individual taxpayer response to tax cuts 1982 1984 with implications for the revenue maximizing tax rate abstract this paper measures the response of taxpayers to the u s personal rate reductions from 1982 to 1984 a baseline income distribution is created to describe what level and distribution could be expected in the absence of tax changes comparison of this baseline with actual tax return data shows that at least one sixth and probably one quarter of the revenue ascribable to the rate reductions was recouped by changes in taxpayer behavior the data also show that federal income tax revenue would have been maximized at a tax rate of about 35 percent and total income tax revenue maximized at a total tax rate of about 40 percent

non parametric production analysis in non competitive environments we extend the non parametric methodology for empirical production analysis to deal with endogenous prices as price endogeneity is often complemented by price uncertainty we consider both the case of certain prices and the case of uncertain prices the extensions are fully compatible with existing tools for eliciting and representing technology and price information and preserves the tractable mathematical programming structure of the original methodology an empirical application to the dutch electricity distribution sector illustrates our extension

cost allocation and convex data envelopment abstract this paper considers allocation rules first we demonstrate that costs allocated by the aumann shapley and the friedman moulin cost allocation rules are easy to determine in practice using convex envelopment of registered cost data and parametric programming second from the linear programming problems involved it becomes clear that the allocation rules technically speaking allocate the non zero value of the dual variable for a convexity constraint on to the output vector hence the allocation rules can also be used to allocate inefficiencies in non parametric efficiency measurement models such as data envelopment analysis dea the convexity constraint of the bcc model introduces a non zero slack in the objective function of the multiplier problem and we show that the cost allocation rules discussed in this paper can be used as candidates to allocate this slack value on to the input or output variables and hence enable a full allocation of the inefficiency on to the input or output variables as in the ccr model

efficiency analysis for exogenously fixed inputs and outputs we evaluate by means of mathematical programming formulations the relative technical and scale efficiencies of decision making units dmus when some of the inputs or outputs are exogenously fixed and beyond the discretionary control of dmu managers this approach further develops the work on efficiency evaluation and on estimation of efficient production frontiers known as data envelopment analysis dea we also employ the model to provide efficient input and output targets for dmu managers in a way that specifically accounts for the fixed nature of some of the inputs or outputs we illustrate the approach using real data for a network of fast food restaurants

some models for estimating technical and scale inefficiencies in data envelopment analysis in management contexts mathematical programming is usually used to evaluate a collection of possible alternative courses of action en route to selecting one which is best in this capacity mathematical programming serves as a planning aid to management data envelopment analysis reverses this role and employs mathematical programming to obtain ex post facto evaluations of the relative efficiency of management accomplishments however they may have been planned or executed mathematical programming is thereby extended for use as a tool for control and evaluation of past accomplishments as well as a tool to aid in planning future activities the ccr ratio form introduced by charnes cooper and rhodes as part of their data envelopment analysis approach comprehends both technical and scale inefficiencies via the optimal value of the ratio form as obtained directly from the data without requiring a priori specification of weights and or explicit delineation of assumed functional forms of relations between inputs and outputs a separation into technical and scale efficiencies is accomplished by the methods developed in this paper without altering the latter conditions for use of dea directly on observational data technical inefficiencies are identified with failures to achieve best possible output levels and or usage of excessive amounts of inputs methods for identifying and correcting the magnitudes of these inefficiencies as supplied in prior work are illustrated in the present paper a new separate variable is introduced which makes it possible to determine whether operations were conducted in regions of increasing constant or decreasing returns to scale in multiple input and multiple output situations the results are discussed and related not only to classical single output economics but also to more modern versions of economics which are identified with contestable market theories

commercial branch performance evaluation and results communication in a canadian bank a dea application abstract in this paper we focus on evaluating the performance of the commercial branches of a large canadian bank using data envelopment analysis two production models are considered in this country wide evaluation one model looking directly at resource usage is most useful to the branch manager the other model incorporating financial results is more geared towards senior management we introduce non discretionary factors to reflect specific aspects of the environment a branch is operating in such as risk and economic growth rate of the region both input and output multipliers are constrained by incorporating market prices as well as managerial preferences in order to get effectiveness measures the cost minimisation study led to valuable results pertaining to the performance of individual branches notable is the methodology introduced here that shows how to present graphical and numeric outcomes to managers gap maps pie charts and target tables are produced for each branch to provide performance goals for the managers useful information has also been obtained at the district level output oriented models were analysed to reflect the bank s recent emphasis towards growth in some areas

