Costs Of Exit Research Articles

Explaining Canada’s Unsurprising Response to Russia’s Invasion of Ukraine, 2022–2023

This study argues that Canada’s foreign policy behavior has remained predictably unchanged in the face of Russia’s invasion of Ukraine in 2022. Historically, Canada’s foreign policy has been directed by external considerations, specifically a liberal international order, multilateralism, key allies, and the United States. These orientations have determined Canadian foreign policy for generations. They guide Canada’s foreign policy decision-making but are sometimes contradictory. In the case of Ukraine in 2022, however, these orientations aligned perfectly, allowing the Justin Trudeau government to participate in international efforts to support Ukraine without controversy. This paper surveys four major external orientations and one domestic orientation before describing the country’s contributions to international efforts to support Ukraine. It concludes with a discussion about the troubling implications of a foreign policy that is tightly linked to external consideration: the costs of exit and the fundamental purpose of Canada’s foreign policy in the first place.

The right to a fair exit

This paper introduces a novel account of freedom of dissociation, construed as the “right to a fair exit.” It defines freedom of dissociation as the right to end an association without excessive and undue costs. This novel account contrasts with the classic right of exit that some liberal philosophers have theorized as the bedrock of associational freedom. The original right of exit is first and foremost concerned with the protection against excessive exit costs, while the right to a fair exit broadens its scope to include undue costs as well. State policy should aim at monitoring and resourcing exit not only to ensure that leavers have adequate exit options, but also that the costs of exit are fairly divided between parties. This account illuminates a range of cases, such as divorce, dissolution of employment contracts, and contested exits from religious associations.

Camouflage: A dominant reaction to worsening conditions

Individuals choose camouflage as a dominant response when a state’s political conditions worsen, particularly when a democracy turns authoritarian. Individuals hide their private preferences to survive under oppressive regimes. This paper argues that in many circumstances camouflage is the most rational, cost-minimizing reaction to oppression. The paper identifies five kinds of costs that induce individuals to resort to four different ideal types of camouflage: (1) avoidance of contact, (2) minimal participation, (3) restricted cooperation, and (4) full engagement with the oppressive regime. Camouflage is particularly advantageous as the costs of exit or voice are often high. Therefore, a large majority of citizens disagreeing with the ideology and policies of a regime are likely to camouflage.

Why Jihadis Switch: Social Ties, Ideological Affinity and Opportunity

What prompts individuals to leave an established extremist group to join a breakaway faction or splinter group? This phenomenon of inter-terrorist or inter-extremist group migration is under-studied. However, terrorists and extremists can and do migrate between groups, especially in those instances when the costs of exit are low. Using a systematic, iterative, inductive theoretical approach merging existing theory on fragmentation and defection with insights from deep fieldwork with 11 Islamist extremist groups in Indonesia between 2010 and 2019, this article identifies three mechanisms via which individuals migrate between extremist groups: social ties, ideological affinity, and opportunity. In doing so, it finds that Indonesian Islamist extremists rarely switch for the same reason each time; instead, their decisions are shaped by relationships, needs, and beliefs that evolve and shift over their lifecycle in that particular jihadi ecosystem.

When Should International Courts Intervene? How Populism, Democratic Decay and Crisis of Liberal Internationalism Complicate Things

Abstract Shai Dothan’s book International Judicial Review aims to refute criticism which stresses international courts’ (ICs) lack of legitimacy, epistemic inferiority, suffocation of public deliberation, susceptibility to capture and production of bad outcomes. This essay argues, however, that there is an important line of criticism of ICs stemming from a profounder disagreement with the post-Cold War international legal system – the critique related to ethno-national and/or authoritarian populism – which poses novel challenges to justifying ICs. Engaging with Dothan’s arguments through the prism of the populist backlash, this essay contributes to recent scholarship on populism and international law by explaining how populism challenges the justification of IC interventions. Populists treat majority will and national/regional identity as the exclusive sources of the common good, and this casts doubts on arguments favouring multilateralism, such as the Condorcet Jury Theorem used by Dothan. It also allows populists to re-frame IC interventions as threats to people’s well-being and disseminate ‘counter-myths’ delegitimizing ICs, which may impair ICs’ ability to produce good outcomes. Altogether, populism has the capacity to increase the costs of international judicial intervention for ICs and reduce the costs of non-compliance and exit for the populists, which confronts IC scholars and judges with new challenges.

