carbon dioxide emissions and governance a nonparametric analysis for the g 20 this paper applies nonparametric estimators to examine countries carbon dioxide co2 emissions and governance relationship by using data for the time period 1996 2010 of the twenty largest economies group of twenty g 20 the dynamics of the considered relationship are analyzed six governance measures are included in our analysis voice and accountability political stability and absence of violence government effectiveness regulatory quality rule of law and control of corruption as have been defined in world governance indicators from the world bank the empirical findings reveal a nonmonotonic relationship between countries co2 emissions and the examined governance measures in addition and with respect to the environmental policy makers a significant difference on the number of governance measures influencing countries carbon dioxide emissions which is subject to countries specific regional and development variations is recorded finally the carbon dioxide emissions governance relationship is highly nonlinear and appears that countries higher governance quality does not always result to lower carbon dioxide emission levels

workfare wellbeing and consumption evidence from a field experiment with kenya s urban poor abstract restrictions like work requirements and constraints on voucher transfers are often used in social welfare systems but little empirical evidence exists on their impact on wellbeing we conducted a 10 day randomized experiment with 432 individuals living below the poverty line in the kawangware settlement of nairobi kenya testing two elements of social welfare design workfare versus welfare and restricted versus unrestricted vouchers participants were randomly assigned to a work condition involving daily work for unrestricted vouchers or one of two wait conditions involving daily waiting for vouchers that were either unrestricted or partially restricted to staple foods we find that working improved psychological wellbeing relative to waiting suggesting that the means of implementing welfare programs may have important effects on individuals beyond the impact of monetary benefit alone furthermore although the restrictions were inframarginal partially restricted vouchers crowded in spending on staple foods suggesting the existence of a flypaper effect in spending from restricted vouchers

evaluating welfare reform in the united states this paper reviews the economic literature on welfare reform over the 1990s a brief summary of the policy changes is followed by a discussion of the methodological techniques that analyze the effects of these changes on outcomes the paper then critically reviews the econometric and experimental literature on caseload changes labor force changes poverty and income changes and family formation changes a growing body of evidence suggests that recent policy changes have influenced economic behavior and well being one particular set of new style welfare programs seems to show especially promising results with significantly increased work and earnings and reduced poverty

choice under uncertainty a model of applications for the social security disability insurance program abstract not all people with health problems are disabled some individuals with severe physical or mental impairments such as blindness or limb amputation continue to hold jobs and generally function satisfactorily they constitute however a group of potentially disabled individuals who might apply and qualify for disability insurance or other disability related benifits if they were to lose their jobs or to decide that employment offered an inadequate financial or non pecuniary reward thus disability or a health related inability to work is more than a medical problem but involves motivational and attitudinal factors we specify a model of the application process which we model as choice under uncertainty about approval of an application for disability insurance we specify the possible outcomes to the choice process of an individual in which the probability of acceptance for disability insurance is a key consideration we then estimate a joint model of labor supply and application to the disability insurance program based on the 1972 survey we then compare our results to the observed time series applications process since 1976 lastly we estimate the sensitivity of the application process to the probability of acceptance and the level of benifits

targeting assistance to the poor efficient allocation of transfers when household income is not observed abstract this paper examines the problem of how to transfer money or other forms of assistance to poor households when one observes some characteristics of households but not their incomes this and related issues are often referred to as the targeting problem the paper first sets out the problem formally as one of minimizing a poverty index given a fixed amount of money available for transfers assuming that household survey data are available which include accurate income and or expenditure information the solution for the problem is formulated as a non linear mathematical programming exercise using household survey data from cote d ivoire the technique is applied to both urban and rural areas separately the paper concludes with a general discussion and suggestions for future research

optimality of workfare with heterogeneous preferences with the standard non linear income taxation framework with heterogeneity of preferences in this paper the optimality of workfare as a screening tool is examined it is assumed that workfare does not serve as a human capital investment participation is mandatory and administrative costs are negligible imposing alternative cardinalizations on individuals utilities allows for the possibility that the government optimally redistributes income to or from high disutility of labour individuals under either case it is never optimal to impose workfare on these individuals it is also shown that non productive workfare can be an e cient policy tool in contrast to the results found in besley and coate 1995 brett 1998 and beaudry and blackorby 1997 jel classification h21 h23 optimalite du workfare en presence de preferences heterogenes l auteur examine l timalite du workfare en tant qu instrument de tamisage a l aide du cadre conceptuel traditionnel d imposition non lineaire des revenus en presence de preferences heterogenes on postule que le workfare n est pas un processus d investissement en capital humain que la participatioun est obligatoire et que les couts d administration sont negligeables quand on postule aussi des utilites cardinales differentes pour les individus il devient possible pour le gouvernement de redistribuer optimalement les revenus en faveur ou au detriment des individus pour qui le travail a une tres grande desutilite dans l un et l autre cas on montre que le workfare n est jamais une politique optimale on montre aussi que le workfare dans des activites non productives peut etre un instrument de politique publique e cient contrairement a ce qu a rment besley et coate 1995 brett 1998 et beaudry et blackorby 1997

in kind transfers self selection and optimal tax policy abstract this paper examines the role of public provision of goods as a redistributive mechanism when tax policies are designed optimally on the basis of the information available to the government we characterize pareto efficient allocations that are attainable through the tax policy and derive the conditions under which public provision will enhance welfare above the maximum that can be achieved through a mix of a general income tax and commodity taxes price subsidies first when there are two produced goods we prove that public provision is always pareto improving the improvement is achieved through changing individuals actual consumption levels second with no restrictions on the number of goods we derive a sufficient condition for public provision to be pareto improving this is achieved by weakening self selection constraints so that welfare improving tax changes are made possible suitable examples include provision of day care basic health care and rights to a minimum old age pension

