rational household labor supply traditionally household behavior is derived from the maximization of a unique utility function in this paper we propose an alternative approach in which the household is modeled as a two member collectivity taking pareto efficient decisions the consequences of this assumption are analyzed in a three good model in which only total consumption and each member s labor supply are observable if the agents are assumed egoistic i e they are only concerned with their own leisure and consumption it is possible to derive falsifiable conditions upon household labor supplies from both a parametric and nonparametric viewpoint if alternatively agents are altruistic restrictions obtain in the nonparametric context useful interpretation stems from the comparison with the characterization of aggregate demand for a private good economy

marriage market divorce legislation and household labor supply this paper provides a theoretical framework for analyzing the impact of the marriage market and divorce legislation on household labor supply in our approach the sex ratio in the marriage market and the rules governing divorce are examples of distribution factors these factors are defined as variables that affect the household members bargaining position but not preferences or the joint budget set we extend the collective labor supply model developed by chiappori to allow for distribution factors we show that our model imposes new restrictions on the labor supply functions and eases the identification of individual preferences and the intrahousehold decision process the model is estimated using psid data for the year 1988 our results do not reject the restrictions imposed by the model also the sex ratio and divorce laws deemed favorable to women are found to affect labor supply behavior and the decision process in the directions predicted by the theory and to have sizable effects

collective labor supply a single equation model and some evidence from french data in chiappori s 1988 collective model of labor supply hours of work are supposed flexible in many countries however male labor supply does not vary much in that case the husband s labor supply is no longer informative about the household decision process and individual preferences to identify structural components of the model additional information is needed we thus consider an approach in which the wife s labor supply is expressed as a function of the household demand for one specific good we demonstrate that the main properties of chiappori s initial model are preserved and apply our results on french data

collective labor supply and household production this paper emphasises the importance of incorporating household production into the collective model of the household and considers how and to what extent the results of chiappori 1992 can be extended to this case this abstract was borrowed from another version of this item

electoral outcomes with probabilistic voting and nash social welfare maxima abstract this paper provides unexpected support to nash s view of how bargaining determines the social choice we first present a spatial model of electoral competition with probabilistic voting and a very close relation between voters preferences and their choice probabilities the outcome of the electoral competition game is then shown to be precisely the social alternative that maximizes a nash type social welfare function theorem 1 this electoral outcome is also interpreted as a unanimity likelihood maximum corollary 1 within our framework existence and uniqueness of such an outcome are guaranteed corollaries 2 and 3

interpreting net fiscal incidence calculations this paper evaluates calculations of net fiscal incidence using an applied general equilibrium model of australia into which public goods are incorporated results indicate that it is inappropriate to regard the redistributive impacts of government policies as a zero sum game for large reductions in public goods provision and taxes the dominant effect is the foregone consumer surplus from suboptimal public goods provision in addition the redistributive pattern of small charges are quite different from large charges marginal and average net fiscal incidence thus need to be clearly separated a point not emphasized in existing literature copyright 1987 by mit press

introducing household production in collective models of labor supply in a recent paper chiappori 1992 i proposed a model of labor supply based on a collective representation of household behavior in this framework each household member is characterized by his or her own utility function and decisions are only assumed to result in pareto efficient outcomes i showed that these simple assumptions were sufficient to i generate testable restrictions on labor supply functions and ii recover individual preferences and the outcome of the decision process from observed behavior for the sake of simplicity the results were derived in the simplest possible case namely a static labor supply model with private consumptions such a framework was appropriate only for the purpose of the paper that is a preliminary exploration of the properties of collective models of labor supply the next step is to evaluate the robustness of the results to various extensions of the basic model this opens a general research program and generates a wide range of particular problems that it is hoped will be considered in the future among the most serious shortcomings of the 1992 model is the absence of household production as in most labor supply models agents were assumed to divide their time between market activities and leisure as apps and rees 1997 in this issue very rightly point out in their comment the absence of domestic production is far from innocuous as soon as welfare issues are considered for instance a low level of market labor supply will automatically be interpreted as a large consumption of leisure whereas it may in fact reflect the specialization of one of the members in domestic