Reforming to Please: A Comprehensive Explanation for Non-Exit from the European Court of Human Rights

States’ growing dissatisfaction with the performance of the European Court of Human Rights – Governments’ commitment to reform process – Threats of exit that failed to materialise – Adaptation of Hirschman’s exit–voice–loyalty framework to explain states’ non-exit from the European Court of Human Rights – Sufficiently effective voice, manifestations of loyalty, and high costs of exit as possible reasons behind non-exit – Governments’ inability to achieve change in the Court’s practice unilaterally – Divergent perceptions and expectations of governments – Court’s responsiveness to governments’ concerns – Showing the importance of cautious, incremental changes to accommodate diverse governmental expectations on the role of the European Court of Human Rights

An economic theory of blockchain foundations

Abstract. Blockchain (or crypto) foundations are nonprofit organizations that supply public goods to a crypto-economy. The standard theory of crypto foundations is that they are like governments with respect to a national or regional economy, i.e. raising a public treasury and allocating resources to blockchain specific capital works, education, R&D, etc., to benefit the community and develop the ecosystem. We propose an alternative theory of what foundations do, namely that the treasury they manage is a moat to raise the cost of exit or forking because the benefit of the fund is only available to those who stay with the chain. Furthermore, building and maintaining a large treasury is a costly signal that only a high quality chain could afford to do (Spence 1973). We review these two models of the economic function of a blockchain foundation - (1) as a private government supplying local public goods, and (2) as a moat to raise the opportunity costs of exit. We outline the empirical predictions each theory makes, and examine the implications for optimal foundation design. We conclude that foundations should be funded by a pre-mine of tokens, and work best when large, visible, transparent, rigorously managed, and with a low burn rate.

La estabilidad de los nuevos contratos indefinidos durante la crisis económica

This paper is focused on how the economic crisis has concerned the stable employment that began in our country during the last years of economic expansion, when the rate of growth of the open ended contracts was the highest. The objective is to assess if it can be observed differences between the types of those open ended contracts with different costs of entry and exit to employment as well as to measure the incidence on their duration depending on special causes of exits. The database used is the “Continuous Sample of Working life” linked with registered contracts in Spanish Public Employment Service. The results show an important volume of instability associated mainly with jobs of low productivity and dismissals.

Product proliferation, complexity, and deterrence to imitation in differentiated‐product oligopolies

Research SummaryGame theory suggests that, in oligopolistic markets characterized by nonprice competition, dominant incumbents can use product proliferation to occupy a region of the product space (i.e., a subspace) and deter rivals from imitating their products. In part, this is because product proliferation makes the introduction of close substitutes comparatively less profitable; in part, it is because the strategy conveys a threat of retaliation to potential imitators. Yet this threat is only credible if the proliferator has high costs of exit from the occupied region of space. We hypothesize that complexity, as a property of product (sub)spaces, generates exit costs for the proliferator and increases the deterrent power of its strategy. We test this hypothesis by studying sequential product introductions in the U.S. recording industry, 2004–2014.Managerial SummaryDifferentiated‐product markets are often concentrated in the hands of a few dominant organizations, which strive to keep on equal footing by offering similar products. In these markets, a product proliferation strategy can help one of the dominant incumbents claim a particular submarket as its territory. Investing heavily in that submarket communicates a threat that the proliferator will retaliate against invaders to protect these investments. However, this threat is not credible enough to deter rivals unless the occupied submarket is sufficiently complex in terms of product attributes, as precisely this kind of complexity makes it harder for proliferators to back down if challenged. We find evidence of this mechanism in an analysis of product competition among major record companies and discuss implications for strategic decision‐making.RESOURCESThis article has earned an Open Data badge for making publicly available the digitally‐shareable data necessary to reproduce the reported results. The data is available at https://github.com/piazzai/smj-18-19552. Learn more about the Open Practices badges from the Center for Open Science: https://osf.io/tvyxz/wiki.

The Costs of Firm Exit and Labour Market Policies: New Evidence from Europe

Abstract The churning of firms is an inherent process of industrialized economies, which entails a high rate of job destruction. Thus, a key question is: what are the policies that minimize the costs of worker displacement due to business closure? Accordingly, this paper exploits a retrospective panel of workers in 13 European countries over the period 1985–2008 to explore the factors which shape the reemployment prospects of workers displaced due to business closure. The results suggest that higher spending on active labour market policies increases the reemployment prospects of the unemployed workers displaced by business closure, both in terms of unemployment duration and in terms of stability of reemployment. On the contrary, there is evidence of a negative and sizable impact of passive labour market policies on unemployment duration.

