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New asymptotic approximations are established for the Wald and t statistics in the presence of unknown but strong autocorrelation. The asymptotic theory extends the usual fixed-smoothing asymptotics under weak dependence to allow for near-unit-root and weak-unit-root processes. As the locality parameter that characterizes the neighborhood of the autoregressive root increases from zero to infinity, the new fixed-smoothing asymptotic distribution changes smoothly from the unit-root fixed-smoothing asymptotics to the usual fixed-smoothing asymptotics under weak dependence. Simulations show that the new approximation is more accurate than the usual fixed-smoothing approximation.

Many data situations require the consideration of network effects among the cross-sectional units of observation. In this chapter, the authors present a generalized panel model which accounts for two features: (i) network effects present through weighted dependent variables as regressors, exogenous variables, as well as the error components, and (ii) higher-order network effects due to ex ante unknown network decay functions or the presence of multiplex (multi-layer) networks among all of those. The authors outline the model, the basic assumptions, and present simulation results.

This chapter aims to quantify and compare inequalities of opportunity in health across European countries considering two alternative normative ways of treating the correlation between effort, as measured by lifestyles, and circumstances, as measured by parental and childhood characteristics, championed by Brian Barry and John Roemer. This study relies on regression analysis and proposes several measures of inequality of opportunity. Data from the Retrospective Survey of SHARELIFE, which focuses on life histories of European people aged 50 and over, are used.

In Europe at the whole, inequalities of opportunity stand for almost 50% of the health inequality due to circumstances and efforts in Barry scenario and 57.5% in Roemer scenario. The comparison of the magnitude of inequalities of opportunity in health across European countries shows considerable inequalities in Austria, France, Spain and Germany, whereas Sweden, Poland, Belgium, the Netherlands and Switzerland present the lowest inequalities of opportunity. The normative principle on the way to treat the correlation between circumstances and efforts makes little difference in Spain, Austria, Greece, France, Czech Republic, Sweden and Switzerland, whereas it would matter the most in Belgium, the Netherlands, Italy, Germany, Poland and Denmark.

In most countries, inequalities of opportunity in health are mainly driven by social background affecting adult health directly, and so would require policies compensating for poorer initial conditions. On the other hand, our results suggest a strong social and family determinism of lifestyles in Belgium, the Netherlands, Italy, Germany, Poland and Denmark, which emphasises the importance of inequalities of opportunity in health within those countries and calls for targeted prevention policies.

We investigate the reasons why income inequality is so high in Spain in the EU context. We first show that the differential in inequality with Germany and other countries is driven by inequality among households who participate in the labor market. Then, we conduct an analysis of different household income aggregates. We also decompose the inter-country gap in inequality into characteristics and coefficients effects using regressions of the Recentered Influence Function for the Gini index. Our results show that the higher inequality observed in Spain is largely associated with lower employment rates, higher incidence of self-employment, lower attained education, as well as the recent increase in the immigration of economically active households. However, the prevalence of extended families in Spain contributes to reducing inequality by diversifying income sources, with retirement pensions playing an important role. Finally, by comparing the situations in 2008 and 2012, we separate the direct effects of the Great Recession on employment and unemployment benefits, from other more permanent factors (such as the weak redistributive effect of taxes and family or housing allowances, or the roles of education and the extended family).

The aim of this chapter is to shed some light on the behavior of Income Inequality and Inequality of Opportunity over time for 26 European countries. The analysis is carried out using microdata collected by the European Union Statistics on Income and Living Conditions (EU-SILC), which incorporates a wide variety of personal harmonized variables, allowing comparability between countries. The availability of this database for years 2004 and 2010 is particularly relevant to assess changes over time in the main inequality indices and the contribution of circumstances to inequality of opportunity. Furthermore, a bootstrap estimation is performed with the aim of testing whether the differences between both years are statistically significant.

The protective aspects of relationships for health have been extensively studied. Here, we assess whether different dimensions of partnership status at the time of a child’s birth are associated with better self-assessed health later in mid-life. Data are from three countries with different social welfare policies relating to union status and parenting: the US, the UK, and Norway. Results indicate that women who were partnered at first birth had better health at midlife in all three countries than women who were unpartnered. The analysis indicates no differences in the mid-life health of Norwegian women who were married or cohabiting at birth, whereas for US and UK women, being married at the birth of a first child is more beneficial for mid-life health than bearing the child in a cohabiting union. In the US, women who are least likely to marry do not demonstrate better mid-life health if they had wed relative to cohabiting. In the UK, in contrast, the women least likely to be married at the birth experience better returns if they marry. These findings highlight the importance of paying closer attention to heterogeneous treatment effects as they relate to childbearing, relationship status, and mid-life health.

According to the market timing theory, firms try to take advantage of windows of opportunity to raise capital by exploiting temporary cost fluctuations of alternative financing sources. In this context, the main objective of this paper is to examine the influence and persistence of market timing in the financing decisions of Brazilian firms that launched IPOs in the period from 2001 to 2011.

We analyze the influence of past market values on the capital structure of these firms, based on the main models proposed by Baker and Wurgler (2002), adapted to reflect the characteristics of Brazilian firms’ financial statements.

We find evidence of market timing, but this behavior is not sufficiently persistent in the period studied to the point of determining these firms’ capital structure. We believe the fact that Brazilian companies rarely carried out follow-on primary equity issues after floating their capital in the period analyzed, due to the presence of more advantageous financing sources (particularly from the national development bank, BNDES), explains the results. Therefore, Brazilian firms appear to be pay heed to different funding sources, in search of windows of opportunity, to guide their financing decisions and determine their capital structures.

The Brazilian capital market has been developing intensely in recent years, making it increasingly relevant to analyze the financing and investment decisions of the country’s listed companies. The Brazilian literature on capital structure is extensive, but few works have addressed the issue of market timing.

This chapter examines the impact of education on income inequality in 18 Latin American countries between 2000 and 2010. This period has raised interest in the academic community because inequality has fallen across the region, after several years of consistent high levels. Employing the novel technique proposed by Firpo, Fortin, and Lemieux (2007), the author’s research provides a detailed decomposition of inequality. Three main findings emerge from the author’s results: First, the expansion of education increases inequality in six countries but reduces inequality in four countries. Second, the changes in returns to education are the driving component of the effects of education on inequality. Those countries where education contributes to a fall in inequality are those where the returns to education fell at the top of the income distribution. Third, the rise in the average years of education, considered alone, had an inequality-increasing effect in most of the countries under analysis.

In this chapter, the authors investigate the impact of the disclosure of corporate social responsibility (CSR) information (in the form of ethical certification announcements) on firm value, measured as stock market reactions. When determining the potential value of CSR practices, investors evaluate disclosed information against firm-level characteristics. To cope with uncertainties related to voluntary disclosure and information asymmetries, investors also rely on heuristic evaluations of the congruity between firm- and institutional-level characteristics. The authors find that ethical certification information is especially valuable in opaque contexts with fewer firm reporting standards and poor protection mechanisms for investors. Overall, our findings suggest that in contexts where information asymmetries between insiders and outsiders are higher, validation of CSR activities by independent third-party institutions is more effective as a value creation mechanism.