electoral politics interest groups and the size of government electoral politics interest groups and the size of government i introduction interest groups have been considered main actors in the political drama for some time now by political scientists as in bentley 1908 schattschneider 1935 and truman 1951 and more recently by economist also such as olson 1965 and stigler 1975 despite the widespread consensus on their importance there have been few formal attempts to analyze their impact on public policies thus borooah and van der ploeg 1983 90 were moved to declare that theory based on the importance of different interest groups is badly needed in economics an important exception is becker s 1983 1985 analysis of interest group competition becker draws insights about the nature of the trade offs that occur when interest groups compete for political influence but becker consciously avoids incorporating into his model political institutions such as voting voting rules and candidates 1983 391 4 1985 330 rather he assumes that the political process operates as a veil through which the underlying strengths and demands of various interest groups are revealed this paper takes a different tack but one complementary to becker s approach the analysis is based on an explicit model of the political process that includes interest groups in the model interest group influence is a potential supply of votes for which parties or candidates compete each party seeks a winning coalition of voters and thus engages in implicit logrolling tullock 1959 572 an equilibrium exists in the competition for the support of interest groups and the nature of the equilibrium electoral platforms is identified below embodied in the characterization of the equilibria is a set of parameters that can be said to measure the strengths of the various interest groups and which enable one to identify how candidates change their policy positions in response to a change in the strength of an interest group it is therefore possible to analyze simultaneously the existence of an electoral equilibrium its nature including its normative properties and changes in equilibrium due to shifts in the balance of forces between competing groups 1 in contrast to becker 1983 1985 these analytical features are not assumed outright rather they are based on an underlying model of elections the theoretical underpinnings for this model are discussed in section ii interest groups are often alleged to be responsible in part for recent increases in the size of government in western democracies 2 therefore in sections iii and iv a model of the political process is used to study the impact of an increase in the influence of a particular interest group on government size in the simple models of the public sector considered here increasing group influence per se does not cause the size of the government to increase but an increase in the government s size does result when i there are constraints on the government s ability to change tax shares in response to a shift in group power or ii there is a publicly provided good which benefits one untaxed group and that group s sole concern with government policy is to maximize the amount of the good that it gets the paper concludes by considering some of the normative implications of the results ii interest groups in the electoral process there are two sets of actors in the model parties and interest groups and two sets of relationships which must be analyzed the relationships between interest groups and the parties and the relationship between the parties themselves with respect to the first question this paper investigates the determinants of each interest group s influence on the platforms proposed by the parties with respect to the second it explores whether the competition for votes between the parties produces an equilibrium and if so what its properties are

family time use leisure home production market work and work related travel this study analyzes the two person gronau type neoclassical model of the household where time use for each person is divided into three basic activities market work home production and pure leisure plus work related travel time the latter is treated as predetermined one contribution of this paper is that the economics of the gronau model is made clear and a complete comparative static analysis is provided a second contribution is that the model is subjected to a rigorous empirical test using data that permits the division of time into its four primary components most data sets do not permit this our empirical results do not accord well with the model s predictions or with previous findings by gronau in addition our results suggest that work related travel has an important influence on family time use

debt and taxes in the theory of public finance if a specified amount of government spending must be financed how should that finance be divided between taxes and government borrowing in the case of a temporary increase in government spending it has been argued that debt finance is optimal because the small increments in all future tax rates to finance interest payments involves a smaller excess burden than the single large tax rate increase that would be required to avoid an initial increase in the national debt this argument ignores the excess burden of debt finance that results if the initial capital stock is smaller than optimal e g because of taxes or capital income the first section of the present paper shows how the debt finance advantage of a small increase in tax rates can be explicitly balanced against the disadvantage of the excess burden that arises from additional debt the analysis shows that with plausible parameter values the excess burden of debt finance is likely to outweigh the advantage of avoiding a large single tax change and therefore that financing a temporary increase in government spending by an immediate tax increase is likely to be preferable to debt financing the second section examines the appropriate response to a permanent increase in government spending and shows that such spending cannot be financed by a permanent increase in government debt moreover whenever the golden rule level of capital intensity is an optimality condition independent of the level of government spending any increase in government spending should be matched by an equal increase in tax revenue this abstract was borrowed from another version of this item