how retirement saving programs increase saving this paper summarizes the authors work on the effect of ira and 401 k contributions on net personal saving they consider many different nonparametric approaches to controlling for heterogeneity in individual saving behavior and conclude that the weight of the available evidence suggests that contributions to both iras and 401 k s largely represent new saving the authors devote particular attention to reconciling their results with the findings in other studies that reach different conclusions sometimes using the same databases that the authors analyze methodological limitations that undermine the reliability of results in other studies explain many of these disparities

measuring economic efficiency with incomplete price information with an application to european commercial banks measuring economic efficiency requires complete price information while resorting to technical efficiency exclusively does not allow one to utilise any price information in most studies at least some information on the prices is available from theory or practical knowledge of the industry under evaluation in this paper we extend the theory of efficiency measurement to accommodate incomplete price information by deriving upper and lower bounds for farrell s overall economic efficiency the bounds typically give a better approximation for economic efficiency than technical efficiency measures that use no price data whatsoever from an operational point of view we derive new data envelopment analysis dea models for computing these bounds using standard linear programming the practical application of these estimators is illustrated with an empirical application to large european union commercial banks

some unsolved problems in data envelopment analysis a survey abstract the present study is a survey of a set of inherent characteristics and unsolved problems in current dea models we will focus on what types of local characteristics the dea estimated technology exhibits in relation to non jointness of a multi output multi input production no indicators are currently available telling the analysts whether or not the structure in data supports the existence of a joint technology if the estimated ccr technology has a sparse facet structure in the sense that few facets are active for output vectors in certain cones of the output space then the multi output multi input ccr technology is possibly locally non joint another important field of research relates to the inclusion of explicit distributional assumptions as part of the dea model specification and to the extension of the dea estimation from an estimation of a deterministic frontier towards an estimation of a stochastic frontier some recent results will be compared finally measures of scale economies from parametric models and dea models will be compared

nonparametric analysis of technical pure technical and scale efficiencies for food crop production in east java indonesia abstract nonparametric analysis of technical efficiency for irrigated farms in the madiun regency in the west central part of east java indonesia is conducted using linear programming techniques this procedure allows the relative technical efficiency for each farm to be determined and for inefficiencies to be decomposed into pure technical inefficiency and scale inefficiency and does not require restrictions or assumptions regarding functional form to be placed on the data farmers in madiun generally are efficient relative to each other farmers operating inefficiently do so more often because of scale inefficiencies rather than pure technical inefficiencies a majority of the farms operate in the region of decreasing returns to scale rather than increasing returns to scale farmer age the level of diversification of cropping activities and high school education were found to be related to technical efficiency in the rainy season under irrigated conditions other socioeconomic factors were not statistically significant the results imply that inefficient farms use excessive levels of inputs particularly nitrogen fertilizer this is perhaps due to the lingering effects of past input subsidization policies particularly of fertilizers in indonesia or to risk reducing behavior the results also imply that current government policies to encourage diversification of cropping practices in java may lead to greater technical inefficiencies in production in addition extension education targeted to younger farmers with low levels of formal education would improve efficiency

on nonparametric supply response analysis in this paper we explore the usefulness of nonparametric methods in the investigation of production behavior and the estimation of price elasticities of output supply and input demand functions the approach can handle the situation where some data points are not consistent with production theory the method is illustrated by estimating supply demand elasticities of outputs and inputs in u s agriculture

estimation of profit functions when profit is not maximum this paper deals with derivation and implications of profit functions when profit is not maximum due to the presence of either technical inefficiency or allocative inefficiency or both we show that input demand and output supply elasticities and returns to scale are in general affected by these inefficiencies we also show that the overall profit efficiency is not necessarily the product of technical and allocative efficiencies meaning that technical and allocative inefficiencies are not necessarily independent estimation techniques are developed for both cross sectional and panel data models working of the model is illustrated using a panel of 60 salmon farms copyright 2001 oxford university press