optimal social security with imperfect tagging workers are exposed to the risk of permanent disability we rely on a dynamic mechanism design approach to determine how imperfect information on health should optimally be used to improve the trade off between inducing the able to work and providing insurance against disability after deriving the fi rst order conditions to this problem we calibrate the model to the u s economy and run a numerical simulation the government should offer back loaded incentives and make strategic use of the difference between the age at which disability occurs and the age of eligibility to disability bene ts also the able who are mistakenly tagged as disabled should be encouraged to work until some early retirement age this makes a decrease in the strictness of the disability test desirable which would reduce the number of disabled who are not awarded the tag and hence improve insurance finally we show how the first best allocation of resources can asymptotically be implemented by making strategic use of the disability test

male labour force participation following illness or injury this paper develops a model of the disabled individual s labour force participation decision following illness or injury and confronts it with data on the financial consequences of ill health a utility function is specified which allows for the effect of changes in health on work leisure preferences and is evaluated in relation to a household budget constraint estimation is through maximization of the appropriate likelihood function correcting for self selection bias within a switching regression model results are presented showing significant effects of financial variables on participation and these are seen to vary with age disability and income

lessons from the u s unemployment insurance experiments recent social experiments have evaluated two reforms of the unemployment insurance ui system reemployment bonuses and job search programs the bonus experiments show that economic incentives affect the length of ui receipt and provide weak evidence that an earlier return to work does not decrease earnings the experiments do not show the favorability of a permanent bonus program as they ignore its effect on the number of the claimants the job search experiments test several more promising reforms nearly all of the combinations of services and increased enforcement reduce ui receipt and have favorable cost benefit analyses earnings often increase though the estimates are imprecise

modelling the take up of state support abstract we discuss the modelling of the take up of state support by going beyond the standard analysis and recognising that both the researcher and the welfare agency make errors is assessing entitlement we apply the discussion to an examination of the take up of supplementary benefits in britain by explicitly modelling the costs to taking up state support we can illustrate how these costs can dampen the welfare impact of state support and mitigate or aggravate welfare agency errors in assessing entitlement

social security and retirement decision a positive and normative approach social insurance for the elderly is judged responsible for the widely observed trend towards early retirement in a world of laissez faire or in a first best setting there would be no such trend however when first best instruments are not available because health and productivity are not observable the optimal social insurance policy may imply a distortion on the retirement decision the main point we make is that while there is no doubt that retirement systems induce an excessive bias towards early in many countries a complete elimination of this bias i e a switch to an actuarially fair system is not the right answer this is so and for two reasons first some distortions are secondbest optimal this is the normative argument second and on the positive side the elimination of the bias might be problematic from a political perspective depending on the political process it may either not be feasible or alternatively it may tend to undermine the political support for the pension system itself

optimal demogrants with imperfect tagging abstract this paper considers optimal taxation of income when some individuals are imperfectly tagged as disabled it proves that under very general conditions these individuals should receive a larger demogrant if leisure is a normal good

income distribution and price controls targeting a social safety net during economic transition abstract during the ongoing post communist economic transitions the relative well being of many people is changing rapidly and governments are not well positioned to accurately measure individual living standards under such circumstances continued price controls over basic consumer goods within the state sector and the associated queuing can form a serviceable device for targeting poor people for subsidies with a fixed price state sector and free price parallel markets rich people might choose to avoid queues and shop in the free markets while poor people would prefer to pay low nominal prices and queue in the state sector the targeting of subsidies through queues therefore can be accomplished even if the government has no information concerning individual income or living standards when the alternative to price controls is a poorly targeted explicit social safety net the resource cost of queues might be more than offset by an improvement in the targeting of subsidies

agency and the design of welfare systems abstract transfers to the needy are administered by social workers whose job it is to tag welfare applicants to determine eligibility for disability benefits the accuracy of tagging depends on the effort of the social workers which is private information to prevent shirking and induce optimal effort costly monitoring is required using the framework of optimal non linear taxation we characterize the form of the optimal tax transfer system when the government operates a costly welfare system financed by income taxation higher income persons self select into the income tax system the needy apply for welfare if tagged they receive a disability benefit if untagged they receive general welfare benefits we characterize circumstances under which welfare recipients should or should not be induced to work the structure of the optimal tax transfer system and the optimal payment and monitoring of social workers

carbon emission performance evaluation and allocation in chinese cities abstract this paper presents a dea approach with multiple abatement factors to evaluate co2 emission performance and allocate co2 emission quotas in chinese cities we first consider the difference of marginal abatement costs among cities and construct the non radial directional distance function with multiple abatement factors the total factor co2 emission performance index and its dynamic change index are then proposed to measure co2 emission performance considering equity and efficiency we develop a composite index by the hybrid method to allocate emissions quota which considers co2 emissions as well as co2 emission performance then we conduct an empirical study using inputs and outputs dataset of 71 chinese cities in 2005 2012 chinese cities have poor energy efficiency and still have high co2 emissions the eastern region outperforms the central region and the western region performs worst whereas the dynamic co2 emission performance of the central region has the largest increase the change of co2 emission performance is driven mainly by technological advances as for the co2 emission allocation the composite index method encourages cities to reduce emissions and enhance emission performance through carbon trading market it also motivates cities with high historical emissions to reduce their emissions by improving technology when they have poor co2 emission performance

older people s participation in extra cost disability benefits the targeting of an uk extra cost disability benefit for older people attendance allowance is analyzed using longitudinal data from the british household panel survey first a binary model of benefit participation is used to investigate whether receipt is responsive to the onset of disability second matching estimators are used to evaluate the consequences of missed participation on later financial wellbeing results indicate that participation is highly responsive to the onset of disability although the chance of delays in receipt emerges personal characteristics unrelated to eligibility also appear to influence benefit receipt translating into sizeable differences in the amount of cash support received the comparison of recipients with observationally equivalent non recipients confirms that timely participation reduces disabled older people s financial strain

