book review feature public policy in an uncertain world by charles f manski cambridge ma harvard university press 2013 pp 224 39 95 isbn 978 0674066892

a theory of socio economic disparities in health over the life cycle motivated by the observation that medical care explains only a relatively small part of the ses health gradient we present a life cycle model that incorporates several additional behaviours that potentially explain jointly a large part of observed disparities as a result the model provides not only a conceptual framework for the ses health gradient but more generally an improved framework for the production of health we derive novel predictions from the theory by performing comparative dynamic analyses more generally our comparative dynamic method can be applied to models of similar form e g human capital health deficits firm investment to name a few

nonseparable preferences frisch labor supply and the consumption multiplier of government spending one solution to a fiscal policy puzzle this paper proposes a theoretical explanation of the positive consumption multipliers of government spending often found in the data the explanation requires two ingredients first labor demand expands e g prices are sticky second general nonseparable preferences over consumption and leisure should be such that the two goods are substitutes that is frisch labor supply elasticity is lower than the constant consumption elasticity this implies that constant consumption labor supply shifts left existing empirical evidence on the relative magnitudes of the two elasticities supports this hypothesis the parametric conditions under which the result occurs are consistent with restrictions of concavity and noninferiority of consumption and leisure

a measure of robustness to misspecification abstract researchers often report estimates and standard errors for the object of interest such as a treatment effect based on a single specification of a statistical model we propose a systemat

a new method of estimating risk aversion i show existing evidence on labor supply behavior places an upper bound on risk aversion in the expected utility model i derive a formula for the coefficient of relative risk aversion in terms of the ratio of the income elasticity of labor supply to wage elasticity and degree of complementarity between consumption and labor i bound the degree of complementarity using data on consumption choices when labor supply varies across states using labor supply elasticity estimates i find a mean estimate of 1 then show generating 2 requires that wage increases cause sharper labor supply reductions jel d81 j22

the quantitative importance of news shocks in estimated dsge models we estimate a dynamic stochastic general equilibrium dsge model with several frictions and both unanticipated and news shocks using quarterly u s data from 1954 to 2004 and bayesian methods we find that unanticipated shocks dominate news shocks in accounting for the unconditional variance of output consumption and investment growth interest rate and the relative price of investment the unanticipated shock to the marginal efficiency of investment is the dominant shock accounting for over 45 of the variance in output growth news shocks account for less than 15 of the variance in output growth within the set of news shocks nontechnology sources of news dominate technology news with wage markup news shocks accounting for about 60 of the variance share of both hours and inflation we find that in the estimated dsge model i the presence of endogenous countercyclical price and wage markups due to nominal frictions substantially diminishes the importance of news shocks relative to a model without these frictions and ii while there is little change in the estimated contributions of technology news when we restrict wealth effects on labor supply the contributions of nontechnology news shocks are relatively more sensitive

rising u s earnings inequality and family labor supply the covariance structure of intrafamily earnings this paper studies the labor supply contributions to individual and family earnings inequality during the period of rising wage inequality in the early 1980 s working couples have positively correlated labor market outcomes which are almost entirely attributable to permanent factors an intertemporal family labor supply model with this feature is used to estimate labor supply elasticities for husbands of 0 05 and wives of 0 40 this implies that labor supply explains little of the rising annual earnings inequality for married men but over 20 percent of the rise in family inequality and 50 percent of the modest rise in female inequality

the carnegie conjecture some empirical evidence this paper examines tax return generated data on the labor force behavior of people before and after they receive inheritances the results are consistent with andrew carnegie s century old assertion that large inheritances decrease a person s labor force participation for example a single person who receives an inheritance of about 150 000 is roughly four times more likely to leave the labor force than a person with an inheritance below 25 000 additional albeit weaker evidence suggests that large inheritances depress labor supply even when participation is unaltered warren kendall heir to an insurance company fortune says he s worth about 5 million and has an income of about oh 300 and some thousand a year h e has never held a job or wanted to going down to sea in cruise ships is his full time pursuit he estimates that he has taken about 250 cruises over the past couple of decades spending at least 50 percent to 70 percent of the year afloat morgenthaler 1991 p al