frontier production functions and technical efficiency measures the concept of technical efficiency is central to measuring the firm performance the measurement of technical efficiency has proved difficult and complex and the literature provides a range of methodologies this paper reviews the various methodologies for measuring technical efficiency and offers a comparison between established methods of measurements the discussion is literary with less mathematical jargons and equations the objective of this paper is not to be exhaustive but to be up to date and to provide a significant discussion on some of the core methods of measuring technical efficiency

hyperbolic efficiency and return to the dollar abstract this paper after establishing the relations between hyperbolic graph measure of technical efficiency and the radial measures of technical efficiency shows that the dual cost and revenue interpretation of the hyperbolic efficiency measure is related to georgescu roegen s notion of return to the dollar n georgescu roegen in koopmans t ed activity analysis of production and allocation wiley new york 1951 pp 98 115 once this relation is established it leads to a derivation of an allocative efficiency index which measures the price distortions using data on observed costs and revenues without requiring information on prices

non parametric productivity analysis with undesirable outputs an application to the canadian pulp and paper industry this article extends the chavas cox approach to non parametric analysis by incorporating undesirable outputs to provide a more complete representation of the production technology inner and outer non parametric technology bounds are constructed the methods are illustrated with application to time series data for the canadian pulp and paper industry conventional measures that ignore changes in pollutant outputs underestimate true productivity growth further there is a large gap between estimates generated with reference to inner and outer bounds to the technology suggesting that researchers need to be aware of the limitations of results derived from analyses relying only on dea methods copyright 2001 oxford university press

measuring overall efficiency and effectiveness using dea this paper presents a framework where data envelopment analysis dea is used to measure overall efficiency and show how to apply this framework to assess effectiveness for more general behavioral goals the relationships between various cone ratio dea models and models to measure overall efficiency are clarified specifically it is shown that as multiplier cones tighten the cone ratio dea models converge to measures of overall efficiency furthermore it is argued that multiplier cone and cone ratio model selection must be consistent with the behavioral goals assigned or assumed for purposes of analysis consistent with this reasoning two new models are introduced to measure effectiveness when value measures are represented by separable or linked cones where the latter can be used to analyze profit maximizing effectiveness

efficiency and productivity of french ski resorts abstract this paper analyses french ski resorts productivity with the luenberger productivity indicator lpi based on the directional distance function it permits the calculation of a productivity indicator that is decomposed into technical efficiency change and technological change the conclusions are that productivity decreased for the majority of french ski resorts which is almost always explained by technological change finally the mixed results do not establish a clear relationship between the ski resorts size and productivity therefore the kruskal wallis test is used to statistically verify this relationship managerial implications are derived from this study

inner and outer approximations of technology a data envelopment analysis approach this paper discusses inner and outer approximation to a technology given by a data set of prices and quantities

undesirable outputs in efficiency valuations abstract efficiency measurement is usually based on the assumption that inputs have to be minimized and outputs have to be maximized in a growing number of applications however undesirable outputs are incorporated into the production model which have to be minimized in this paper various approaches for treating such outputs in the framework of data envelopment analysis dea are discussed and the resulting efficient frontiers are compared new radial measures are introduced which assume that any change of the output level will involve both undesirable and desirable outputs

estimating most productive scale size using data envelopment analysis abstract the relation between the most productive scale size mpss for paparticular input and output mixes and returns to scale for multiple inputs multiple outputs situations is explicitly developed this relation is then employed to extend the applications of data envelopment analysis dea introduced by charnes cooper and rhodes ccr to the estimation of most productive scale sizes for convex production possibility sets it is then shown that in addition to productive inefficiencies at the actual scale size the ccr efficiency measure also reflects any inefficiencies due to divergence from the most productive scale size two illustrations of the practical applications of these results to the estimation of most productive scale sizes and returns to scale for hospitals and stem electric generation plants are also provided emphasize the advantage of this method in examining specific segments of the efficient production surface