the repatriation incentive of the foreign dividend exemption system abstractdue to the high taxation of domestic corporate income japanese multinational enterprises have avoided to repatriate foreign profits to japan for quite some time as a consequence the japanese government introduced a new taxation system in 2009 the so called dividend exemption system which was aimed at reducing the effective tax burden of foreign dividends of japanese multinational companies in order to increase tax revenue and stimulate economic growth applying a theoretical framework which allows comparing the repatriation incentive of the old and new japanese tax systems we find that in the long run the tax regime change fails to incentivize foreign subsidiaries to repatriate foreign profits especially subsidiaries with high leverage located in countries with low corporate taxes and low dividend taxes might reinvest rather than distribute their earnings in the dividend exemption method

public goods self selection and optimal income taxation using the self selection approach to tax analysis this paper derives a modified samuelson rule for the provision of public goods when the government deploys an optimal nonlinear income tax this approach gives a straightforward interpretation of the central result in this area generalises it and provides a simple characterisation of optimal policy in a wide range of circumstances the analysis also emphasises and clarifies the significance of the choice of numeraire for the optimality of decentralising public spending decisions it is well known that the famous samuelson rule for the provision of public goods may not be applicable when the tax revenues used to finance the public goods come from distorting taxes the principle was recognized as long ago as pigou 1947 long before the samuelson rule was devised pigou saw that in addition to the resource cost involved in transferring funds from the private to the public sector there was a deadweight loss involved from this insight he suggested that the criterion for providing public goods should be more stringent than the samuelson rule would later suggest in particular one might expect that the inclusion of the deadweight loss of taxes as part of the cost of providing a public good would lead to a reduction in its optimal provision relative to a situation in which lump sum taxes were available the problem was investigated more systematically by atkinson and stern 1974 who considered the case in which a public good is financed by a set of optimal commodity taxes all individuals were assumed to be identical so efficiency alone dictated the objective they found that no prima facie case could be made for the pigou position that the use of distortionary taxes called for a reduction in the supply of the public good their analysis clearly showed that there were two influences at work when the financing of a public good was by distorting taxes on the one hand

can workfare programs moderate conflict evidence from india can public interventions persistently reduce conflict adverse weather shocks through their impact on incomes have been identified as robust drivers of conflict in many contexts an effective social insurance system moderates the impact of adverse shocks on household incomes and hence could attenuate the link between these shocks and conflict this paper shows that a public employment program in india by providing an alternative source of income through a guarantee of 100 days of employment at minimum wages effectively provides insurance this has an indirect pacifying effect by weakening the link between productivity shocks and incomes the program uncouples productivity shocks from conflict leading persistently lower conflict levels

carbon dioxide emissions allocation a review carbon dioxide co2 emissions allocation plays a fundamental role in determining reduction responsibility at economy level or emission permits at firm level past decades have seen the development and applications of various methods for co2 emissions allocation this paper provides a literature review of co2 emissions allocation with emphasis on the evolution of allocation methods used it begins with a summary of the most popular allocation principles and criteria that lay a foundation for the development of allocation methods we then classify the existing allocation methods into four groups namely indicator optimization game theoretic and hybrid approaches the main features and findings of past studies are identified and summarized while the fairness principle prevails in earlier studies the efficiency principle has been found to receive increasing attention recently we also present a comparison of the empirical results based on ten popular indicator methods to show how indicator choice affects the allocation results issues related to selecting appropriate methods in co2 emissions allocation are finally discussed further research may be carried out to strike a balance between fairness and efficiency so that the allocation results become more widely acceptable and economically feasible

viewpoint innovations in the theory and practice of redistribution policy we present a survey of key results from second best optimal redistribution theory and their implications for tax transfer policy the core results include the corlett hague theorem the deaton conditions the production efficiency theorem the atkinson stiglitz theorem and the mirrlees saez characterization of the optimal non linear income tax system these have been augmented in recent years by optimal participation tax rates the implications of involuntary unemployment the use of unconventional instruments such as minimum wages in kind transfer and workfare and the optimal taxation of capital income and bequests l auteur presente un survol des principaux resultats theoriques de la redistribution optimale de second ordre et de leurs implications pour les politiques d imposition et de transferts les resultats fondamentaux incluent le theoreme de corlett hague les conditions de deaton les theoremes d efficacite en production le theoreme d atkinson stiglitz ainsi que la caracterisation du systeme optimal d imposition non lineaire du revenu a la mirrlees saez ces derniers resultats ont ete enrichis au cours des dernieres annees par certains autres portant sur les taux d imposition decoulant des allocations conditionnelles les implications du chomage involontaire l usage d instruments non conventionnels tels que le salaire minimum les transferts en nature le workfare ainsi que l imposition optimale des revenus du capital et des legs ces resultats sont exposes et leurs implications pour les politiques d imposition et de transferts sont discutees

topping up or opting out the optimal design of public provision schemes there is extensive public provision of private goods in all developed countries the public provision scheme is often designed so that individuals can opt out but not top up supplement the publicly provided quantity quality using an optimal income ta

welfare work requirements with paternalistic government preferences work requirements in means tested transfer programmes have grown in importance in the us and in some other countries the theoretical literature which considers their possible optimality generally operates within a traditional welfarist framework where some function of the utility of the poor is maximised here we consider a case where society instead has preferences over the actual work allocations of welfare recipients optimality of work requirements is shown to be possible but depends on the accuracy of the screening mechanism which assigns work requirements numerical simulations show that accuracy must be high for optimality earnings subsidies may also be optimal work requirements in means tested or welfare programmes have seen a resurgence in the last twenty years in the us and in a few european countries these requirements generally stipulate that benefit recipients must work or engage in some work like activity for some minimum number of hours each week most economists who have studied the