Exit from Trade Agreements: A Reputational Analysis of Cooperation and Fairness

The last three years have been marked more by exits from trade agreements than by the successful completion of major additional pacts. While most of the international trade literature focuses on the best methods of better integrating national markets, this article seeks to examine the effect of exit on international relations. We generally assume that the costs of severing economic ties is enough to maintain trade agreements, but that proposition no longer seems robust in our current moment of widespread dissatisfaction with trade relations. This article, therefore, seeks to look outside of trade-related costs of exit to possible extralegal costs, particularly reputational or community costs, of exit. The article also aims to provide the first cut of distinguishing between the two types of reputations—one for being ‘uncooperative’ and one for being ‘unfair’. Drawing on behavioral theories, the article begins to develop a distinction between an audience’s belief that a state is acting ‘uncooperatively’ as compared to ‘unfairly’ and what the consequences of this distinction may be. The article illustrates how different types of exit can have divergent reputational effects.

Financial distress cost of Italian small and medium enterprises

PurposeThis paper aims to propose a theoretical model designed to predict the likelihood of financial distress of an enterprise and to quantify the damages whenever the financial crisis became full-blown.Design/methodology/approachCoherently with the objectives of the paper, the analysis considers the last seven exercises (period: 1999/2006) of a sample of 25.000 small- and medium-sized enterprises (SMEs) (volume of sales: < 20 mlns; number of employees: < 250) organized in the form of Ltd. The empirical investigation has been affected through the use of BvD database: Aida and Mint Italy.FindingsThe analysis shows that the ex post costs of financial distress decrease in relation to the company’s increased ability to use intangible assets and in relation to the local roots of the banks (local banks rather than international banking groups).Research limitations/implicationsThe instruments used for this study need to be subjected to more statistical tests to establish a more robust validity and reliability. Replication of this study using larger samples and a broader geographic base (extended at European level) is suggested.Practical implicationsThe timely monitoring of investigated variables allows you to mitigate the costs of exit from the market.Originality/valueFollowing the global financial crisis, this paper sheds new light on the financial distress cost of Italian SMEs.

Care&amp;WorkMOD: An Australian Microsimulation Model Projecting the Economic Impacts of Early Retirement in Informal Carers

We developed a microsimulation model, Care & WorkMOD, to estimate the economic costs of early exit from the labour force, both for informal carers and the government, from 2015 to 2030. In this paper, we describe the methods used to create the model Care & WorkMOD, and the sources of data and model assumptions. Care & WorkMOD is based on the unit record data of people aged 15-64 years in the three Australian Bureau of Statistics (ABS) Surveys of Disability, Ageing and Carers (SDAC) 2003, 2009 and 2012. Population and the labour force projections from the 2015 Intergenerational Report and the outputs of an Australian microsimulation model APPSIM were used for the static aging of the base data to every five years from 2015 to 2030. The 2015 output dataset of another microsimulation model STINMOD was linked with Care & WorkMOD base data using synthetic matching. The matching process has added data on further economic variables from STINMOD into Care & WorkMOD, which are not available in SDACs. Economic data were indexed based on long-term trends on economic variables to capture the projected economic growth from 2015 to 2030. Care & WorkMOD can provide the long-term estimates of the lost labour productivity due to informal caring responsibilities and the related economic burden both at the individual and national level, and has the potential to fill the gaps in the current body of evidence on the costs of chronic diseases, particularly related to informal carers.

Has the participation of older employees in the workforce increased? Study of the total Swedish population regarding exit from working life.

Aims: This study investigated: (i) the workforce participation in Sweden among older employees before and after changes in eligibility for sickness absence and unemployment compensation by a social insurance reform; and (ii) absence and early exit mechanisms from the workforce for different professions by looking at sickness benefits, disability pension and unemployment, early statutory pension, employment pension and unregistered economic supply. Methods: A register-based follow-up study of the total Swedish workforce population of 55–64-year-olds, measured in 2004 and 2011. Results: The total proportion of individuals aged 55–64 in the workforce increased between 2004 and 2011, but the increase was mostly in professions with lower educational requirements, a lower salary and dominated by women. Both in 2004 and in 2011, men in professions with higher educational requirements more often exit working life with an early statutory pension and employment pension. In contrast, professions with lower educational requirements more often absence working life with sickness benefits, disability pension and unemployment compensation than other professions in both 2004 and 2011. Conclusions: The change in regulations seems to have contributed to an overall shrinking proportion of individuals within the sickness benefit and disability pension schemes. At the same time the proportion of individuals taking an early pension has increased. The results indicated a tendency of passing on the costs of labour-market exit within different economic compensation arrangements, as well as to the individuals themselves; for example, less sickness benefit, disability pension, but more statutory pension and employment pension earlier.