inequality a hidden cost of market power this paper explores the impact of competition on inequality by developing a new model to illustrate how higher profits from market power and associated higher prices could influence the distribution of wealth and income we analyse data from eight oecd countries canada france germany korea japan spain the united kingdom and the united states in an average country in the sample market power increases the wealth of the richest 10 per cent by between 12 and 21 per cent for a range of reasonable assumptions about savings behaviour while it reduces the income of the poorest 20 per cent by 11 per cent or more the results contribute to the economic literature on the origins of inequality suggesting that lack of competition may be one source of economic inequality

estimating the effect of income on health and mortality using lottery prizes as an exogenous source of variation in income a vast literature has established a strong positive relation between income and health status and a negative relation with mortality this paper studies the effects of income on health and mortality using only the part of income variation due to a truly exogenous factor monetary lottery prizes of individuals the findings are that higher income causally generates good health and that this effect is of a similar magnitude as when traditional estimation techniques are used a 10 percent income increase improves health by about 4 5 percent of a standard deviation

an empirical model of labor supply in a life cycle setting this paper formulates and estimates a structural intertemporal model of labor supply using theoretical characterizations derived from an economic model of lifetime behavior a two step empirical analysis yields estimates of intertemporal and uncompensated substitution effects which provide the information needed to predict the response of hours of work to life cycle wage growth and shifts in the lifetime wage path

bounds on elasticities with optimization frictions a synthesis of micro and macro evidence on labor supply how can price elasticities be identified when agents face optimization frictions such as adjustment costs or inattention i derive bounds on structural price elasticities that are a function of the observed effect of a price change on demand the size of the price change and the degree of frictions the degree of frictions is measured by the utility losses agents tolerate to deviate from the frictionless optimum the bounds imply that frictions affect intensive margin elasticities much more than extensive margin elasticities i apply these bounds to the literature on labor supply the utility costs of ignoring the tax changes used to identify intensive margin labor supply elasticities are typically less than 1 of earnings as a result small frictions can explain the differences between micro and macro elasticities extensive and intensive margin elasticities and other disparate findings pooling estimates from existing studies i estimate a hicksian labor supply elasticity of 0 33 on the intensive margin and 0 25 on the extensive margin after accounting for frictions

wealth and health behavior testing the concept of a health cost wealthier individuals engage in healthier behavior this paper seeks to explain this phenomenon by exploiting both inheritances and lottery winnings to test a theory of health behavior we distinguish between the direct monetary cost and the indirect health cost value of health lost of unhealthy consumption the health cost increases with wealth and the degree of unhealthiness leading wealthier individuals to consume more healthy and moderately unhealthy but fewer severely unhealthy goods the empirical evidence presented suggests that differences in health costs may indeed partially explain behavioral differences and ultimately health outcomes between wealth groups

investment shocks and consumption abstract several influential papers have argued that preferences featuring a weak wealth effect on labour supply are key to generate macroeconomic co movement across real variables in response to shocks using a fully general specification for the instantaneous utility function we show that the size of the wealth effect on labour supply is largely inconsequential for macroeconomic dynamics instead we find that edgeworth complementarity between consumption and hours worked is crucial in order to obtain co movement of key macroeconomic variables we consider investment shocks and we show that co movement can easily be achieved with non separable preferences in combination with a reasonable degree of nominal rigidity this holds even in the presence of sizeable wealth effects