new directions in emissions trading the potential contribution of new institutional economics abstract once an arcane topic even among environmental economists emissions trading systems have substantially increased during this past decade in the usa moreover the implementation of these systems has necessitated increased involvement of professionals in many fields besides economics this paper reviews the practical experience of the six major types of emissions trading systems focusing on credit market development participation and results including transaction costs five more recent applications of emissions trading also are considered as well as the possibility of inter pollutant trading while inter pollutant trading has been successfully used for chlorofluorocarbons cfcs the applicability of this experience is probably very limited additionally it would be highly premature to attempt an evaluation of these newer emissions trading systems some of which have yet to be even partially implemented in order to improve these latter and future programs the paper considers the potential contribution of the new institutional economics nie to emissions trading the nie is used to develop theoretical insights and a series of predictions about the performance of a range of emissions trading systems

the effect of moving to a territorial tax system on profit repatriation evidence from japan abstract in an increasingly globalized world the design of international tax systems in terms of the taxation of foreign corporate income has attracted much attention from policy makers and economists alike in the past japan s worldwide tax system taxed foreign source income upon repatriation however to stimulate dividend repatriations from japanese owned foreign affiliates the japanese government introduced a foreign dividend exemption system in 2009 that exempted dividends remitted by japanese owned foreign affiliates to their parent firms from home country taxation this paper examines the effect of this dividend exemption system on profit repatriation by japanese multinationals we find that the response of japanese owned affiliates to the dividend exemption was heterogeneous more particularly foreign affiliates with a large stock of retained earnings were generally more responsive to the reform and significantly increased dividend payments to their parent firms in response to the enactment of the dividend exemption system dividend payments by these affiliates also became more sensitive to withholding tax rates on dividends levied by host countries under the new exemption system

optimal redistribution with productive social services publicly provided private goods are conventionally considered consumer goods departing from this perspective we analyze the public provision of inputs that improve household productivity e g education and childcare in a two class economy with distorting taxation public provision is always welfare improving with respect to pure taxation given that the public input directly affects household productivity moreover the case for public provision strengthens as households heterogeneity in input demand fades out contrary to consolidated results in the literature the features of optimal provision schemes depend on the nature of publicly provided input namely if it substitutes household productive capacity or just helps households to exploit it

explaining applications to the u s disability system a semiparametric approach this study investigates the determinants of applications for u s disability benefits between 1986 and 1993 using a semiparametric discrete factor procedure separately for men and women approximating a dynamic optimization model the estimation accounts for a variety of potential biases that were unaddressed in prior studies our results indicate different responses of men and women to variations in policy measures past labor earnings and fringe benefits as well as benefit eligibility and benefit amounts clearly affect application behavior

disability transfers and the work decision of older men the potential causal relationship between the availability and generosity of disability transfers and the nonparticipation rates of older men is often asserted and much studied parsons 1980 haveman and wolfe 1984 leonard 1986 however estimates of the magnitude of this linkage vary widely the growth in transfer availability and generosity has been credited with from 30 to 100 percent of the significant post 1960 fall in older male participation rates the disparity in these research results stems primarily from 1 alternative sources of data that differentially constrain estimation of relevant expected wage and transfer incomes 2 specifications that are unable to distinguish income transfer from labor market effects and 3 reliance on measures of health status that are endogenous to the work leisure decision this study seeks to narrow the range of estimates by addressing each of these issues our utility maximization model of work status choice assumes that workers who differ in health status choose between the mutually exclusive options of working at the wage offered for their characteristics and accepting public or private disability transfers because the income flows in the two options are censored they are estimated using switching regression techniques as expectations conditional on exogenous individual characteristics hence accounting for the potentially endogenous process that separates wage earners from transfer recipients the marginal utilities of income from the two sources are allowed to differ because of stigma effects in the estimation we adjust the choice based nature of our sample employ longitudinal earnings data to measure expected changes in as distinct from the expected level of income in the two options and use a separately estimated latent health status measure largely purged of its endogeneity with the participation decision

relocation of headquarters and international taxation about 6 of multinationals relocated their headquarters to another country in the 1997 2007 period this paper presents empirical evidence on the role of taxes in these relocation decisions it considers a sample of 140 multinationals that relocated their headquarters over the past decade and compares them to a control group of 1943 multinationals that did not relocate it is found that the additional tax due in the home country upon repatriation of foreign profits has a positive effect on the probability of relocation the empirical results suggest that an increase in the repatriation tax by 10 percentage points would raise the share of relocating multinationals by 2 2 percentage points equivalent to an increase in the number of relocations by more than one third furthermore the presence of controlled foreign corporation legislation also has a positive effect on the number of relocations

revealing the political decision toward chinese carbon abatement based on equity and efficiency criteria abstract china s economic reform over the past 30 years has allowed the free market to drive economic development however government still plays a key role in the energy sector by allocating energy conservation and emissions abatement how does the government make an equity decision as a tradeoff to market efficiency this is an unanswered question the purpose of this paper is to illustrate the government s preference toward equity and efficiency using the provincial level co 2 intensity allocation data we investigate the political decision that the government made based on the equity and efficiency criteria we find that the equity index plays a more important role than the efficiency index in determining the co 2 intensity target in addition political factors such as social stability are found to be important factors

