Economica

A severe collapse of fixed capital formation distinguished the onset of the Great Depression from other investment downturns between the world wars. Using a model estimated for the years 1890–2000, we show that the expected profitability of capital measured by Tobin's q, and the uncertainty surrounding expected profits indicated by share price volatility, were the chief influences on investment levels, and that heightened share price volatility played the dominant role in the crucial investment collapse in 1930. Investment did not simply follow the downward course of income at the onset of the depression: rather, its slump helped to propel the wider collapse.

We explore empirically whether earnings uncertainty and borrowing constraints deter households from the stock market, consistent with the predictions of theoretical studies of portfolio choice in the presence of uninsurable earnings. Since recent extensions highlight the importance of the correlation between earnings and financial risks, here we use a self‐assessed proxy from the DELTA‐TNS 2002 cross‐sectional survey to empirically assess the impact. Although income risk does not affect the participation decision of households' reporting a negative correlation, it does lower the participation of those who report a non‐negative sign, consistent with economic theory predictions.

This paper studies collective bargaining and industry wage levels using microdata and quantile regression techniques for the United States, Britain, West Germany, Austria, Sweden and Norway for the 1980s. The United States has higher industry wage differentials and union wage effects than other countries, with particularly large impacts at the bottom of the distribution. European wage structures are more compressed at the bottom for both nonunion and union workers relative to the United States, with larger differences for nonunion workers. These findings suggest more coordination, contract extension and spillover to nonunion workers, and more binding industry wage floors outside the United States.

Excessive preoccupation with self‐image (or identity) is regarded as a factor contributing to the proliferation of food disorders, especially among young women. This paper models how self‐image and peer effects influence health‐related behaviours, specifically food disorders. We empirically test our claims using data from the Eurobarometer Survey. Our findings suggest that the larger peers’ body mass, the lower the likelihood of being anorexic. Self‐image is correlated with body weight. We use several definitions of peers’ body mass, and find that all are negatively associated with the likelihood of women being thin or extremely thin.