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Papers by thierry verdier

Social Science Research Network, 2006

* A previous version circulated under the title 'Corporate Hierarchies and International Trade'. ... more * A previous version circulated under the title 'Corporate Hierarchies and International Trade'. Part of the paper was written when Dalia Marin visited the Stern School of Business of New York University. She thanks for the hospitality and stimulating discussions. We also would like to thank Denis Gromb, Irena Grosfeld, Elhanan Helpman, and Daniel Sturm for helpful comments and Thorsten Hansen and Alexander Raubold for excellent research assistance. The paper benefited from presentations at Conferences on Globalization and Contracts,

Indian Economic Review

This paper provides a simple model of identity salience that is applied to the phenomenon of the ... more This paper provides a simple model of identity salience that is applied to the phenomenon of the recent rise in right-wing populism in the Western world. Trade and capital flows, skill-biased technological change, and migration have led to declining employment and wages in these economies and a parallel rise in economic and cultural populism, tapping into nativist sentiments. We argue that when long-term income stagnation for most of the population and decline for some go together with high rates of income growth at the very top, one has zero-sum economics and that naturally raises the possibility of using various kinds of social identities to claim a bigger share of a fixed sized pie. We show that in ethnically or racially polarized societies this naturally leads to the salience of social identities that enable majority ethnic groups to vote for policies that exclude minority groups so that they get a greater share of a dwindling surplus. In contrast, in more ethnically and raciall...

We conduct a simple lab experiment where 320 subjects make a series of incentivized choices on ho... more We conduct a simple lab experiment where 320 subjects make a series of incentivized choices on how to allocate a bonus within a small firm that affect themselves and four other group members. By varying the characteristics of the distributions, we can infer subject’s attitudes toward various types of inequalities and whether inequalities become acceptable when they meet Rawlsian justice principles. Using a within-subject design, individuals make the same binary choices both behind the veil of ignorance and when their relative position is revealed. Choosing behind the veil of ignorance relates to a situation where individuals are perfectly mobile between ranks, while mobility is restricted as soon as they redo the choices with their position being revealed. Moreover, rank is determined randomly for one half of the subjects (Control group) and through an effort-task for the other half (Treatment group). We find that when future rank is based on effort, subjects are more willing to acc...

Using a choice-experiment in the lab, we look at preferences over pairs of income distributions w... more Using a choice-experiment in the lab, we look at preferences over pairs of income distributions within small groups in a firm-like setting. Is one type of distribution capable of attracting votes unanimously? It turns out that Pareto-dominance is the most important choice criterion: in binary choices over two distributions, all subjects prefer larger inequality when it makes everyone weakly better off. This is true,no matter whether income distribution is based on merit or luck. Unanimity only breaks once subjects’ positions within the income distribution are fixed and known ex-ante. However, even then, 75% subjects prefer Pareto-dominant distributions. This suggests that efficiency motives are of primary importance, more so than the origin of inequality.

SSRN Electronic Journal, 2018

Swiss Journal of Economics and Statistics, 2009

Summary We examine the impact of transnational terrorism diffusion on security and international ... more Summary We examine the impact of transnational terrorism diffusion on security and international trade. To counter the diffusion of transnational terrorism, targeted governments implement security measures against countries where terror could potentially diffuse. Since security measures raise trade costs, we argue that countries, close enough to those from where terror originates, should experience negative spillovers on their trade. We find evidence for this hypothesis in our data. We show that the closer a country is to a source of terrorism, the higher the negative spillovers on its trade.

Economics Letters, 2015

This paper studies the population dynamics of preference traits in a model of intergenerational c... more This paper studies the population dynamics of preference traits in a model of intergenerational cultural transmission with cultural leaders who compete for oblique socialization. We show that by adding this new chanel in the transmission of preferences, i.e. cultural leaders, in steady-state, there cannot be an equilibrium with total assimilation or total integration of the population.