agricultural household models extensions applications and policy this book presents the basic model of an agricultural household that underlies most of the case studies undertaken so far the model assumes that households are price takers and is therefore recursive the decisions modeled include those affecting production and the demand for inputs and those affecting consumption and the supply of labor comparative results on selected elasticities are presented for a number of economies the empirical significance of the approach is demonstrated in a comparison of models that treat production and consumption decisions separately and those in which the decisionmaking process is recursive the book summarizes the implications of agricultural pricing policy for the welfare of farm households marketed surplus the demand for nonagricultural goods and services the rural labor market budget revenues and foreign exchange earnings in addition it is shown that the basic model can be extended in order to explore the effects of government policy on crop composition nutritional status health saving and investment and to provide a more comprehensive analysis of the effects on budget revenues and foreign exchange earnings methodological topics primarily the data requirements of the basic model and its extensions along with aggregation market interaction uncertainty and market imperfections are discussed the most important methodological issues the question of the recursive property of these models is also discussed

collective labor supply heterogeneity and nonparticipation in this paper we extend the collective model of labour supply developed by chiappori 1988 to allow for discrete choices censoring and nonparticipation in employment we derive the collective restrictions on labour supply functions that we contrast with restrictions implied by the usual unitary framework we apply our results to the estimation of a collective labor supply model for married couples without children using uk data from 1979 to 1993 taking into account unobserved heterogeneity we use the log linear labor supply framework the implications of the unitary framework are rejected while those of the collective approach are not the estimates of the sharing rule show that wages have a strong influence on bargaining power within couples

from theory to practice canadian economists contributions to public finance we survey canadian economists contributions to the field of public finance from the mid 1980s to 2016 we highlight the development and extension of the models and tools of public economics and the empirical studies that have deepened our understanding of the efficiency and distributional issues over a wide range of public finance issues we also highlight contributions to the development of policies through commissioned reports and the important role that canadian institutions the canadian tax foundation the think tanks and the federal and provincial departments of finance have played in shaping tax and fiscal policies de la theorie a la pratique contributions des economistes canadiens a la finance publique on examine les contributions des economistes canadiens au domaine de la finance publique du milieu des annees 1980 a 2016 on souligne le developpement et l extension des modeles et des outils d economie publique et les etudes empiriques qui ont aide a approfondir notre comprehension des enjeux d efficacite et de distribution dans un vaste eventail de questions de finance publique on souligne aussi les contributions des rapports commandites au developpement de politiques publiques ainsi que le role important d institutions canadiennes l association canadienne d etudes fiscales les groupes d experts ainsi que les ministeres des finances du gouvernement federal et des gouvernements provinciaux dans le design des politiques fiscales

collective labour supply heterogeneity and non participation we present identification and estimation results for the collective model of labour supply in which there are discrete choices censoring of hours and non participation in employment we derive the collective restrictions on labour supply functions and contrast them with restrictions implied by the usual unitary framework using the large changes in the wage structure between men and women in the u k over the last two decades we estimate a collective labour supply model for married couples without children the estimates of the sharing rule show that male wages and employment have a strong influence on bargaining power within couples

collective female labour supply theory and application this article deals with female labour supply in the collective framework it studies married couples and starting from the empirical observation that the husband s labour supply is generally fixed at full time it shows that in this case structural elements of the decision process such as individual preferences or the rule that determines the intra household distribution of welfare can be identified if household demand for at least one commodity together with the wife s labour supply is observed these theoretical considerations are followed by an application using french data

diversification in banking is noninterest income the answer this paper assesses potential diversification benefits in the u s banking industry from the steady shift toward activities that generate fee income trading revenue and other types of noninterest income in the aggregate declining volatility of net operating revenue reflects reduced volatility of net interest income not diversification benefits from noninterest income which is quite volatile and increasingly correlated with net interest income at the bank level greater reliance on noninterest income particularly trading revenue is associated with lower risk adjusted profits and higher risk this suggests few obvious diversification benefits from the ongoing shift toward noninterest income

time allocation within the family welfare implications of life in a couple a collective model of leisure demand generalised to the production of a household public good is estimated on the british household panel survey the sharing rule is identified by using an original parametric framework based on the change of family status from single living to couple or from couple to single living womens ratios of private household expenditures are 40 on average the level of intra household inequality appears highly dependent on the intra household wage gap omitting household production in the model would overestimate the ratio by 7 percentage points on average