tax incentives and the decision to purchase health insurance evidence from the self employed the tax reform act of 1986 introduced a new tax subsidy for health insurance purchases by the self employed we analyze the changing patterns of insurance demand before and after tax reform to generate new estimates of how the after tax price of insurance affects the discrete choice of whether to buy insurance we employ both traditional regression models and difference in difference methods that compare changes in insurance coverage across groups around tra86 the results from our most carefully controlled comparison suggest that a 1 percent increase in the cost of insurance coverage reduces the probability that a self employed single person will be insured by 1 8 percentage points

non parametric analysis of multi output production with joint inputs we focus on analysing cost minimising production behaviour in multi output settings we distinguish between two approaches for modelling the use of joint inputs the cooperative approach assumes cost minimisation at the aggregate firm level while the non cooperative approach assumes cost minimisation at the level of the individual output division our framework extends the existing non parametric framework for analysing single output production an empirical application to the english and welsh drinking water and sewerage sector shows the practical usefulness of our framework specifically we compare the empirical validity of the cooperative and non cooperative models for describing the observed production behaviour

testing data for consistency with revealed preference the author develops a method of hypothesis testing for revealed preference tests this method is particularly well suited to tests of commonality of tastes or tests of preference stability he devises a metric based on an estimate of the fraction of expenditure wasted in maximizing utility if all consumers in the sample share the same utility function this metric increases in size with increases in the proportion of observations having different tastes and with increasing differences in tastes the author proposes bootstrap methods for estimating the distribution of the test statistic copyright 1995 by mit press

differential impact of korean banking system reforms on bank productivity abstract we study the impact of banking system reforms during a crisis following a period of undisciplined lending regulatory changes aimed at strengthening the banks capital structure and risk management practices do not have a uniform impact on bank productivity but rather favor financially sound or strategically privileged banks we present evidence documenting the differential impact of regulatory reforms on korean commercial bank productivity over the period 1995 2005 average technical efficiency of banks decreased during the financial crisis of 1997 1998 it improved following the subsequent bank restructuring and continued to improve through 2005 the capital adequacy ratio is positively associated with banks technical efficiency the non performing loans ratio is negatively associated with technical efficiency both relationships are accentuated during the crisis but attenuated after the reforms

the luenberger indicator and productivity growth a note on the european savings banks sector we employ the luenberger productivity indicator to estimate productivity growth and its decomposition into technical change and efficiency change components for savings banks sectors in 10 eu countries between 1996 and 2003 the luenberger indicator requires less restrictive assumptions than standard nonparametric productivity indexes and it allows the assumption of profit maximization to be made for sample firms we estimate average productivity growth in the savings banks sector to be 2 78 per annum and driven almost entirely by technical change whilst the general results confirm earlier findings this study is one of the earliest to identify cross border differences in productivity growth in the savings banks sector

nonparametric analysis of technical and allocative efficiencies in production in this paper we extend varian s 1984 nonparametric production analysis to situations when the set of observed output input and price data is not consistent with profit maximization for at least one firm in such cases varian s results imply that no production possibility set containing all observations can rationalize the observed data we identify each firm whose performance given the prices faced by it may be found consistent with profit maximization relative to some production possibility set containing all observed output input vectors we show that the set 4 of all such firms can itself be weaklv rationalized in the sense that there exists a closed convex and monotone production possibility set that contains all the observations and relative to which the performance of all the firms in the set 8o is consistent with profit maximization given their respective prices by definition firms not included in this largest set d of efficient observations unambiguously deviate from profit maximizing behavior for any production possibility set containing all observations we follow farrell 1957 and analyze these deviations into technical and allocative efficiency measures considering as admissible all closed convex and monotone production possibility sets relative to which the performance of each firm in the set g remains consistent with profit maximization we then describe nonparametric methods for determining the tightest upper and lower bounds on the technical allocative and aggregate efficiency measures evaluated relative to all such admissible production possibility sets it is seen that the tightest upper bound on the technical efficiency measure is the same as the value computed by the nonparametric efficiency evaluation technique known as data envelopment analysis thus establishing a link between this literature in management science operations research and the nonparametric production analysis in economics