reducing conflicts between climate policy and energy policy in the us the important role of the states the absence of us national action on global climate change policy has prompted initiatives by the us congress cities states and regions toward what is likely to become a long term collaborative effort to harmonize national energy and climate policies this upward evolution in the face of a reluctant administration is historically consistent with the development of national legislation on other environmental and social issues in the us at the heart of this movement is the need to resolve conflicts between high intensity use of low cost fossil energy supplies and the dominating impact of carbon dioxide emissions on global climate change us states are among the largest carbon dioxide emitters in the world and play a critical role in supplying and transforming energy as well as consuming it for economic advantage state governments are also likely to have to shoulder some of the cost of potentially extensive climate damages and bear the brunt of the cost of implementing future federal mandates as a result many are taking proactive stances on the development of climate mitigation policy to prepare for accelerate and or guide national policy as us states show leadership on addressing greenhouse gas emissions they also play an important role in forging policies and measures that reduce economic conflict between energy and climate goals a number have launched or completed greenhouse gas mitigation plans and other major policies in the past few years that address these conflicts through 1 finding ways to reduce mitigation costs including the use of incentive based policy instruments 2 promoting an open and democratic policy process that includes major stakeholders 3 promoting equity across socioeconomic groups regions and generations and 4 promoting interregional cooperation the results are promising and suggest that the state arena for climate and energy policy is evolving quickly and constructively toward alternatives that reduce conflict regional efforts are also unfolding along with greater congressional attention to the lessons learned and commitments made by sub federal actions in the next few years many national energy and climate conflicts are likely to be tested and addressed by states among these pennsylvania is likely to be an important player due to its high profile of energy production and potential for leadership

do low income housing subsidies increase the occupied housing stock abstract a necessary condition for justifying a policy such as subsidized low income housing either via tenant based rental assistance or construction of public or private projects is that it has a real effect on market outcomes in this paper we examine one aspect of the real effect of subsidized housing does it increase the housing stock if subsidized housing raises the quantity of occupied housing per capita either more people are finding housing or they are being housed less densely on the other hand if subsidized housing merely crowds out equivalent quality low income housing that otherwise would have been provided by the private sector the housing policy may have little real effect on housing consumption using both census place and msa level data from the decennial census and from the department of housing and urban development we ask whether housing markets with more subsidized housing also have more total housing after accounting for housing demand we find that government financed units raise the total number of units in a market although on average one government subsidized unit adds only one third to one half of a unit to the total housing stock there is less crowd out in more populous markets and more crowd out in places where there is less excess demand for subsidized housing as measured by the number of government financed units per eligible person tenant based housing programs such as section 8 certificates and vouchers seem to be more effective than project based programs at targeting subsidized housing units to people who otherwise would not have their own

can higher prices stimulate product use evidence from a field experiment in zambia the controversy over how much to charge for health products in the developing world rests in part on whether higher prices can increase use either by targeting distribution to high use households a screening effect or by stimulating use psychologically through a sunk cost effect we develop a methodology for separating these two effects we implement the methodology in a field experiment in zambia using door to door marketing of a home water purification solution we find evidence of economically important screening effects by contrast we find no consistent evidence of sunk cost effects jel c93 d12 i11 m31 o12

large cash transfers to the elderly in south africa we examine the social pension in south africa where large cash sums about twice the median per capita income of african households are paid to people qualified by age but irrespective of previous contributions we present the history of the scheme and use a 1993 nationally representative survey to investigate the redistributive consequences of the transfers documenting who receive the pensions their levels of living and those of their families we also look at behavioural effects particularly the effects of the cash receipts on the allocation of income to food schooling transfers and savings in south africa a large social pension about twice the median per capita income of african households is paid in cash to people qualified by age irrespective of previous contributions we present the history of the scheme and explain how such large transfers could come about in an economy in which the recipients were not only politically weak but without any political representation whatsoever we then use a 1993 nationally representative survey to investigate the redistributive consequences of the transfers documenting who receive the pensions their levels of living and those of their families we also look at behavioural effects particularly the effects of the cash receipts on the allocation of income to food schooling transfers and savings the pressing policy issue for south africans is whether it makes sense to target seven billion rand nearly 2 billion of social expenditure through the current pension schemes our analysis contributes to the discussion by documenting the redistributive and behavioural effects of the transfers we find that at least as far as immediate incidence is concerned and without allowance for behavioural effects the social pension is an effective tool of redistribution and that the households it reaches are predominantly poor because so many of the elderly among south africa s african population live with children the social pension is also effective in putting money into house

investment in education and the time inconsistency of redistributive tax policy time inconsistency of tax policy is shown to arise in a setting where households differ in their ability to accumulate wealth and where the government has redistributional objectives it is assumed that wealth accumulation takes the form of human capital acquired through education the government is precluded from redistributing to a first best optimum by a self selection constraint the second best is shown to be time inconsistent in the time consistent optimum households underinvest in education an argument can be made for public intervention in the provision of education

on the form of transfers to special interests an important question in political economy concerns the form of transfers to special interests the chicago view is that political competition leads politicians to make such transfers efficiently the virginia position is that lack of information on the part of voters leads politicians to favor inefficient sneaky methods of redistribution this paper analyzes the form of transfers in a model of political competition in which politicians have incentives to make transfers to special interests it shows that when voters have imperfect information about both the effects of policy and the predispositions of politicians inefficient methods of redistribution may be employed

do non monetary prices target the poor evidence from a field experiment in india monetary price subsidies are often used to increase take up of health products but monetary prices may screen out those with the highest returns the poor using willingness to pay wtp data from a field experiment in india this paper determines whether nonmonetary prices better target health products to the poor than monetary prices it is found that monetary wtp is increasing in income and nonmonetary wtp is weakly decreasing in income comparing across price types nonmonetary wtp falls relative to monetary wtp as income rises nonmonetary prices better target the poor than monetary prices a larger fraction of total demand is poor

targeting in medicaid the costs and enrollment effects of medicaid s citizenship documentation requirement abstract the deficit reduction act of 2005 imposed a federal requirement that all individuals provide citizenship documentation when applying for or renewing medicaid coverage this represented a change in policy for 46 states using differences in differences to analyze data from the current population survey 2004 2008 this paper shows that the policy reduced medicaid enrollment among non citizens as intended and did not significantly affect citizens one in four adult non citizens in medicaid 390 000 total and one in eight child non citizens 81 000 were screened out by the policy annually child non citizens were more likely to become uninsured afterwards while adult non citizens appeared to shift from medicaid to other coverage overall the citizenship documentation requirement reduced medicaid participation among non citizens in an appropriately targeted way nonetheless a cost benefit analysis indicates that the policy was a net loss to society of 600 million through increased state administrative spending and compliance costs imposed on u s citizens applying for medicaid