size and performance of banking firms testing the predictions of theory abstract in recent years two important literatures on the theory of banking firms have developed one examines the economic functions of banks in environments in which agents are asymmetrically informed another considers the incentive effects moral hazard resulting from deposit insurance both theories make predictions about the relation between banking firm size and performance an empirical analysis of large bank holding companies investigates measures of market valuation and risk of failure limited support is provided for either set of theoretical predictions

the effect of the expansion of the voting franchise on the size of government this paper examines the claim that expansion of the voting franchise has been an important factor in the growth of government state government spending and state and local spending are explained using a panel of 46 states for 1950 88 elimination of poll taxes and literacy tests led to higher turnout particularly among the poor and a poorer pivotal voter as predicted we find that these changes a fall in the income of voters relative to state income and the ouster of republicans from state government led to a sharp rise in welfare spending but no change in other spending

the significance of the probabilistic voting theorem for centuries it has been recognized that democratic government is endangered by two unfortunate properties of majority rule voting the absence of an electoral equilibrium comparable to the general equilibrium in the economy and the risk of expropriation of minorities by majorities much of democratic theory is devoted to the study of how these dangers can be averted the probabilistic voting theorem has been alleged to show that these dangers are illusory it is argued in this paper that though the theorem is valid on its assumptions these assumptions are considerably stronger and the theorem is less comforting about the stability of democratic government than one might at first suppose

u s deficits since world war i the tax smoothing theory suggests that deficits would respond particularly to recession temporarily high government spending and anticipated inflation my empirical estimates indicate that a relation of this type is reasonably stable in the u s since at least 1916 in particular the statistical evidence does not support the idea that there has been a shift toward a fiscal policy that generates either more real public debt on average or that generates larger deficits in response to recessions further the deficits for 1982 3 and popular projections formed in 1984 for 1984 5 are consistent with the previous structure the high values of these deficits reflect the customary response to substantial recession interacting with big government and to expected inflation

a positive theory of the earnings relationship of unemployment benefits in a wage bargaining model a stronger earnings relationship of unemployment benefits may reduce wages therefore the benefit structure significantly influences profits and trade union utility raising the question as to how the benefit structure is determined in the political process we consider a government that chooses the earnings relationship in order to maximize its political support our model predicts a strong earnings relationship under right wing governments and a weak relationship when unions are influential using panel data for 19 oecd countries we find support for these theoretical predictions moreover we show that the earnings relationship varies negatively with openness

probabilistic voting and equilibrium an impossibility result the introduction of voters uncertainty alone is in no way sufficient to guarantee an equilibrium outcome of a voting process what is needed in addition is the assumption that the voting probabilities depend strictly convex respectively concave of the utility losses caused by the proposed policies of the different parties this assumption is however not compatible with an unrestricted policy space and it has to be rejected for theoretical as well as empirical reasons thus using models of probabilistic voting we still have to accept that cycles can arise and electoral outcomes are prone to manipulation via agenda setting

balanced budget redistribution as the outcome of political competition this paper models balanced budget redistribution between socio economic groups as the outcome of electoral competition between two political parties equilibrium is unique in the present model and a sufficient condition for existence is given requiring that there be enough stochastic heterogeneity with respect to party preferences in the electorate the validity of hotelling s principle of minimum differentiation and of director s law are examined under alternative hypotheses concerning administrative costs of redistributions and voter s possibilities both of abstaining from voting and of becoming campaign activists for one of the parties the policy strategy of expected plurality maximization is contrasted with the strategy of maximizing the probability of gaining a plurality incomes are fixed and known so lump sum taxation is feasible however constraints on tax transfer differentiation between individuals are permitted in the analysis

are scale economies in banking elusive or illusive evidence obtained by incorporating capital structure and risk taking into models of bank production abstract this paper explores how to incorporate banks capital structure and risk taking into models of production in doing so the paper bridges the gulf between 1 the banking literature that studies moral hazard effects of bank regulation without considering the underlying microeconomics of production and 2 the literature that uses dual profit and cost functions to study the microeconomics of bank production without explicitly considering how banks production decisions influence their riskiness various production models that differ in how they account for capital structure and in the objectives they impute to bank managers cost minimization versus value maximization are estimated using u s data on highest level bank holding companies modeling the bank s objective as value maximization conveniently incorporates both market priced risk and expected cash flow into managers ranking and choice of production plans estimated scale economies are found to depend critically on how banks capital structure and risk taking are modeled in particular when equity capital in addition to debt is included in the production model and cost is computed from the value maximizing expansion path rather than the cost minimizing path banks are found to have large scale economies that increase with size moreover better diversification is associated with larger scale economies while increased risk taking and inefficient risk taking are associated with smaller scale economies