the effect of marginal tax rates on taxable income a panel study of the 1986 tax reform act this paper uses a treasury department panel of more than 4 000 taxpayers to estimate the sensitivity of taxable income to changes in tax rates on the basis of a comparison of the tax returns of the same individual taxpayers before and after the 1986 tax reform the analysis emphasizes that the response of taxable income involves much more than a change in the traditional measures of labor supply the evidence shows an elasticity of taxable income with respect to the marginal net of tax rate that is at least one and could be substantially higher the implications for recent tax rate changes are discussed

analysis of trends in technical and allocative efficiency an application to texas public school districts abstract we present a new dea based method to analyze efficiency trends over time and differences across subgroups in a panel data setting we employ a result that the aggregate technical and allocative inefficiency score equals the technical inefficiency when input quantities are aggregated into a single total input cost variable and develop test procedures to evaluate the presence of allocative inefficiency we apply these methods to test for the presence of allocative inefficiency in texas school districts over 1993 99 and analyze shifts and trends in both technical and allocative inefficiencies over time for different regions our empirical results indicate the existence of statistically significant allocative inefficiencies while technical inefficiency increased over the six year sample period allocative inefficiency remained relatively stable during this period these results for the full sample obtain also when we repeat the analysis for different regions

privatization of nippon telegraph and telephone was it a good policy decision nippon telegraph and telephone ntt corporation was privatized in 1985 under the economic assertion that a public enterprise is less efficient and less profitable than a private enterprise this assertion is referred to as the property right theory in economics and it is used as a theoretical rationale for privatizing publicly owned organizations this article empirically examines the economic assertion by comparing ntt s performance before and after its privatization data envelopment analysis dea is used as the research tool in this study which confirmed the economic assertion in terms of production based efficiency measures but it cannot find any major difference in its cost reducing corporate efforts thus this study presents serious management problems occurring within the ntt s partial privatization the partial privatization is now prevailing in the telecommunications industry all over the world this article also discusses the japanese business environment which makes ntt managerially ineffective under its public private joint ownership

the law of one price in data envelopment analysis restricting weight flexibility across firms abstract the law of one price loop states that all firms face the same prices for their inputs and outputs under market equilibrium taken here as a normative condition for efficiency prices this law has powerful implications for productive efficiency analysis which have remained unexploited thus far this paper shows how loop based weight restrictions can be incorporated in data envelopment analysis dea utilizing the relation between industry level and firm level cost efficiency measures we propose to apply a set of input prices that is common for all firms and that maximizes the cost efficiency of the industry our framework allows for firm specific output weights and for variable returns to scale and preserves the linear programming structure of the standard dea we apply the proposed methodology to the evaluation of the research efficiency of economics departments of dutch universities this application shows that the methodology is computationally tractable for practical efficiency analysis and that it helps in deepening the dea analysis

a household based nonparametric test of demand theory a nonparametric test of demand theory determining the consistency of price expenditure data with the generalized axiom of revealed preference is applied to household macroeconomic data for the first time the fraction of consumption bundle comparisons that violate the generalized axiom of revealed preference is proposed as a summary statistic to indicate the consistency of a data set with revealed preference axioms this violation rate is calculated among consumption pairs with similar expenditures to increase the power of the test the results suggest that similar households consumption choices and budget constraints are generally consistent with the joint hypotheses of optimizing behavior and common preferences copyright 1995 by mit press

efficiency effectiveness and productivity of marketing in services abstract how can a service firm right size marketing expenses and yet strive to maximize revenue this paper represents the first attempt to model these efficiency and effectiveness issues using a 49 unit asia pacific hotel chain as illustration we employ a triangular dea model with total expenses controlling for number of rooms as the raw input marketing expenses as intermediate output input and revenues from room rentals and f b as final outputs we infer that efficiency tails off when more than 12 of the budget is expended on marketing activities in terms of effectiveness we find that all the units rated as relatively inefficient can accrue increasing returns to scale in revenues from marketing activities by contrast in the productivity stage linking the raw inputs to the revenues we observe mostly decreasing returns to scale our results highlight the crucial role of marketing in service organizations