managerial compensation contract and bank bailout policy abstract under the incomplete contract framework we consider an optimal regulatory policy for motivating bank equity owners and bank managers to restructure the bad loans of their banks in the presence of managerial compensation contracts with stock options the regulatory policy studied in this paper is mainly concerned with the design of repayment schedules in the scheme of injection of cash funds into insolvent banks by the regulator we show that the regulator cannot necessarily attain the social optimal allocation by injecting cash funds into insolvent banks through the purchase of subordinated bonds with the risk free interest rate however even in that case we also suggest that if the regulator injects cash funds into active restructuring banks through the purchase of subordinated bonds or preferred stocks with less stringent repayment conditions and nationalizes passive restructuring banks the regulator can attain the social optimal allocation by performing such a non linear injection scheme under certain conditions

estimating the effect of unearned income on labor supply earnings savings and consumption evidence from a survey of lottery players this paper provides empirical evidence about the effect of unearned income on earnings consumption and savings using an original survey of people playing the lottery in massachusetts in the mid 1980 s the effects of the magnitude of lottery prizes on economic behavior are analyzed the critical assumption is that among lottery winners the magnitude of the prize is randomly assigned it is found that unearned income reduces labor earnings with a marginal propensity to consume leisure of approximately 11 percent with larger effects for individuals between 55 and 65 years old after receiving about half their prize individuals saved about 16 percent

family labor supply and asset returns abstract we study how shocks to wages and asset prices affect consumption and labor supply decisions of two earner households in a life cycle framework with housing and flexible preferences we provide a micro foundation of the wealth effects on consumption and labor supply we find evidence for non separability between non durable consumption housing services and hours of work the results also highlight the importance of family labor supply in understanding how households respond to shocks to financial and housing markets

the effect of inheritance receipt on retirement abstract this paper provides new evidence on how wealth shocks influence retirement behavior economic theory generally posits that leisure is a normal good yet it is difficult to obtain reliable empirical estimates of the wealth effect because wealth is correlated with numerous unobservable characteristics that affect labor supply we use inheritance receipt as a wealth shock and find that it is associated with a significant increase in the probability of retirement especially when the inheritance is unexpected this evidence has important implications for how public policies such as pension or tax reform may influence retirement behavior through the wealth effect

the stock market housing and consumer spending a survey of the evidence on wealth effects abstract this paper examines the time series and micro econometric evidence on the relationship between stock and house prices and consumer spending the time series studies distinguish between short run and long run links between consumption income and wealth they allow us to identify which variables adjust to restore the long run equilibrium in the case of a shock and to determine the time taken by the adjustment process the micro econometric literature improves our understanding of the link between wealth and expenditure and distinguishes among the alternative hypotheses of direct wealth effect common causality and collateral channel that have been proposed to explain this relationship the relationship between wealth and consumer spending appears to be strong but there is some disagreement as to its size and nature furthermore there appear to be some important differences across countries which should be allowed for by policy makers when appraising the policy implications of a change in asset prices

risk preferences in multi period consumption models the equity premium puzzle and habit formation utility abstract the relationship between the relative risk aversion measure for the utility function for consumption and that for the value function for wealth is a derived relationship whose properties depend on how consumption and wealth are defined and measured this fact together with information concerning estimates for these two relative risk aversion measures is used to give another perspective on the equity premium puzzle and to explain why it is that the habit formation utility function is effective in eliminating that puzzle a time separable utility function that can serve as an alternative to the assumption of habit formation is also presented

the effect of wealth on individual and household labor supply evidence from swedish lotteries abstract we study the effect of wealth on labor supply using the randomized assignment of monetary prizes in a large sample of swedish lottery players winning a lottery prize modestly reduces earnings with the reduction being immediate persistent and quite similar by age education and sex a calibrated dynamic model implies lifetime marginal propensities to earn out of unearned income from 0 17 at age 20 to 0 04 at age 60 and labor supply elasticities in the lower range of previously reported estimates the earnings response is stronger for winners than their spouses which is inconsistent with unitary household labor supply models jel d14 j22 j31