why can modern governments tax so much an agency model of firms as fiscal intermediaries we develop an agency model explaining why third party information reporting by firms makes tax enforcement successful while third party reporting would be ineffective with frictionless collusion between firms and employees collusive evasion is impossible to sustain in firms with many employees and accurate business records as any single employee may reveal evasion we embed our agency model into a macro model where the number of employees grows with development showing that the tax take evolves as an s shape driven by changes in third party information we show that our model is consistent with a set of stylized facts on taxation and development

pareto optimality of policy proposals with probabilistic voting this paper studies the pareto optimality properties of policy proposals and electoral outcomes when there is probabilistic voting theorem 1 proves that when the position of one candidate is taken as fixed the other candidate will propose a pareto optimal alternative this implies that whenever there is an electoral equilibrium in pure strategies the electoral outcome is pareto optimal it also implies that even if there is no such equilibrium the electoral outcomes from a sequence of elections will be pareto optimal except possibly for an initial status quo

risk in banking and capital regulation this paper investigates the role of bank capital regulation in risk control it is known that banks choose portfolios of higher risk because of inefficiently priced deposit insurance bank capital regulation is a way to redress this bias toward risk utilizing the mean variance model the following results are shown a the use of simple capital ratios in regulation is an ineffective means to bound the insolvency risk of banks b as a solution to problems of the capital ratio regulation the theoretically correct risk weights under the risk based capital plan are explicitly derived and c the theoretically correct risk weights are restrictions on asset composition which alters the optimal portfolio choice of banking firms the recent increase in bank failures especially after the 1980 and 1982 deregulatory acts has again ignited a controversy over the risk portfolio of the banking industry given the importance of this sector there has been increased scrutiny of the industry s motives for risk taking and possible regulatory changes to improve its stability these investigations have centered around two rather complementary areas the first of these is the role of deposit insurance and how its current pricing procedure encourages risk taking and justifies current bank regulations the works of buser chen and kane 4 kane 9 and benston et al 2 have made substantive contributions the authors demonstrates the way in which our current fixed rate insurance system rewards risk taking by the firm and insulates it through deposit insurance from the market discipline that needs to exist to ensure proper risk evaluation this realization has led these authors to propose a series of regulatory changes to encourage proper portfolio choice within the industry these include a shift to market value accounting risk based deposit insurance premiums and additional capital regulation the last of these serves as a method of coinsurance whereby higher capital levels require the bank to absorb greater losses in the event of failure and encourage additional prudence in management in essense it is one method of risk reduction that may offset the risk preference imposed on the industry due to the inappropriate insurance pricing because the amount of capital influences the probability of bank insolvency and thus the soundness of the entire banking system the regulators ceteris paribus prefer more capital to

the taxman tools up an event history study of the introduction of the personal income tax abstract the introduction of income taxation was a landmark in the historical development of the fiscal state of the now developed world this paper presents an event history study of the adoption of the income tax in 17 countries from western europe north america oceania and japan between 1815 and 1939 we find evidence that spending pressures reductions in tax collection costs and to a lesser extent social learning played a significant role for the adoption decision we also find evidence that the extension of the franchise at first reduced the likelihood of adoption of the income tax but eventually as universal suffrage was approached increased the likelihood

a positive model of tax structure the model of tax structure developed in this paper is one in which the composition of revenues and the structure of specific taxes arise naturally as the result of self interested political behavior it is assumed that political agents choose tax structure so as to minimize the political costs or expected net loss in votes associated with raising a budget of given size several hypotheses concerning the nature of political cost functions are developed and applied to an explanation of the differences among u s states in their reliance on income taxation the empirical application emphasizes differences in political constraints across jurisdictions in the belief that much can be learned about the choice of policy instruments by studying structural adjustments in response to varying constraints the paper discusses how the proposed approach differs from or is consistent with that adopted by other authors and how the estimating equation relates to other empirical research in the literature

initial asset inequality and tariff formation a cross country analysis abstract using cross country evidence it is found that a country s initial asset inequality is positively and significantly associated with the formation of the average tariff rate even after controlling for the democracy index and some endowment measures