measuring economic efficiency with incomplete price information abstract this note identifies and corrects a technical error in t kuosmanen g t post eur j oper res 134 2001 43 58

the effect of tax based savings incentives on the self employed abstract the u s individual income tax allows employers to make tax deferred contributions to qualified pension plans for their employees and in the case of the self employed on their own behalf we examine the effect of these tax based savings incentives on the self employed for this purpose we use a panel of sole proprietors constructed from the statistics of income soi individual income tax files for 1985 1989 and 1993 we find that taxes have a substantial effect on both the dichotomous decision to contribute and the amount contributed to tax deferred retirement savings plan by the self employed in general our estimates suggest a tax price elasticity of contributions around 2 0 this finding is surprisingly robust to a number of alternative specifications

the effect of income taxes on household income research on the distribution of income during the 1980s has identified a trend towards increasing inequality which may be the continuation and acceleration of trends spanning several decades this paper explores to what extent behavioral responses to the tax changes during the 1980s may also explain the rising inequality the 1986 tax reform act is used as a natural experiment to explore the roles played by both taxes and a variety of nontax factors our principal finding is that both tax rates and nontax factors appear to have had significant effects on relative income growth during the late 1980s

firm and industry level profit efficiency analysis using absolute and uniform shadow prices we discuss the nonparametric approach to profit efficiency analysis at the firm and industry levels in the absence of complete price information two new insights are developed first we measure profit inefficiency in monetary terms using absolute shadow prices second we evaluate all firms using the same input output prices this allows us to aggregate firm level profit inefficiencies to the overall industry inefficiency besides the measurement of profit losses the presented approach enables one to recover absolute price information from quantity data we conduct a series of monte carlo simulations to study the performance of the proposed approach in controlled production environments

income taxes and entrepreneurs use of labor we investigate the effect of entrepreneurs personal taxes on their use of labor analyze the tax returns of sole proprietors before and after the tax reform act of 1986 and determine how the substantial reductions in marginal tax rates affected their hiring decisions and wage bills individual income taxes exert a statistically and quantitatively significant influence on the probability of hiring workers raising the entrepreneur s tax price by 10 raises the mean probability of hiring by about 12 further taxes influence total wage payments to workers the tax price elasticity of the median wage bill is about 37

piecewise loglinear estimation of efficient production surfaces linear programming formulations for piecewise loglinear estimation of efficient production surfaces are derived from a set of basic properties postulated for the underlying production possibility sets unlike the piecewise linear model of banker charnes and cooper banker r d a charnes w w cooper 1984 models for the estimation of technical and scale inefficiencies in data envelopment analysis management sci 30 september 1078 1092 this approach permits the identification of increasing marginal products and estimation of the classical s shaped production functions methods are also provided for estimating technical inefficiencies and other production characteristics such as rates of substitution and transformation marginal products returns to scale and most productive scale sizes on the basis of observed production data the results of a simulation study are reported to illustrate the usefulness of this estimation method in empirical applications when there are a priori reasons to expect increasing marginal products in some regions of the production function a modified model is provided to extend this analysis to the situation of non competing outputs addressed by the bi extremal model of banker charnes cooper and schinnar banker r d a charnes w w cooper a schinnar 1981 a bi extremal principle for frontier estimation and efficiency evaluation management sci 27 december 1370 1382

clustered pricing in the corporate loan market theory and empirical evidence abstract existing theories explaining security price clustering as well as clustering in the retail deposit and mortgage markets are incompatible with the clustering in the corporate loan market we develop a new theoretical model that the attitude of the lender toward the uncertainty about the quality of the borrower leads to the clustering of spreads our empirical results support our theoretical model and we find that clustering increases with the degree of uncertainty between the lender and the borrower in contrast clustering is less likely when the uncertainty about the quality of the borrower has been reduced through repeated access and through prior interactions of the lender and the borrower