We develop a model of the political consequences of public income volatility. As is standard, pol... more We develop a model of the political consequences of public income volatility. As is standard, political incentives create inefficient policies, but we show that making income uncertain creates specific new effects. Future volatility reduces the benefit of being in power, making policy more efficient. Yet at the same time it also reduces the re-election probability of an incumbent and since some of the policy inefficiencies are concentrated in the future, this makes inefficient policy less costly. We show how this model can help think about the connection between volatility and economic growth and in the case where volatility comes from volatile natural resource prices, a characteristic of many developing countries, we show that volatility in itself is a source of inefficient resource extraction.

International Journal of Economic Theory, 2009

This paper studies the population dynamics of multiple preference traits in a model of intergener... more This paper studies the population dynamics of multiple preference traits in a model of intergenerational cultural transmission. Parents socialize and transmit their preferences to their children with endogenous intensities. Populations concentrated on a single cultural group are in general not stable. There is a unique stable stationary distribution, and it supports two or more cultural groups, in particular those with greater intolerance with respect to others' traits. The larger the heterogeneity of intolerance levels across cultural groups, the smaller the number of traits that are supported in the stable stationary distribution.

Annals of Public and Cooperative Economics, 2015

Despite the fact that nonprofit organizations play a large role in the production and distributio... more Despite the fact that nonprofit organizations play a large role in the production and distribution of goods and services in modern economies, and the rising role of non-governmental organizations in carrying out projects in developing countries, our knowledge of their governance, and of its' implications for their behavior and performance, is limited. This special issue tries to uncover some of the mechanisms and institutions that characterize the governance of non-profits and NGOs, as well as its implications. In particular, the papers focus on: (i) the determinants of NGO governance and its implications for reducing poverty in developing countries, (ii) the governance of non-profit organizations, (iii) the impact of governance characteristics on the performance of non-profit organizations, and (iv) the effect of non-profit governance on the interaction between the non-profit and for-profit sectors. Nonprofit organizations are in charge of a large share of the production and distribution of goods and services (especially, public goods) in modern economies. Salamon (2010) finds that in the OECD economies, on average 7.5 per cent of economically active population are employed in the nonprofit sector, and in some countries (Belgium, the Netherlands, Ireland, U.K.) this share exceeds 10 per cent. Recently, one sub-sector of the nonprofit economy-the non-governmental organizations acting as foreign aid (in its public and private forms) intermediaries-have seen spectacular growth, both in their numbers and revenues, as has been documented, for instance, by McCleary and Barro (2008), Werker and Ahmed (2008), and Atkinson et al. (2012). Despite the high and increasing importance of non-profits and NGOs, our knowledge of their governance, and of its' implications for their behavior, is still quite limited. Closing this gap is ever more important, given that the lack of good measures of performance-because of the particular nature of the goods and services produced in this sector-limits the ability of donors, funding agencies, the government-to monitor the

Quarterly Journal of Economics, 2000

Oxford Review of Economic Policy, 2007

Journal of the European Economic Association, 2011

Any opinions expressed here are those of the author(s) and not those of the institute. Research d... more Any opinions expressed here are those of the author(s) and not those of the institute. Research disseminated by IZA may include views on policy, but the institute itself takes no institutional policy positions. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit company supported by Deutsche Post World Net. The center is associated with the University of Bonn and offers a stimulating research environment through its research networks, research support, and visitors and doctoral programs. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. IZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author.

Journal of Economic Theory, 2001

Journal of Development Economics, 2014

European Journal of Political Economy, 2000

In this paper, we present a model of cultural transmission of preferences on goods, some of which... more In this paper, we present a model of cultural transmission of preferences on goods, some of which are provided publicly through simple majority voting. We emphasize the existence of a two-way causality between socialization decisions and political outcomes. This generates the possibility of indeterminacies and multiple self-fulfilling equilibrium paths in cultural change and politics. We provide then a rationale for ideologies and collective socialization institutions as coordination mechanisms allowing cultural groups to preserve or shift political power in favor of their preference profile in the long run.

Economics Letters, 2001

Cultural transmission mechanisms which favor the direct transmission of the parents' traits to th... more Cultural transmission mechanisms which favor the direct transmission of the parents' traits to their children may be adaptive to natural selection when opposed to mechanisms in which the parents choose for the offspring the highest ftness at any time.

SSRN Electronic Journal

The views expressed herein are those of the authors and do not necessarily reflect the views of t... more The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.