enjoying the quiet life under deregulation evidence from adjusted lerner indices for u s banks abstract the quiet life hypothesis posits that firms with market power incur inefficiencies rather than reap monopolistic rents we propose a simple adjustment to lerner indices to account for the possibility of forgone rents to test this hypothesis for a large sample of u s commercial banks we find that adjusted lerner indices are significantly larger than conventional lerner indices and trending upward over time instrumental variable regressions reject the quiet life hypothesis for cost inefficiencies however lerner indices adjusted for profit inefficiencies reveal a quiet life among u s banks

inefficiency of male and female labor supply in agricultural households evidence from uganda this article analyzes the efficiency of the intra household allocation of female and male labor inputs in agricultural production in a collective household model spouses optimal on farm labor supply is such that the marginal rate of technical substitution between male and female labor is equated over different crops using the uganda national household survey 2005 06 we test whether this condition holds by estimating production functions and controlling for endogeneity using a method proposed by gandhi navarro and rivers 2009 we find that women are less productive than men that there is more female labor input on low productivity parcels and that men are relatively more productive on female controlled plots compared with male controlled plots total farm output could be higher and pareto improvements could be possible if male labor was reallocated to female controlled plots and or female labor was reallocated to male controlled plots

a model of electroral competition with interest groups abstract this letter specifies and analyzes a model of electoral competition with interest groups the assumptions used in the model are drawn from the existing literature we i show that certain assumptions that have been used in empirical analyses of voting provide a sufficient condition for the existence of an electoral equilibrium and ii characterize the equilibrium strategies embodied in the characterization is a set of parameters that can be said to measure the electoral strengths of the interest groups we also state the appropriate definition of the pareto relation for our model and note that each of the equilibrium strategies is pareto optimal

labour supply household production and intra family welfare distribution abstract this paper demonstrates the importance in conceptual and empirical terms of incorporating household production in models of labour supply to avoid misleading results concerning the intra family distribution of income and behavioural responses to economic policy

a swing state theory of trade protection in the electoral college this paper analyzes trade policy determination in the electoral college in the presence of swing voters it determines the circumstances under which incumbent politicians have an incentive to build a reputation for protectionism thus swaying voting decisions and improving their re election probability strategic trade protection is shown to be more likely when protectionist swing voters have a lead over free trade supporters in states with relatively strong electoral competition and in states representing a larger proportion of electoral college votes an empirical test using a measure of industrial concentration in swing and decisive u s states lends support to the theoretical findings

banks responses to deregulation profits technology and efficiency the deregulation of interest rates in the early 1980s raised bank funding costs and lowered profits in response banks raised fees for deposit services reduced branch operating costs and shifted to higher earning assets rates of return did not regain their prederegulation levels until the early 1990s our goal is to decompose the change in bank profits following deregulation into i intemal bank initiated adjustments to the new regulatory structure and ii external contemporaneous changes in banks business environment this decomposition will depend in part on the assumed competitive structure of the banking industry with perfect competition output and input prices are part of the external environment and banks responses are limited to changes in output and input quantities an alternative approach assumes imperfect competition where banks have some control over output prices deposit fees minimum balance requirements and interest rates on certain loans and output quantities and input prices comprise the external environment the altemative model is supported by the data using this model large banks but not smaller banks are found to have relied primarily on changing output prices and input use to mitigate and reverse the negative effects of deregulation on profits the adjustment to deregulation was essentially complete after four years following this additional changes in bank profitability during the late 1980s were primarily due to changes in banks business environment

taxation and the household abstract previous analyses of demand systems and the welfare effects of taxing male and female labour supplies suppress the analysis of household resource allocation by assuming a household utility function to analyse the implications of assuming this is not the case we construct a simple but fairly general model of household resource allocation and use the properties of the equilibrium of this model to characterise the effects of tax policy on individual utilities as determined by the household resource allocation process

the size of government most research on the causes of growth in government expenditure has focused on the demand for government services in this paper we argue that in fact this growth may have occurred because of changes in supply changes in technology leading to increased specialization and thus increased opportunity costs of self production have led to increased market production and increased record keeping also female labor force participation has increased both of these factors serve to reduce the efficiency cost of collecting taxes if the demand for government spending has not changed this increase in supply would lead to a larger public sector we estimate a system of simultaneous equations for the period 1929 1970 incorporating this hypothesis and the results are consistent with the theory we are able to explain virtually all of the growth of government increases in female labor force participation seems to be a very important variable in this explanation

