Because of their more limited inequality and more comprehensive social welfare systems, many perceive average welfare to be higher in Scandinavian societies than in the United States. Why then does the United States not adopt Scandinavian-style institutions? More generally, in an interdependent...

Many developing countries have suffered under the personal rule of ‘kleptocrats’, who implement highly inefficient economic policies, expropriate the wealth of their citizens, and use the proceeds for their own glorification or consumption. The incidence of kleptocracy is a serious...

We consider an economy where property rights are necessary to ensure sufficient rewards to ex-ante investments. Because enforcement of property rights influences the ex-post distribution of rents, there is room for corruption. We characterize the optimal organization of society and the optimal...

The paper surveys the interactions between aid and trade, distinguishing between policies and outcomes as well as between various instruments. It first discusses the theoretical literature, focusing on the causal impact of aid on the recipient’s welfare via the trade channel, before turning to...

We present a simple model to analyse law enforcement problems in transition economies. Law enforcement implies coordination problems and multiplicity of equilibria due to a law abidance and a fiscal externality. We analyse two institutional mechanisms for solving the coordination problem. A...

What is the impact of terrorism on trade through higher security at the borders? We set up a theory which shows that the impact goes not only from terrorism to trade; higher trade with a partner might, in turn, increase the probability of terrorism acts and make security measures more costly for...

The aim of this paper is to show that both location and stereotypical racial beliefs matter for explaining the high criminality rate among blacks in cities. In our model, blacks and whites are identical in all respects. However, if, for not economic but extrinsic reasons, everybody (including...

Using the UK Fourth National Survey of Ethnic Minorities, we explore the determinants of religious identity for Muslims and non-Muslims. We find that Muslims integrate less and more slowly than non-Muslims. A Muslim born in the UK and having spent there more than 50 years shows a comparable...

This paper proposes an explanation of the puzzling coexistence of elements of inertia and dynamism on the Russian labour market using a segmentation model. Risk averse workers are differentiated according to their productivity. They face a trade-off between wages and access to social services...

Income redistribution often takes highly inefficient forms, such as employment in the bureaucracy. We argue that this arises as an optimal political strategy in situations where politicians cannot commit to policies. Political exchanges between politicians and voters must be self-enforcing and...