The industrial organization of developing countries is characterized by: (i) pervasive use of subcontracting arrangements among small firms, (ii) "missing middle" in the firm size distribution, and (iii) financially constrained firms.  This paper studies an incomplete contract model in which...

This paper explains the existing cross-country differences in household formation rates in industrialized countries by highlighting how an individual`s probability to form a household may be affected by social norms toward the household division of labor. Because social norms are to a large...

This paper studies a class of Markov models which consist of two components. Typically, one of the components is observable and the other is unobservable or `hidden`. Conditions under which geometric ergodicity of the unobservable component is inherited by the joint process formed of the two...

This paper investigates the traits of the self-employed entrepreneurs in urban China, an economy rife with informational and institutional imperfections, under-developed financial markets, but a growing and important non-state sector. The self-employed make on average 20% more than...

The welfare effects of third-degree price discrimination are analyzed when demand in one market is an additively shifted version of demand in the other market and both markets are served with uniform pricing. Social welfare is lower with discrimination if the slope of demand is log-concave or...

This paper develops a sequential learning estimator of production functions and productivity dynamics for unbalanced establishment panels. Extending an idea from the literature on dynamic industry models, establishments are uncertain about their own idiosyncratic productivities and update...

This paper complements conventional economic analysis and presents a social norms interpretation to explain cross-country differences in partnership formation rates, and the dramatic decrease in partnership formation rates in Southern Europe in particular. We argue that increases in female human...

Southern Europe`s rapid fertility decline has resulted in a positive cross-country correlation between female labor force participation and fertility. We develop a model with heterogeneity in attitudes towards women`s home time and a social externality associated to men`s home production to...

Was the London Stock Exchange (LSE) little more than a Dickensian den of speculation, or did it make a contribution to industrial development in Interwar Britain?  The interwar stock market laboured under problems of weak disclosure, inadequate investor protection and ineffective...

We introduce a model of redistributive income taxation and public expenditure. Besides redistributing personal income by means of taxes and transfers, the government supplies goods and services. The government chooses the tax schedule that is found acceptable by the largest share possible of the...