disability cash transfers in the context of poverty and unemployment the case of south africa summary south africa s disability grant dg program has been criticized for its poor administration and the dependency culture it promotes this paper assesses the program s targeting effectiveness and its effects on labor supply using disability self reports and standard measures of economic well being the results suggest that dg s inclusion errors are relatively limited but exclusion errors are substantial and serious the paper also shows that increased leniency in disability screening policy in the gauteng province in the early 2000s does not appear to have altered labor market behaviors relative to northern cape a province where there was no change in policy

revisiting the optimal linear income tax with categorical transfers when individuals differ in both productivity and some categorical attribute optimal linear piecewise linear tax expressions are written to capture cases where it is suboptimal to eliminate inequality in the average social marginal value of income between categorical groups simulations provide examples

take up and targeting experimental evidence from snap this paper develops a framework for evaluating the welfare impact of various interventions designed to increase take up of social safety net programs in the presence of potential behavioral biases we calibrate the key parameters using a randomized field experiment in which 30 000 elderly individuals not enrolled in but likely eligible for the supplemental nutrition assistance program snap are either provided with information that they are likely eligible provided with this information and also offered assistance in applying or are in a status quo control group only 6 percent of the control group enrolls in snap over the next 9 months compared to 11 percent of the information only group and 18 percent of the information plus assistance group the individuals who apply or enroll in response to either intervention receive lower benefits and are less sick than the average enrollee in the control group the results are consistent with the existence of optimization frictions that are greater for needier individuals suggesting that the poor targeting properties of the interventions reduce their welfare gains

international equity and differentiation in global warming policy ne of the major obstacles to reaching a comprehensive agreement on global warming is the setting of greenhouse gas emission reduction targets for individual countries long standing tensions between industrialized and developing countries have raised the issue of equity in burden sharing moreover individual industrialized nations have pleaded special circumstances and have sought differentiation in their obligations this paper analyzes alternative rules for distributing tradable carbon dioxide emissions permits a non linear programming model which distinguishes between allocation based and outcome based rules is used to analyze the relative welfare outcomes the model is applied to the world body of nations and yields several important policy implications

optimal minimum wage policy in competitive labor markets this paper provides a theoretical analysis of optimal minimum wage policy in a perfectly competitive labor market and obtains two key results first we show that a binding minimum wage while leading to unemployment is nevertheless desirable if the government values redistribution toward low wage workers and if unemployment induced by the minimum wage hits the lowest surplus workers first importantly this result remains true in the presence of optimal nonlinear taxes and transfers in that context a binding minimum wage enhances the effectiveness of transfers to low skilled workers as it prevents low skilled wages from falling through incidence effects second when labor supply re sponses are along the extensive margin only the co existence of a minimum wage with a positive tax rate on low skilled work is always second best pareto ineffcient a pareto improving policy consists of reducing the pre tax minimum wage while keeping constant the post tax minimum wage by increasing transfers to low skilled workers and financing this reform by increasing taxes on higher paid workers overall our results imply that the minimum wage and subsidies for low skilled workers are complementary policies pa

targeting transfers through restrictions on recipients our objective is to design transfer programs that maximize some social welfare function following the optimal income tax formulation we assume that a random process endows individuals with characteristics that influence welfare such as ability to earn income medical condition or unmonitorable income the goal is to maximize the utility of a randomly chosen individual other individualistic social welfare functions would lead to equivalent results if the random characteristics were observable a first best outcome could be achieved by making them the basis for lump sum transfers in practice however we can observe only indicators of these characteristics such as earnings medical expenditures or consumption patterns the challenge for policy is to design an efficient second best transfer program based on indicators in this paper we argue that 1 an optimal transfer program in general must sacrifice productive efficiency to target efficiency this is done by imposing restrictions on the choices made by intended beneficiaries 2 a program that incorporates restrictions such as means tested in kind transfers commodity specific taxes and subsidies and even ordeals i e the imposition of deadweight costs to qualify for a transfer will perform better than programs that rely solely on income taxes and cash transfers

social insurance with in kind provision of private goods this paper addresses the desirability of providing in kind transfers as a screening device to facilitate redistribution of income from able to disabled persons within a social insurance system an optimal policy consisting of cash transfers income contingent in kind transfers of one good particularly demanded by disabled workers and linear taxation of other commodities is characterized it is then asked whether and if so when this policy can be replaced by an earning tested scheme that provides the in kind good only to those indivi duals who have no earnings from labor or by a non linear pricing policy

distinguishing income from substitution effects in disability insurance a set of studies conducted over the last 15 years has produced a near consensus that the social security disability insurance system ssdi has substantial disincentive effects on the labor supply of near elderly males diminishing labor force participation increasing the sensitivity of labor force exit decisions to adverse economic shocks and encouraging those nearing retirement to claim disability benefits and subsequently transfer into the social security retirement program yet efforts by the social security administration ssa to encourage labor supply among the disabled by removing the work disincentives built into ssdi have been almost entirely unsuccessful most notably in 1999 congress authorized the ticket to work program which provides an array of inducements for current ssdi beneficiaries to take up employment including permitting a trial work period of up to nine months providing 7 75 years of ongoing medicare eligibility following return to work and providing three years of automatic benefit reinstatement when claimants workplace earnings fall below a threshold level each of these steps reduces the implicit tax placed on labor supply by the ssdi program despite these lures fewer than 1 400 0 01 percent of the 12 2 million tickets issued to date have led to successful workforce integration autor and duggan 2006

self screening in targeted public transfer programs the self screening properties of initial eligibility determination a mechanism often under the control of the administrators of targeted transfer programs are derived and the use of this mechanism in the social security disability insurance system is explored empirically an increase in the rigor of initial eligibility screening may discourage potential applicants because they are unaware of appeal prospects and because the eligibility decision delay is lengthened as denied applicants are forced to appeal their claims in the disability program a 10 percent increase in the initial denial rate induces a 4 percent decrease in applications self selection is nonperverse