History, gravity and international finance

We analyse patterns of bilateral financial investment using data on US holdings of foreign bonds. We document a “history effect” in which holdings seven decades ago continue to influence holdings today. 10–15% of the cross-country variation in US investors' foreign bond holdings is explained by holdings 70 years ago, plausibly reflecting fixed costs of market entry and exit and endogenous learning. This effect is twice as large for bonds denominated in currencies other than the dollar, suggesting the existence of even higher fixed costs of initiating US foreign investment in such currencies. Our findings point to history and path dependence as key sources of financial market segmentation.

“It's Not a Bairro, is It?”: Subsistence Sociability and Focused Avoidance in a Public Housing Estate

This paper draws on a multidisciplinary study of state policy, housing provision, and the social question in Porto, Portugal, over the past half century, combining ethnography, in-depth interviews, and a survey of local families. It examines the trajectory of one of the city's largest and most notorious public housing estates to map out how transformations in its social composition and in the mix of state action have affected how residents deal with the disparaging public image attached to their place of residence. Against analytical simplification, we spotlight responses to territorial stigmatization that muddle the ‘exit–voice’ or ‘conformity–rejection’ dichotomies and reveal the social parameters that determine the symbolic boundaries, sociability patterns, and daily face-to-face interactions found in this housing estate. Strategies of ‘subsistence sociability’ and ‘focused avoidance’ have enabled local families to cope with the spatial taint hovering over their bairro while avoiding both the high costs of exit and the uncertain investment in collective action.

COMPETITION AND QUALITY IN HOME HEALTH CARE MARKETS

Market-based solutions are often proposed to improve health care quality; yet evidence on the role of competition in quality in non-hospital settings is sparse. We examine the relationship between competition and quality in home health care. This market is different from other markets in that service delivery takes place in patients' homes, which implies low costs of market entry and exit for agencies. We use 6 years of panel data for Medicare beneficiaries during the early 2000s. We identify the competition effect from within-market variation in competition over time. We analyze three quality measures: functional improvements, the number of home health visits, and discharges without hospitalization. We find that the relationship between competition and home health quality is nonlinear and its pattern differs by quality measure. Competition has positive effects on functional improvements and the number of visits in most ranges, but in the most competitive markets, functional outcomes and the number of visits slightly drop. Competition has a negative effect on discharges without hospitalization that is strongest in the most competitive markets. This finding is different from prior research on hospital markets and suggests that market-specific environments should be considered in developing polices to promote competition.

Intraday market liquidity, corporate governance, and ownership structure in markets with weak shareholder protection: evidence from Brazil and Chile

This paper investigates the effects of very highly concentrated ownership structures on the liquidity of stock markets in a context of weak protection for minority shareholders. Such structures are prevalent in a number of European markets as well as in various developing markets, as opposed to US markets. Two alternative hypotheses are tested. The shareholder expropriation hypothesis predicts an inverse relationship between liquidity and ownership concentration for the dominant shareholder. The dominant monitor-insider hypothesis contends that dominant shareholders are not detrimental to market liquidity, since they have incentives to reduce their costs of exit and/or to improve the information transfer of their value enhancing activities to markets. Our empirical results are more consistent with the latter. We find that alternative governance mechanisms also have liquidity enhancing effects for Brazilian and Chilean firms. In particular, cross-listing in the US market and the threat of outside takeovers serve as monitoring devices to reduce informational asymmetries.

Structural unemployment and the costs of firm entry and exit

I build a large-firm model of the labor market with matching frictions and firm turnover. Firms hire both labor and capital. The model allows me to assess the impact of two regulatory frictions on unemployment: i) the administrative costs of establishing a new firm and ii) the share of capital entrepreneurs recover when exiting. These regulations explain half the unemployment gap between Continental Europe and the United States in the calibrated model. More precisely, exit regulation is responsible for the entire explained gap, with entry regulation playing no role. The degree of returns to scale and the presence of fixed capital in the model are important assumptions behind these results.

Good Clubs and Community Support: Explaining the Growth of Strict Religions

How do some religions grow over time without significantly diluting their strict doctrinal commitments? Religious denominations face the problem of expanding their ranks without moderating their doctrine, changing their identity, or losing the existing faithful. Yet some have resolved this dilemma with considerable success. This article suggests that they do so by serving as “good clubs”: offering networks of community support that not only increase growth from within but also increase the costs of exit over time, encouraging reproduction, retention, and resoluteness. Such community support allows these groups to grow while retaining their doctrinal commitments. All denominations want to multiply their ranks and ensure continued vitality. Yet the sect-church dynamic suggests that as churches age, they slacken their doctrinal demands and slow down their growth. Gaining new members and adherents often means moderating ideology and attenuating the core commitments that originally defined the organizations and made them attractive to core supporters. The watering down of theological and ideological