an overall measure of technical inefficiency at the firm and at the industry level the lost profit on outlay abstract as a measure of overall technical inefficiency the directional distance function ddf introduced by chambers chung and fare ties the potential output expansion and input contraction together through a single parameter by duality the ddf is related to a measure of profit inefficiency which is calculated as the normalized deviation between optimal and actual profit at market prices as we show in the most usual case the associated normalization represents the sum of the actual revenue and the actual cost of the assessed firm consequently the corresponding profit inefficiency measure associated with the ddf has no obvious economic interpretation in contrast in this paper we allow outputs to expand and inputs to contract by different proportions this results in a modified ddf that retains most of the properties of the original ddf the corresponding dual problem has a much simpler interpretation as the lost profit on average outlay that can be decomposed into a technical and an allocative inefficiency component in addition an overall measure of technical inefficiency at the industry level is introduced resorting to the direction corresponding to the average input output bundle

the income tax and nonwage compensation d ramatic changes in the division of labor compensation between wage and nonwage payments have occurred since world war ii voluntary employer contributions to private pension and welfare funds have risen from 1 2 of wage and salary compensation in 1947 to 8 3 in 1979 with half the increase taking place since 1969 see table 1 major changes in the composition of the fringe benefit package have also taken place during this period employer contributions to group health insurance plans have risen from 24 of total fringe benefits in 1947 to 40 o in 1979 if this growth continues group health insurance will replace pension and profit sharing plans as the largest fringe benefit expenditure by employers these trends in the compensation mix have long been noted by researchers and various factors have been offered as explanations including the favorable tax treatment of fringe benefits demographic changes such as increased life expectancy and unionization rice 1966 ture 1976 mabry 1973 freeman 1978 however most explanations have not been subjected to rigorous empirical testing and the few results that have been published are both questionable and dated for example rice 1966 estimated that changes in the tax rate structure had little influence on the relative increase in fringe benefits from world war ii to 1963 more recent studies schiller and weiss 1979 1980 have examined a specific fringe benefit the private pension plan for its impact on turnover and its role as an equalizing difference but these studies have not analyzed the determinants of the compensation mix this paper discusses the theoretical determinants of the division of labor compensation between fringe benefits and cash income and empirically estimates their importance it concentrates on the impact of taxation on the compensation mix for several reasons first the assumption that rising tax rates encourage individuals to substitute fringe benefits for cash income underlies estimates of the welfare cost of tax preferences browning 1979 second proposals to fully tax employee fringe benefits under a comprehensive9 income tax have surfaced in recent years nolan 1977 clotfelter 1979 finally current federal tax policy is calling for large tax rate reductions to increase supply incentives unlike the determinants of the compensation mix that change slowly over time such as life expectancy tax rate changes can occur rapidly through legislative action reducing tax rates might enlarge the tax base by increasing the fraction of labor income received as taxable cash wages and salaries section ii outlines the tax treatment of various forms of labor compensation and in section iii other factors thought to influence the choice between wage and nonwage compensation are discussed empirical analyses of the compensation mix are presented in section iv a brief summary and implications of the major findings for the future growth of fringe benefits follow in section v

alternative methods for environmentally adjusted productivity analysis abstract advances in the productivity with which food is produced around the world have been made possible through the intensive use of industrial inputs that have important environmental impacts like standard measures of macroeconomic performance however commonly used measures of agricultural efficiency and productivity account only for marketed commodities and inputs but ignore the environmental effects of these production processes a more complete analysis of trends in the sector s productivity requires the use of models that incorporate these environmental effects to provide better measures of the contributions of the sector from the social point of view this paper compares the conceptual merits and empirical performance of alternative approaches that can be employed for this purpose input distance functions output distance functions nonparametric methods and index number approaches each of the methods has relative strengths and weaknesses the methods are empirically illustrated using data from the canadian pulp and paper industry

a generalized distance function and the analysis of production efficiency a generalization of shephard s distance functions is proposed extending the usefulness of distance functions in economic analysis applications to efficiency measurements and productivity analysis are presented new indexes of productivity and technical allocative and scale efficiency are proposed and analyzed interpretation of these indexes in terms of ray average cost ray average revenue and cost to revenue ratio is discussed