assigning resources to budget constrained agents this article studies different methods of assigning a good to budget constrained agents schemes that assign the good randomly and allow resale may outperform the competitive market in terms of utilitarian efficiency the socially optimal mechanism involves random assignment at a discount an in kind subsidy and a cash incentive to discourage low valuation individuals from claiming the good copyright oxford university press

the negative income tax and the evolution of u s welfare policy the negative income tax proposed by milton friedman represents one of the fundamental ideas of modern welfare policy however the academic literature has raised two difficulties with it one challenging its purported work incentives and the other suggesting the possible superiority of work requirements in addition work requirement approaches have gained ground in actual u s welfare policy over the last 30 years and the number of different programs has proliferated another development counter to the negative income tax on the other hand the earned income tax credit has produced a negative income tax like program on a vast scale

price subsidies diagnostic tests and targeting of malaria treatment evidence from a randomized controlled trial author s dupas pascaline cohen jessica schaner simone abstract both under and over treatment of communicable diseases are public bads but efforts to decrease one run the risk of increasing the other using rich experimental data on household treatment seeking behavior in kenya we study the implications of this tradeoff for subsidizing life saving antimalarials sold over the counter at retail drug outlets we show that a very high subsidy such as the one under consideration by the international community dramatically increases access but nearly half of subsidized pills go to patients without malaria we study two ways to better target subsidized drugs reducing the subsidy level and introducing rapid malaria tests over the counter

the promise of positive optimal taxation normative diversity and a role for equal sacrifice abstract a prominent assumption in modern optimal tax research is that the objective of taxation is utilitarian i present new survey evidence that most people reject this assumption s implications for several prominent features of tax policy instead preferring tax policies based at least in part on a classic alternative objective the principle of equal sacrifice i generalize the standard model to accommodate this preference for a mixed objective proposing a method by which to make disparate criteria commensurable while respecting pareto efficiency then i show that optimal policy in this generalized model calibrated to the survey evidence and u s microdata is capable of quantitatively matching several features of existing tax policy that are incompatible in the conventional model but widely endorsed in the survey and reality including the coexistence of substantial redistribution and limited tagging together these findings demonstrate the potential of a positive theory of optimal taxation

economic aspects of optimal disability benefits this paper analyzes optimal disability and retirement or welfare benefits with imperfect disability evaluation with some able workers judged disabled and some disabled workers judged able thus the levels of both disability and retirement benefits affect labor supply with anyone not working eligible for retirement benefits we analyze the optimal structure of benefits for a given disability screening mechanism and briefly consider the problem of optimal evaluations of disability evidence in the united states there is an overlap in eligibility for disability and retirement portions of social security more generally welfare is sometimes available to people denied disability benefits

the allocation of co2 emissions as a claims problem abstract in the context of multilateral negotiations on climate change this paper proposes to use the claims approach as a reasonable and practicable alternative in order to allocate the admissible co2 emissions per region the proposed methodology entails analyze the application of a broad group of theoretical solutions through the establishment of equity and stability criteria to this regard the empirical analyzing combines several co2 world endowments from meinshausen et al 2009 together with claims forecasts associated with the rcp representative concentration pathways scenarios the results obtained indicate that the constrained equal awards and minimal solutions are clearly equity sensitive given that the co2 emission reduction imposed by the constrained equal awards solution on asia and the oecd are very important and considering the better balance between equity and proportionality associated with the min solution it could be that this latter solution would be the most practicable and acceptable

equity efficiency trade off in china s energy capping policy abstract as a part of the transition to a sustainable economy china has set a cap on primary energy consumption for the first time of 5 0 billion tonnes of standard coal equivalent by 2020 however there is a debate on the cap feasibility and failure to adequately address the underlying equity efficiency trade off which hampers achievement this paper identifies some key challenges ahead including the coal dominant energy mix declining financial support inconsistent central local goals rising costs of energy saving measures and quality of energy statistical data by quantifying the preference of each providence toward equity based or efficiency based allocation schemes the great disparity among provinces is revealed and the equity efficiency trade off relationship is confirmed developing regions primarily located in central and western areas tend to favor equity based disaggregating schemes contrarily developed coastal provinces strongly favor efficiency based schemes the present national disaggregation schemes are mainly based on historical energy consumption but disregard the provincial development gap and efficiency factors we conclude that this ambitious goal is likely within reach but increased efforts and flexible instruments are needed

subsidies as sorting devices abstract the divergence between tax payments and the cost of providing public services that arise from financing local public services provides an incentive for higher income communities to deter the entry of lower income households into their community here we demonstrate that higher income households to insure that low income households do not enter their community or reduce the number that do enter subsidize goods consumed by higher income households more than by lower income households this strategy will make the rich community less attractive to the poor deterring their entry to the community

the effect of recipient contribution requirements on support for social programs abstract a large literature examines the use of recipient contribution requirements in social programs to target people who most need and value aid yet little is known about public support for such requirements in a field experiment with a nationally representative sample we examine the effect of recipient contributions on charitable donations to a food aid program the response to recipient monetary contributions is non monotonic donations increase when recipients make small monetary contributions and return to baseline under large recipient contributions recipient time contribution requirements also increase program support results from additional treatments suggest that individuals use contribution requirements to increase both allocative efficiency screening recipients who most value the good and targeting efficiency screening recipients most in need our work informs the design of social programs which must respond to the preferences of voters and donors who provide political and financial support