cash transfers and labor supply evidence from a large scale program in iran abstract this paper examines the impact of a national cash transfer program on labor supply in iran in 2011 iran started monthly deposits of cash into individual accounts covering more than 70 million people and amounting to 28 of the median per capita household income the payments were compensation for the sudden removal of hefty energy subsidies the program has been heavily criticized for its disincentive for work especially for the poor we use panel data to study the causal effect of the transfers on labor supply using exogenous variation in the time households first started receiving transfers and in the intensity of treatment which we define as the share of net transfers from the program in total per capita household expenditures we find no evidence that cash transfers reduced labor supply in terms of hours worked or labor force participation to the contrary we find positive effects on the labor supply of women and self employed men

the effects of lottery prizes on winners and their neighbors evidence from the dutch postcode lottery each week the dutch postcode lottery pcl randomly selects a postal code and distributes cash and a new bmw to lottery participants in that code we study the effects of these shocks on lottery winners and their neighbors consistent with the life cycle hypothesis the effects on winners consumption are largely confined to cars and other durables consistent with the theory of in kind transfers the vast majority of bmw winners liquidate their bmws we do however detect substantial social effects of lottery winnings pcl nonparticipants who live next door to winners have significantly higher levels of car consumption than other nonparticipants

the welfare effects of lotto evidence from the uk abstract this paper estimates the demand for lottery tickets using pooled cross section data that contain individual incomes and extensive information about characteristics one of the cross sections corresponded to a draw which was a double rollover the jackpot was enhanced by adding the two previous draws jackpots which had not been won together these datasets provide sufficient observations facing different prices to allow us to estimate the price elasticity as well as the income elasticity of demand we estimate tobit and other specifications and use the estimates to evaluate the welfare effects arising from the introduction of the lottery

lucky in life unlucky in love the effect of random income shocks on marriage and divorce abstract economists have long been interested in the extent to which economic resources affect decisions to marry and divorce however this issue has been difficult to address empirically due to a lack of exogenous income shocks we overcome this problem by exploiting the randomness of the florida lottery and comparing recipients of large prizes to those of small prizes results indicate that while positive income shocks of 25 000 to 50 000 do not cause statistically significant or economically meaningful changes in divorce rates single women are less likely to marry as a result of the additional income

on the job learning and news driven business cycles this paper proposes a new channel of on the job learning to explain the positive comovement between consumption and employment following good news about future productivity the new recruits can generate an additional stream of output production in all future periods and the firm s labor demand is thus characterized by the forward looking property therefore the firm is motivated to hire more new recruits in advance in response to good news about future productivity once the increase in labor demand is greater than the decrease in labor supply caused by the income effect the coincident rise in consumption and employment can be driven by the news shock when such a channel is paired with investment adjustment costs and the endogenous capacity utilization rate this paper provides a plausible explanation for simultaneous booms in current consumption investment output and employment to match the empirical evidence under the news shock

the transmission of monetary policy through redistributions and durable purchases this paper studies a redistribution channel for the transmission of monetary policy using a tractable olg setting in which the government is a net debtor we show that standard open market operations omo conducted by central banks have signi cant revaluation eects that alter the level and distribution of wealth in the economy and the real interest rate expansionary omo generate a negative wealth eect the private sector as a whole is a net creditor to the government increasing households incen tives to save for retirement and pushing down the real interest rate this in turn leads to a substitution towards durables generating a temporary boom in the durable good sector with search and matching frictions a form of productive investment is added to the model and the fall in interest rates causes an increase in labour demand raising aggregate employment the mechanism can mimic the empirical responses of key macroeconomic variables to monetary policy interventions the model shows that dierent monetary interventions e g omo versus helicopter drops can have sharply dierent eects on activity

