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2012/26 : The effect of within-group inequality in a conflict against a unitary threat

A group of agents must defend their individual income from an external threat by pooling their efforts against it. The winner of this confrontation is determined by a contest success function where members’ efforts may display different degrees of complementarity. Individual effort is costly and follows a convex isoelastic function. We investigate how the success of the group in the conflict and its members’ utilities vary with the degree of within-group inequality. We show that there is a natural relationship between the group’s probability of victory and the Atkinson index of inequality. If members’ efforts are complementary or the cost function convex enough, more egalitarianism within the group increases the likelihood of victory against the external threat. The opposite holds when members’ efforts are substitutes and the cost linear enough. Finally, we obtain conditions under which richer members of the group are willing to make transfers to poorer members in order to enhance their final payoff.

2012/21 : Trends in shotgun marriages: the pill, the will or the cost?

This paper examines the evolution of out-of-wedlock conceptions and births over the last four decades. Increases in conception outside of marriage only partially account for increases in the illegitimacy rate: controlling for age at pregnancy, being born one year later increases the probability of being single at first conception by 0.9 percentage points, while the probability of being single at first birth rises by 0.5 additional percentage points. The incidence of shotgun (post- conception) marriage among those conceiving out of wedlock decreased sharply, but the rate is not affected by the level of planning of the pregnancy nor is driven by non-users of modern contraception. However, women in marriage markets (defined by race, religion, and age) with high modern contraceptive use and who conceive outside marriage are less likely to give birth out of wedlock. The trend over time is significantly steeper when the level of modern contraceptive use in the woman’s market is considered, suggesting that the spread of the pill contributed to reduce the rate of increase of out-of-wedlock motherhood.

2012/16 : The contribution of the disabled to the attainment of the Europe 2020 strategy headline targets

In 2009 the European Council published its Europe 2020 Strategy in which it fixed a number of social, educational and economic targets to be achieved by 2020. However, given the current economic crisis, the majority of European countries are struggling to attain these goals. In this framework, this study seeks to quantify the potential contribution of one of the most disadvantaged groups, Europe’s disabled, to the attainment of the Europe 2020 Strategy targets via the monitoring of a number of indicators. The impact of changes in the situation of the disabled is simulated using micro data drawn from the 2009 European Union Statistics on Income and Living Conditions. Our results show that improving the socioeconomic situation of the disabled could be crucial for attaining the Europe 2020 targets. However, future policy designs at the national level will need to take into account the actual definition of disability that is employed, the heterogeneity of circumstances to be found within such a definition, and the gap between the situation of the disabled and non disabled populations.

2012/10 : The strategic interplay between bundling and merging in complementary markets

In this paper, two pairs of complementors have to decide whether to merge and eventually bundle their products. Depending on the degree of competitive pressure in the market, either both pairs decide to merge (with or without bundling), or only one pair merges and bundles, while rivals remain independent. The latter case can very harmful for consumers as it brings surge in prices. We also consider the case in which one pair moves first. Interestingly, we find a parametric region where first movers merge but refrain from bundling, to not induce rivals to merge as well.

2012/08 : Gibrat’s law and legacy for non-profit organisations: a non-parametric analysis

Gibrat’s Law of proportional effect (i.e. growth is independent of initial size) has been tested for firms for several decades. In this paper I test Gibrat’s Law for charities in England and Wales through time. Using a data set based on the population of registered charities from 1998 to 2009, I am able to test the ‘ex ante’ hypothesis that Gibrat’s Law holds over the long run for a sample of charities as well as testing Gibrat’s Legacy (that Gibrat’s Law holds for large and mature organisations), the ‘ex post’ hypothesis. I use nonparametric local polynomial smoothing techniques which are more robust to the issues of autocorrelation, sample selection and truncation that make the conventional parametric approaches to testing Gibrat’s Law difficult in practice. Results suggest that the dynamic processes driving growth in the charitable sectors may differ from those driving the growth of firms. Unlike for-profit firms Gibrat’s Law is found to generally hold when controlling for selection both ‘ex ante’ and ‘ex post’. Results may be driven by the absence of a minimum efficient scale which charities must achieve to survive and the different funding profiles of charities.

2012/07 : How does aid matter? the effect of financial aid on university enrolment decisions

Using a counterfactual approach, this paper empirically investigates the impact of an educational programme recently introduced in the Province of Trento (North-East of Italy). The aim of the policy is to foster university enrolment of students from low-income families and to reduce inequalities in access to higher education. The programme, known as Grant 5B, consists in generous incentives: it targets the university students from low-income families and is awarded upon both merit and demonstrated financial need. We exploit data from an ad hoc survey conducted on a sample of upper secondary graduates and employ a regression discontinuity design to estimate the impact of the intervention on the university enrolment decisions. We find that the programme has no significant effect on enrolment rates, but it exerts a positive effect on redirecting students already bound for university to enrol outside the place of residence. Relying on the relative risk aversion theory, we explain why a relaxation of the eligibility rules based on merit might be more effective in reducing social inequalities in access to university.