taxes fringe benefits and faculty the growth of employee benefits in academe has closely paralleled their economy wide growth this study estimates a complete system describing the demand for benefits and wages using panel data on 1477 institutions of higher learning the demand for benefits is very responsive to changes in real income and the tax price of benefits these conclusions are robust with respect to varying definitions of the tax price treating it as endogenous and accounting for unmeasured individual effects on demand simulations suggest that the tax reform act of 1986 sharply reduced the demand for benefits extrapolating the impact to the entire economy the annual flow of compensation shifted away from benefits by at least 15 billion copyright 1992 by mit press

a comparative application of data envelopment analysis and translog methods an illustrative study of hospital production this paper compares inferences about hospital cost and production correspondences from two different estimation models 1 the econometric modeling of the translog cost function and 2 the application of data envelopment analysis dea while there are numerous examples of the application of each approach to empirical data this paper provides insights into the relative strengths of the estimation methods by applying both models to the same data the translog results suggest that constant reruns are operant whereas the dea results suggest that both increasing and decreasing returns to scale may be observed in different segments of the production correspondence in turn suggesting that the translog model may be averaging diametrically opposite behavior on the other hand by examining the rate of output transformation both models agree that patient days devoted to care of children are more resource intensive than those devoted to adults or to the elderly in addition we compare estimates of technical efficiencies of individual hospitals obtained from the two methods the dea estimates are found to be highly related to the capacity utilization but no such relationship was found for the translog estimates this comparative application of different estimation models to the same data to obtain inferences about the nature of underlying cost and production correspondences sheds interesting light on the strengths of each approach and suggests the need for additional research comparing estimation models using real as well as simulated data

energy productivity growth in the dutch greenhouse industry profitability of dutch greenhouse firms is largely dependent on energy costs and policy makers focus on reducing the use of energy by these firms this article uses russell measures of te to develop indicators of energy productivity growth results show that energy productivity grew by 2 8 annually in the period 1976 95 with technical progress being the key factor driving the process of productivity growth from this we conclude that policies aiming at enhancing the adoption of technological innovations are more effective if due attention is paid to measures for improving te

economic efficiency and frontier techniques abstract most of the literature related to the measurement of economic efficiency has based its analysis either on parametric or on non parametric frontier methods the choice of estimation method has been an issue of debate with some researchers preferring the parametric and others the non parametric approach the aim of this paper is to provide a critical and detailed review of both core frontier methods in our opinion no approach is strictly preferable to any other moreover a careful consideration of their main advantages and disadvantages of the data set utilized and of the intrinsic characteristics of the framework under analysis will help us in the correct implementation of these techniques recent developments in frontier techniques and economic efficiency measurement such as bayesian techniques bootstrapping duality theory and the analysis of sampling asymptotic properties are also considered in this paper

marginal tax rates and tax favoured pension savings of the self employed evidence from sweden in recent years the study of how individuals respond to policies that aim at promoting pension savings has emerged as a vital area of economic research this paper adds to this body of literature by estimating the tax price elasticity of contributions to tax favoured pension savings accounts on a population of self employed individuals i exploit a unique total database over the swedish population that covers the years 19992005 using instrumental variables i obtain a tax price elasticity estimate of 0 51 and an income elasticity estimate of 0 13 whereas ordinary least squares ols produces estimates that conflict with consumer theory

a goal programming method of stochastic allocative data envelopment analysis abstract allocative data envelopment analysis adea is a version of data envelopment analysis dea which measures relative efficiency for a group of similar operating units with known input prices by using the actual input values adea provides information to managers on the minimum cost method of operation for each unit a major criticism of dea methods is that they are deterministic and have no means of allowing for uncertainty this paper applies the goal programming approach introduced by banker 1991 to allocative efficiency and develops the stochastic adea model a two stage solution method is introduced which is needed because of the existence of alternate optimal solutions regarding which units are found to be significantly inefficient we propose that identifying the significantly inefficient units is most useful to managers because it best facilitates improved efficiency the concept of a minimum frontier is introduced and used to define the significantly inefficient units we also show how bounds can be imposed which allow the ambiguity of the noise inefficiency trade off to be eliminated from the objective function the use of bounds also allows the identification of the significantly inefficient unit based on the amount of uncertainty present for each operating unit as a result of optimizing cost this method has the important advantage of being ideally suited for multiple outputs