the marginal propensity to earn and consume out of unearned income evidence using an unusually large cash grant reform in this paper we use the rapid introduction of an unconditional cash grant child support in south africa to estimate the marginal propensity to consume and earn out of unearned income we find that the marginal propensity to earn is about 0 3 and that the marginal propensity to consume is about 0 7 nothing of the grant appears to be saved if anything households dissave against future grant payments the marginal propensities estimated here are similar to those reported in comparable papers using us data however they stand in contrast to some results on conditional cash transfers in other developing countries

the effect of disability payments on household earnings and income evidence from the ssi children s program abstract i estimate the effect of removing children with disabilities from supplemental security income ssi on parental earnings and household disability receipt using administrative data from the social security administration ssa i implement regression discontinuity and differencein differences designs based on changes in ssa s budget for child medical reviews i find that parents fully offset the ssi loss with increased earnings and the loss of the child s ssi payment reduces disability applications by parents and siblings but does not reduce their actual disability receipt i examine alternative hypotheses for the large parental earnings response

economic determinants of workers retirement decisions the landscape for older workers has changed dramatically in recent decades governments have made cuts to public pension programs private pensions have shifted from defined benefit to defined contribution plans equity and housing markets have been unusually volatile and workers have experienced declining morbidity and mortality at the same time the labor force participation rate for older men and women has been rising over the past two decades implying later retirement are these phenomena related this paper reviews the large and growing body of literature exploring the economic determinants of workers retirement decisions including public and private pensions wealth and savings health and health insurance and labor demand

unexpected windfalls education and mental health evidence from lottery winners in germany this paper investigates the causal impact of large unexpected windfalls on individual mental health physical health as well as health behaviors i use a large individual level panel data set of l

housework and fiscal expansions in an otherwise standard business cycle model with housework calibrated consistently with data on time use we discipline complementarity between consumption and hours worked and relate its strength to the size of fiscal multipliers evidence on the substitutability between home and market goods confirms that complementarity is an empirically relevant driver of fiscal multipliers however in a housework model substantial complementarity can be generated without imposing a low wealth effect which contradicts the microeconomic evidence also explicitly modeling housework matters for assessing the welfare effects of government spending which are understated by theories that neglect substitutability between home produced and market goods

dynamic hours of work functions for husbands wives and single females hours of work equations are derived from the constrained maximization of a utility function that is not separable over time and that varies with a household s demographic structure these equations are fitted to observations on wage rates nonlabor income and other variables for husbands wives and unmarried women the dependence of each household s current work and consumption behavior upon its work and consumption behavior in the past is examined closely and different interpretations of the relationship are confronted with the data

bulls bears and retirement behavior the authors examine the relationship between stock market performance and retirement behavior they first present a descriptive analysis of the wealth holdings of older households and simulate the labor supply response among stockholders necessary to generate observed retirement patterns few house holds they find have substantial stock holdings and these holdings would have to be extremely responsive to market fluctuations to explain observed labor force patterns the authors then exploit stock market fluctuations since the early 1980s particularly the boom and bust between 1995 and 2002 along with variation in stock exposure to generate a double quasi experiment comparing the retirement and labor force re entry patterns over time of those more and less exposed to the market any difference in behavior that emerged during the boom should have reversed itself during the bust the authors find no evidence that changes in the stock market drove aggregate trends in labor supply

does labor supply respond to transitory income evidence from the economic stimulus payments of 2008 this paper studies labor supply responses to transitory income exploiting the differential timing of the 2008 tax rebates while an influential literature finds that rebates encourage consumer spe

wealth health and child development evidence from administrative data on swedish lottery players we use administrative data on swedish lottery players to estimate the causal impact of substantial wealth shocks on players own health and their children s health and developmental outcomes our estimation sample is large virtually free of attrition and allows us to control for the factors conditional on which the prizes were randomly assigned in adults we find no evidence that wealth impacts mortality or health care utilization with the possible exception of a small reduction in the consumption of mental health drugs our estimates allow us to rule out effects on 10 year mortality one sixth as large as the crosssectional wealth mortality gradient in our intergenerational analyses we find that wealth increases children s health care utilization in the years following the lottery and may also reduce obesity risk the effects on most other child outcomes including drug consumption scholastic performance and skills can usually be bounded to a tight interval around zero overall our findings suggest that in affluent countries with extensive social safety nets causal effects of wealth are not a major source of the wealth mortality gradients nor of the observed relationships between child developmental outcomes and household income jel codes i10 i14 j24

