This study examines how the incentives related to ownership structure influence labor cost management decisions in publicly traded and privately held organizations. I document that public banks have more elastic labor cost structures than private banks, which suggests that public bank managers prefer greater flexibility to remove labor resources when desired. Consistent with public banks facing greater financial reporting pressures, I find that they reduce labor costs to avoid earnings declines. However, I also find that the use of labor cost reductions to manage required regulatory capital is more pronounced in private banks. Consistent with the explanation that access to the equity markets allows public firms to sell equity in lieu of cutting costs, I find that the use of labor cost reductions to manage capital requirements is concentrated in the subsample of banks with lower equity issuances. These findings suggest that while public ownership induces financial reporting pressure, it may also alleviate regulatory pressure through greater ability to sell equity.

Bank distress can have severe negative consequences for the stability of the financial system. Regimes for the restructuring and resolution of banks, financed by bank levies, aim at reducing these costs. This paper evaluates the German bank levy, which has been implemented since 2011. Our analysis offers three main insights. First, revenues raised through the levy were lower than expected. Second, the bulk of the payments were contributed by large commercial banks and by the central institutions of savings banks and credit unions. Third, for those banks, which were affected by the levy, we find evidence for a reduction in lending and higher deposit rates.

occurs in the context of the HochmanRodgers scheme is a function of a) people's rate of substitution between the satisfaction derived from retaining income and that derived from giving it, and b) the distribution of earnings which exists before giving occurs. Whatever the values of a), the outcome will differ depending on b). Such, at least, will be the case unless everybody's rate of substitution is such that complete equality results. Pareto optimal redistribution thus constitutes a secondary redistribution which depends on the initial distribu

European unemployment rose sharply beginning in the mid-1970's and remains very high today, yet policymakers seem reluctant to pursue fiscal and monetary actions that would greatly stimulate aggregate demand. Traditional Keynesian policies may be impeded by a belief that rising unemployment is not so much Keynesian, arising from shortfalls in aggregate demand, as it is classical, originating from a failure of real wages to adjust to changing market conditions, particularly reduced rates of productivity growth. To determine the extent of classical vs. Keynesian unemployment, we apply a theoretical approach developed by Hickman (1987) to econometric models of labor supply and demand in selected European countries and the United States. The models are used to determine the time paths of the natural unemployment rate, potential output, and the full-employment real wage that clears the labor market at the natural rate of unemployment. The computed potential paths are benchmarks for measuring shortfalls of aggregate demand and excesses of actual over full-employment real wages. Effects of eliminating wage gaps are studied in counterfactual simulations, which provide information for decomposing unemployment into its natural, Keynesian, and classical components.

This paper examines heterogeneity in the responsiveness to default options in a large state retirement plan, focusing on individuals’ decision-making approaches as well as their economic and demographic characteristics. Analyses of a survey of plan participants show that procrastination and the need for cognitive closure are important determinants of the likelihood of default. This paper also explores an important implication of defaulting—individuals who default are significantly more likely to subsequently express a desire to enroll in a different plan. The desire to change plans is also correlated with numerous economic and decision-making characteristics, including procrastination.

We examine returns, order flow, and market conditions in the minutes before, during, and after NYSE and Nasdaq short sales. We find two distinct types of short sales: those that provide liquidity, and those that demand it. Liquidity-supplying shorts are strongly contrarian at intraday horizons. They trade when spreads are unusually wide, facing greater adverse selection. Liquidity-demanding shorts trade when spreads are narrow and tend to follow short-term price declines. These results support a competitive rational expectations model where both market-makers and informed traders short, indicating that these two shorting types are integral to both price discovery and liquidity provision.