence in Germany, the likelihood is increasing again. This suggests that once immigrants have overcome the initial adjustment shock, self-employment is a means to take advantage of the opportunities of the host country and achieve a higher socio-economic standing. Among immigrants, guestworkers are twice as likely to choose self-employment as ethnic Germans. Further, we find that self-employment is a lucrative choice only for Germans who are in the upper end of the income distribution. “Rich” self-employed Germans enjoy a wage premium compared to their salaried counterparts. However, immigrants are able to traverse the socioeconomic gap through self-employment, irrespective of the part of the distribution they are at. Self-employed immigrants earn 22% more than the salaried immigrants.

Immigration and socioeconomic gaps: theory and applications

During the first decade of Israels existence large waves of immigrants came from Europe and the Middle East. This paper introduces an empirical study which compares the occupational socioeconomic score differentials between ethnic groups within and outside the kibbutz. The three groups examined are from Asia and Africa, from Europe and America, and the native-born population. It is found that the occupational socioeconomic score differentials after migration are lower in the kibbutz than outside it and that socioeconomic gaps outside the kibbutz increase after migration. In this paper, a model is presented which explains the empirical results. It compares the effects of migration inside the kibbutz, organized as a labour-managed firm, with the effects of migration inside the city, assumed to be organized as a perfectly competitive firm. The model also develops a gap function that quantifies the socioeconomic gaps and uses iso-gap curves to compare the premigration and postmigration gaps.

East Asian NIC manufactured intra-industry trade 1965–1990

Abstract This paper examines the intra-industry trade of the four East Asian Newly Industrialized Countries (Hong Kong, Singapore, South Korea and Taiwan) with European markets, Japan and the United States over the period 1965–1990. Five hypotheses are tested: (1) the effects of product differentiation; (2) the presence of scale economies; (3) the broadening of economic bases as the countrys GNP increases; (4) the influence of multinational corporations (MNCs); and (5) the income-similarity (Linder) Hypothesis. The paper notes the empirical relevance of Inter-Industry trade for NIC exports, and finds empirical support for several theoretical explanations of this phenomenon. ( JEL F14)

Subjective discount functions – an experimental approach

This study estimates the degree of the exponential-function (EF) misvaluation and its variation with three parameters: time, the product price level and its growth rate, as well as with personal characteristics. The results suggest an undervaluation of the compound discounting formula given by the exponential function and an overvaluation of the simple-interest discounting function. Findings appear in line with the hyperbolic function and perhaps indirectly related to the overconfidence and overreaction phenomena. A possible implication of the studys findings is that at least part of the intertemporal-choice anomalous behaviour documented in the experimental literature of economic psychology can be attributed to misevaluation of the exponential function.

The Role of Turkish Immigrants in Entrepreneurial Activities in Germany

This paper addresses a central issue to migration the role of immigrants in entrepreneurial activity. In particular, the paper focuses on the determinants of the decision to become an entrepreneur for Turks living in Germany. The paper provides some important benchmarks, including the self-employment behavior of natives. The paper utilizes a comprehensive and reliable data base, the German Socioeconomic Panel to undertake systematic econometric analyses using appropriate statistical methods. The findings are that observable characteristics play different roles in the self-employment choice of immigrants and natives, whereas age-earnings profiles are similar for native and immigrant entrepreneurs.

Portfolio analysis of South American stock markets

This paper analyses the optimal investment strategy in the stock markets of a selected group of South American countries: Mexico, Brazil, Argentina and Chile. The Markowitz efficiency frontiers are derived based on daily stock market index returns expressed in US dollars, for the period of 1 January 1988 through 23 December 1993. In addition to the Markowitz algorithm, the low partial moment algorithm is used. The benefits of international diversification are studied from the perspectives of an American investor who can invest both in the US and in the South American stock markets. The paper assesses the risks and rewards of investing in these countries based on both foreign exchange as well as sovereign risks. It is shown that the optimal portfolio derived provides a risk-adjusted return that is better or, as good as, the return realizable from investing in stock markets with lesser degrees of risk. The optimal portfolio is calculated based on daily stock-market returns for the emerging South American countries mentioned, with the S&P 500 Index incorporated into the analysis. The portfolios performance is then measured using various portfolio evaluation techniques.

The Premium in Black Foreign Exchange Markets: Evidence from Developing Economies

Abstract This paper examines the determinants of the premia between the black and official exchange rates using monthly data for 17 developing countries. The premium is hypothesized to be positively influenced by the official depreciation-adjusted interest rate differential and dollar value of domestic assets. It is hypothesized to be negatively influenced by the official real exchange rate, exports, and a seasonal factor associated with tourism. The countries studied are: Bangladesh, Brazil, Fiji, Gambia, Ghana, Guyana, Hungary, Ireland, Jamaica, Kenya, Nepal, Nigeria, Philippines, Somalia, South Africa, Uganda, and the former Yugoslavia. In general, the results are very supportive of the model. It is found that the interest rate differential and assets positively influence the premium, as is expected. The official real exchange rate is found to negatively influence the premium.

Institutional Changes of Specified Purpose Acquisition Companies (SPACs)

A Specified Purpose Acquisition Company (SPAC) is formed to purchase operating businesses within a priori determined time period. SPACs existed in U.S capital markets since the 1920s. Their corporate structure has recently become debated in the legal and financial literatures, especially their structural response to regulations by the Security and Exchange Commission (SEC) in the late 1990s. SPACs were traded on American Stock Exchange and Overt the Counter Bulletin Board. Since 2008, SPACs are listed on New York Stock Exchange and National Association of Securities Dealers Automated Quotations. This paper examines the determinants of the execution of mergers by SPACs.This study documents the changes in the corporate design of modern Specified Purpose Acquisition Companies (SPACs) for the years 2003–2012. Do institutional characteristics of SPACs determine the success of their merger outcomes? The paper finds that SPACs significantly redesigned their structure in the period under observation. In addition, the probability of a merger for SPACs increases if they are able to announce the deal soon after the Initial Public Offering (IPO), if the deal focuses on China and when their IPO is underwritten by Early Bird Capital.

Social cost benefit analysis of commercial and residential burglar and fire alarms

Abstract This paper evaluates the net benefits yielded by residential and commercial burglar and fire alarm systems. The policy issue addressed is whether or not alarms should be encouraged by local police departments as a crime prevention measure. It is shown that the total benefits of burglar alarm ownership outweigh the total costs for the combined and separate commercial and residential units. Police respond to each activation with two patrol cars. On the average, alarms are activated 1.12 times a year, and 94 to 98 percent of all activations are false. Thus, alarms impose a significant burden on police resources. Additionally, the fear of being fined is not an effective deterrent against the installation of a burglar alarm. The data was gathered from a suburban community in Pennsylvania that is a prototype for many U.S. suburban localities. The data is regarding individual properties collected from police files on the attributes of burglaries and alarm ownership. Attributes of properties were derived from the real estate board of the county. Data on incidents and the value of property stolen was obtained from questionnaires sent out to all burglary victims.