economic determinants of workers retirement decisions economic determinants of workers retirement decisions the landscape for older workers has changed dramatically in recent decades governments have made cuts to public pension programs private pensions have shifted from defined benefit to defined contribution plans equity and housing markets have been unusually volatile and workers have experienced declining morbidity and mortality at the same time the labor force participation rate for older men and women has been rising over the past two decades implying later retirement are these phenomena related this paper reviews the large and growing body of literature exploring the economic determinants of workers retirement decisions including public and private pensions wealth and savings health and health insurance and labor demand

house prices wealth effects and labour supply we examine the impact of house prices on labour supply decisions using uk microdata we combine household survey data with local level house price measures and controls for local labour demand our microdata also allow us to control for individual level income expectations we find significant house price effects on labour supply consistent with leisure being a normal good labour supply responses to house prices are concentrated among young married female owners and older owners this finding suggests that house prices affect the decisions of marginal workers in the economy our estimates imply that house prices are economically important in the participation decisions for these workers

public policy and extended families evidence from pensions in south africa how are resources allocated within extended families in developing economies this question is investigated using a unique social experiment the south african pension program under that program the elderly receive a cash transfer equal to roughly twice the per capita income of africans in south africa the study examines how this transfer affects the labor supply of prime age individuals living with these elderly in extended families it finds a sharp drop in the working hours of prime age individuals in these households when women turn 60 years old or men turn 65 the ages at which they become eligible for pensions it also finds that the drop in labor supply is much larger when the pensioner is a woman suggesting an imperfect pooling of resources the allocation of resources among prime age individuals depends strongly on their absolute age and gender as well as on their relative age the oldest son in the household reduces his working hours more than any other prime age household member

the use of structural models in econometrics costas meghir has been supported by the cowles foundation and the institution for social and policy studies isps at yale university

borrowing constraints home ownership and housing choice evidence from intra family wealth transfers we study the impact of borrowing constraints on home ownership and housing demand by comparing the tenure choice and housing quality of consumers who receive intra family wealth transfers to those that do not our analysis is based on household level panel data providing information on the receipt of wealth transfers changes in tenure status as well as changes in the size and quality of housing on average we find that the receipt of a wealth transfer increases the propensity of consumers to transition from renters to home owners by 6 8 percentage points 35 of the sample mean additional analyses suggest that this effect is unlikely to be driven by wealth effects and can thus be attributed to the relaxation of borrowing constraints by contrast wealth transfers do not increase the likelihood that existing homeowners trade up to larger homes in better locations

income and employment effects of shale gas extraction windfalls evidence from the marcellus region abstract new technologies combining hydraulic fracturing and horizontal drilling in oil and gas extraction are creating a sudden expansion of production residents of places where deep underground oil and gas deposits are found want to know about the broader economic social and environmental impacts of these activities that generate windfall income for some residents we first review the literature on windfall spending patterns then using the marcellus region the earliest area to be tapped using the new techniques we estimate county level employment and income effects for robustness we employ two methods using a propensity score matching approach we find no effect of fracking on income or employment a panel fixed effect regression approach suggests statistically significant employment effects in six out of seven alternative specifications but significant income effects in only one out of seven specifications in short the income spillover effects in the marcellus region appear to be minimal meaning there s little incentive at the county level to incur current or potential future costs that may be associated with this activity we conclude with some ideas on how localities might employ policies that would allow natural gas extraction to move forward benefitting landowners while establishing some financial safeguards for the broader community