can public works increase equilibrium wages evidence from india s national rural employment guarantee abstract we estimate the impact of the world s largest public works program india s national rural employment guarantee scheme nregs on agricultural wages nregs was rolled out across india in three distinct phases and this phased introduction is used to identify difference in difference estimates of the program effect using monthly data on wage rates from the period 2000 2011 in 209 districts across 18 indian states we include district specific fixed effects and trends to control for differences in wage rates in the absence of the program we find that on average the program boosted the growth rate of real daily agricultural wages by 4 3 per year the effect of the scheme is more consistent with an increase in the growth rate of wages than with a discontinuous jump in wages the effect was concentrated in some states and in the agricultural peak season appears to have been gender neutral and was biased towards unskilled labor since many of the world s poorest depend on casual agricultural labor for their livelihood while at the same time minimum wage legislation is unlikely to be effective in many developing countries we argue that rural public employment programs constitute a potentially important anti poverty policy tool

cost minimizing welfare programs abstract we study opportunities for lowering the cost of welfare programs by exploiting heterogeneity in the unobservable tastes of welfare recipients relying on the inability of cash based programs to achieve self selection we provide circumstances in which it is optimal to provide payments in kind our model differs from other self selection models because we allow the recipients the opportunity to trade the subsequent to the receipt of their welfare packages the presence of unreported cash among the recipient population is considered

the paper work of medicine understanding international medical costs this paper draws on international evidence on medical spending to examine what the united states can learn about making its healthcare system more efficient we focus primarily on understanding contemporaneous differences in the level of spending generally from the 2000s medical spending differs across countries either because the price of services differs for example a coronary bypass surgery operation may cost more in the united states than in other countries or because people receive more services in some countries than in others for example more bypass surgery operations within the price category there are two further issues whether factors earn different returns across countries and whether more clinical or administrative personnel are required to deliver the same care in different countries we first present the results of a decomposition of healthcare spending along these lines in the united states and in canada we then delve into each component in more detail administrative costs factor prices and the provision of care received bringing in a broader range of international evidence when possible finally we touch upon the organization of primary and chronic disease care and discuss possible gains in that area

reformulating tax shield valuation a note standard financial theory in the absence of agency costs and personal taxes implies that each dollar of debt contributes to the value of the firm in proportion to the firm s tax rate to derive this result incremental debt is assumed permanent this paper shows that when the firm acts to maintain a constant market value leverage ratio the marginal value of debt financing is much lower than the corporate tax rate since hamada s 2 unlevering procedure for observed equity betas was derived under the assumption of permanent debt we derive an unlevering procedure consistent with the assumption of a constant leverage ratio implicit in the modigliani miller 4 hypothesis regarding the effect of leverage changes on firm value is that the firm maintains a constant level of debt the purpose of this paper is to examine the implications for tax shield valuation of maintaining a constant market value leverage ratio instead of a constant debt level assuming a constant leverage ratio instead of a constant debt level does not imply any change in the normative implications of capital structure theory however we show that when the firm s financing strategy is to maintain a constant market value leverage ratio the marginal value of a change in debt level resulting from a change in this leverage ratio is much lower than the corporate tax rate we also derive the relationship between the firm s equity beta and its unlevered beta under the assumption of a constant leverage ratio

reducing conflict in global warming policy the potential of equity as a unifying principle abstract international agreement on global warming mitigation is likely to prove difficult efficiency based policies will result in disparate costs and benefits among nations and thus hinder cooperation this paper suggests that consideration be given to an equitable sharing of the economic impacts of global warming policy acknowledging that there is no universally held concept of equity the policy implications of several alternatives are explored because there is considerable variation in these implications it will be important for decision makers to clarify their preferred concepts of equity during the course of their negotiations on policies to address global warming

imperfect tagging in social insurance programs abstract this paper derives the optimal benefit structure of an earnings insurance program when a characteristic or tag imperfectly identifies those unable to work with a two sided classification error the optimal program is a dual work incentive system with a work non work consumption differential maintained for the tagged and untagged just sufficient to induce the able in each group to work and with more generous payments to tagged than to untagged individuals of the same work status it includes premiums to program eligible individuals who work a price missing in the u s social security disability system and in earlier attempts to characterize the optimal disability program

the regional distribution of public employment theory and evidence abstractthe regional distribution of public employment theory and evidence regional studies this article analyzes the optimal regional pattern of public employment in an information constrained second best redistribution policy it shows that regionally differentiated public employment can serve as an expenditure side tagging device bypassing or relaxing the equity efficiency trade off the optimal pattern exhibits higher levels of public employment in low productivity regions and is more pronounced the higher is the degree of regional inequality empirically using a panel of european regions from 1995 to 2007 the analysis finds evidence that public employment is systematically higher in low productivity regions the latter effect is stronger in countries with higher levels of regional inequality

consumption and poverty how effective are in kind transfers the ability of in kind transfers to alleviate poverty depends on accurate targeting as well as recipients valuations of the benefits using data from the consumer expenditure surveys the efficiency of in kind transfers is examined in a microsimulation framework in which recipients are identified as those who have the lowest consumption in this framework in kind transfers of food capital services which includes housing and consumer services are an effective means of providing support to the poor even at high levels of subsidization the multiple good transfers that are considered are essentially equivalent to cash grants copyright 1996 by royal economic society

optimum taxation with errors in administration abstract the paper compares the welfare levels which can be achieved by two distinct tax regimes lump sum taxation where one attempts to identify individuals and allocate transfers or subsidies on the basis of characteristics and income taxation where characteristics are not observed but personal incomes are measured and taxed where there are no errors in classifying individuals lump sum taxation is superior but where mistakes are made in the allocation of lump sum grants or subsidies income taxation may be more attractive the level of errors where the regimes are equally desirable in terms of social welfare is computed in simple models following that of feldstein 1973 where there is strong aversion to inequality then income taxation becomes preferable at quite small errors in analysing income taxation it is shown that in the feldstein model with endogenous wages the marginal tax rate in optimum income taxation on the more skilled is negative and that on the less skilled is positive in contrast to the standard results see seade 1977 with exogenous wages