Contributions in Merlin

Recent immigrants in Switzerland are overrepresented at the top of the wage distribution in high and at the bottom in low skill occupations. Basic economic theory thus suggests that immigration has led to a compression of the wage distribution in the former group and to an expansion in the latter. The data confirm this proposition for high skill occupations, but reveal effects close to zero for low skill occupations. While the estimated wage effects are of considerable magnitude at the tails of the wage distribution in high skill occupations, the effects on overall inequality are shown to be negligible.

This paper addresses the desirability of competition in banking industry. In a model where banks compete on both deposit and loan markets and where banks can use monitoring technology to control entrepreneurs' behavior, we investigate three questions: what are the effects of competition on banks' monitoring incentives? Does competition hurt banks' stability? What can be devices to correct potential negative effects of competition vis à vis financial stability? We find that impacts of competition on banks' monitoring incentives can be decomposed into two effects: one on the attractiveness of monitoring and the other on the monitoring efficiency. The first effect operates through the link between competition and loan margin. The second effect comes from the fact that marginal effect of monitoring on entrepreneur's effort depends on loan rate. We characterize the sufficient condition under which competition will increase monitoring incentives as well as banks' stability. For the third question, we focus on the role of capital requirement and claim that with capital requirement, we can attain a weak correction but not strong correction.

We construct and estimate a unified model combining three of the main sources of cross-country income disparities: differences in factor endowments, barriers to technology adoption and the inappropriateness of frontier technologies to local conditions. The key components are different types of workers, distortions to capital accumulation, directed technical change, costly adoption and spillovers from the world technology frontier. Despite its parsimonious parametrization, our empirical model provides a good fit of GDP data for up to 86 countries in 1970 and 122 countries in 2000. Removing barriers to technology adoption would increase the output per worker of the average non-OECD country relative to the US from 0.19 to 0.61, while increasing skill premia in all countries. Removing barriers to trade in goods amplifies income disparities, induces skill-biased technology adoption and increases skill premia in the majority of countries. These results are reverted if trade liberalization is coupled with international IPR protection.

This paper analyzes the dynamic incentives for technology adoption under a transferable permits system, which allows for strategic trading on the permit market. Initially, firms can both invest in low-emitting production technologies and trade permits. In the model, technology adoption and allowance prices are generated endogenously and are inter-dependent. It is shown that the non-cooperative permit trading game possesses a pure-strategy Nash equilibrium, where the allowance value reflects the level of uncovered pollution (demand), the level of unused allowances (supply), and the technological status. These conditions are also satised when a price support instrument (dubbed European-cash-for-permits), which is contingent on the adoption of the new technology, is introduced. Numerical investigation conrms that this policy generates a Floating price floor for the allowances, and it restores the dynamic incentives to invest. Given that this policy comes at a cost, a criterion for the selection of a self financing policy (based on convex risk measures) is proposed and implemented.

This paper analyzes whether effort provision in entrepreneurial teams depends on the size of the team, assuming that size determines the strength of free-ridingand peer pressure effects in entrepreneurial teams. We provide a theoretical model and empirical analyses to explain the joint effect of free-riding and peer pressure on effort in start-up teams. We begin with an economic model by Kandel and Lazear (1992) and enrich it using insights from entrepreneurship research. Based on our model,we first hypothesize that with increasing team size in entrepreneurial teams, the efforts of the individual team founders should follow an inverted U-shaped pattern. Second, we argue that the peer pressure effect is stronger if team members have stronger social ties,and thus we expect the effort-maximizing team size to be larger in teams with stronger social ties.Using a data set from 214 German start-up teams, we find that our hypotheses aresupportedby the data.

The application of metaphors as a means to advance our understanding of organizations has a long-standing tradition in management studies. Generally speaking, metaphors allow for a description of organizational characteristics and functions in the terminology of another domain of interest. Organizational learning and organizational memory are two prominent examples of anthropomorphic metaphors in management studies which draw on the human mind as the source domain. In the light of recent advancements in neuroscience, however, they lack the complementing metaphor of organizational sleep, though sleep plays a particularly important role for learning and memory of the human mind. Based on the view that communication constitutes organizations (CCO), this study recontextualizes the metaphors of organizational learning and memory in terms of organizational sleep-wake cycles. Finally, the ideal-typical distinction between a regularly resting organization and an insomniac organization leads to a reconsideration of existing theories of organizational learning and memory.

The past decade has witnessed the emergence of a large set of voluntary corporate social responsibility (CSR) standards. However, our knowledge is limited on how and why certain CSR initiatives diffuse extensively whereas others do so only partially or not at all. One of the rare examples of a rapidly and widely spreading CSR standard are the "Equator Principles" (EP), a global standard in international project finance to base investment decisions for large infrastructure projects (e.g., a river dam) on social and environmental criteria. In our qualitative study, we explore the constitutive conditions which facilitated the EP standardization process. First, we track the initiative’s evolution in form of a historical analysis. Second, we conduct 20 semi-structured interviews with relevant actors, e.g., representatives of banks or NGOs. Our study shows that the EP’s diffusion is fostered by dynamic negotiation processes. Instead of viewing organizational fields as relatively stable, we conceptualize them as relational, fragmented and open issue spaces where subject matters are prone to negotiation, interpretation, and contestation.

We explore the pricing of variance risk by decomposing stocks' total variance into systematic and idiosyncratic return variances. While systematic variance risk exhibits a negative price of risk, common shocks to the variances of idiosyncratic returns carry a large positive risk premium. This implies investors pay for insurance against increases (declines) in systematic (idiosyncratic) variance, even though both variances comove countercyclically. Common idiosyncratic variance risk is an important determinant for the cross-section of expected option returns. These findings reconcile several phenomena, including the pricing differences between index and stock options, the cross-sectional variation in stock option expensiveness,the volatility mispricing puzzle, and the signifcant returns earned on various option portfolio strategies. Our results are consistent with theories of financial intermediation under capital constraints.