why do retired workers claim their social security benefits so early a potential explanation based on the cumulative prospect theory abstractsocial security provides longevity insurance for older americans according to expected utility theory models rational households who are not liquidity constrained should delay claiming th

labour supply effects of winning a lottery our article investigates how winning a substantial lottery prize affects labour supply analysing data from dutch state lottery winners we find that winning a lottery prize reduces labour earnings in the year of the winning as well as in the years after the winning this suggests that winning a lottery prize makes one work fewer hours the effects are small but statistically significant we do not find a significant effect of lottery prizes on the probability of being employed

identifying laffer bounds a sufficient statistics approach with an application to germany we derive a simple sufficient statistics test for whether a nonlinear tax transfer system is second best pareto efficient if it is not then it is beyond the top of the laffer curve and there exists a tax cut that is self financing the test depends on the income distribution extensive and intensive labor supply elasticities and income effect parameters a tax transfer system is likely to be inefficient if marginal tax rates are quickly falling in income we apply this test to the german tax transfer system and we find that the structure of effective marginal tax rates is likely to be inefficient in the region where transfers are phased out

inheritance taxation and wealth effects on the labor supply of heirs abstract the taxation of bequests can have a positive impact on the labor supply of heirs through wealth effects this leads to an increase in labor income tax revenue on top of direct bequest tax revenue we first show in a theoretical model that a simple back of the envelope calculation based on existing estimates for the reduction in earnings after wealth transfers fails the marginal propensity to earn out of unearned income is not a sufficient statistic for the calculation of this effect because i heirs anticipate the reduction in net bequests and adjust their labor supply already prior to inheriting and ii when bequest receipt is stochastic even those who ex post end up not inheriting anything respond ex ante to the implied change in their distribution of net bequests we quantitatively elaborate the size of the overall revenue effect due to labor supply changes of heirs by using a state of the art life cycle model that we calibrate to the german economy besides the joint distribution of income and inheritances quasi experimental evidence regarding the size of wealth effects on labor supply is a key target for this calibration we find that for each euro of bequest tax revenue the government mechanically generates it obtains an additional 9 cents of labor income tax revenue in net present value through higher labor supply of non heirs

the effect of age targeted tax credits on labor force participation of older workers abstract i analyze the effect of income tax policy changes on labor force participation of older workers i exploit two age targeted policy initiatives to promote work at older ages simultaneously implemented in sweden in 2007 an earned income tax credit and a payroll tax credit for workers above age 65 using an age based discontinuity in eligibility criteria i conduct a difference in differences analysis with the reform as an instrument for the net of tax rate i find a participation elasticity with respect to the net of participation tax rate of about 0 22 in the year following the 65th birthday for individuals who were working four years earlier

stock market wealth and consumption this paper explores the link between changes in the aggregate value of corporate stock and changes in consumer spending it presents data on the distribution of corporate stock ownership based on the 1998 survey of consumer finances it also uses time series evidence on the comovement of stock market wealth and various categories of consumer spending to calibrate the wealth effect it concludes that in the year after a change in stock market values consumer spending is likely to rise by between one and two cents for each dollar increase in the value of corporate stock

the effect of social benefits on youth employment combining regression discontinuity and a behavioral model natural experiments provide robust identifying assumptions for the estimation of policy effects yet their use for policy design is often limited by the difficulty of extrapolating on the basis of reduced form estimates in this study we exploit an age condition in the eligibility for social assistance in france which lends itself to a regression discontinuity rd design we suggest making the underlying labor supply model explicit that is translating the reduced form discontinuity in terms of discontinuous changes in disposable incomes this exercise shows the potential of combining natural experiments and behavioral models in particular we can test the external validity of the combined approach we find that it predicts the effect of a subsequent reform which extends transfers to the working poor remarkably well the model is then used to simulate the extension of social assistance to young people and finds that a transfer program with an in work component would not create further disincentives to work in this population