debt and tariffs an empirical investigation of the evolution of revenue systems abstract this paper presents a theoretical framework where government chooses fiscal structure so as to maximize political support and where the evolution of fiscal systems is determined by changing economic political and administrative factors estimating equations are derived and the model is used to explain the development of revenue structure in canada from 1871 to 1913 a period when major revenue sources consisted of the tariff debt and excises the empirical analysis distinguishes between government plans and ex post observations of public revenues and places particular emphasis on the derivation of hypotheses linking economic political and administrative variables to revenue structure

estimating the parameters of a household production function with joint products by estimating the parameters of a production function whose inputs consist of family time and market goods the authors offer some new microeconomic estimates of the value of production that takes place in the home and also examine the concept of joint production that is the degree to which time devoted to home production simultaneously serves as leisure they find evidence of substantial jointness between home production time and leisure the degree of which is greater for wives than for husbands and that both husband and wife possess human capital skills more productive in market work than in home work

endogenous tariff formation under representative democracy a probabilistic voting model wolfgang mayer 1984 applied duncan black s 1948 median voter theorem to investigate endogenous tariff formation under direct democracy this paper extends mayer s model from direct to representative democracy the extension from direct to representative democracy is straightforward if candidates possess perfect information one can still apply the median voter theorem for a candidate in a two party representative democracy also chooses the most preferred tariff of the median voter mayer 1984 himself fully recognized this direct extension 2 nevertheless if candidates possess imperfect information which is believed typical in the real world how the medianvoter outcome might alter or be modified remains unanswered the purpose of the current paper is to answer the question that candidates are something more than simply policy surrogates is the highlight of the article by james m enelow and melvin j hinich 1982 in contrast to direct democracy in which only policies matter in voter choices in a representative democracy candidates are thought to be judged by voters on the basis of both nonpolicy candidate characteristics and proposed policies in this paper i adopt the view of enelow and hinich 1982 and combine it with candidate uncertainty more specifically i consider a model incorporating candidates lack of information regarding voters nonpolicy preferences the model gives rise to probabilistic rather than deterministic voting 3 i show that in such a framework the equilibrium tariff is no longer dictated by the most preferred tariff of the median voter but is a weighted mean or even the mean of voters most preferred tariffs moreover the income distribution resulting from the equilibrium tariff tends to be more equalized than that from free trade the plan of the paper is as follows section i introduces the model of the paper it consists of an economic and a political structure section ii characterizes the equilibrium tariff and discusses its implications for income distribution concluding remarks are presented in section iii

do consumers pay for one stop banking evidence from an alternative revenue function abstract in providing financial services jointly banks may reduce costs due to complementarities in production cost economies of scope or raise revenues from complementarities in consumption revenue economies of scope cost economies of scope between bank deposits and loans have been found to be small revenue economies of scope are investigated here for the first time and found to be insignificant over 1978 1990 for both small and large banks and for those on or off the revenue efficient frontier the lack of complementarities between deposits and loans where benefits are most likely to occur suggests that claims of important synergies from an expansion of banking powers be taken with caution

economic and political foundations of tax structure this paper derives the essential elements of tax systems as the outcome of rational behavior in a model w here government maximizes expected support and where opposition to ta xation depends on the loss in full income the analysis treats the le vel of expenditures as endogenous and integrates the influence of adm inistration costs with that of political and economic factors tax st ructure is shown to be a system of related components in equilibrium a final section compares results to two alternative approaches opti mal taxation and the leviathan model copyright 1988 by american economic association

bank capitalization and cost evidence of scale economies in risk management and signaling we amend the standard cost model to account for the role of financial capital in banking the cost function is conditioned on the level of capital but we model the demand for financial capital so that it can serve as a cushion against insolvency for potentially risk averse managers and as a signal of risk for less informed outsiders scale economies are then computed without assuming that the bank chooses a level of capitalization that minimizes cost we find evidence of substantial scale economies and that bank managers are risk averse and use the level of financial capital to signal the level of risk

collective labor supply and welfare the paper develops a general collective model of household labor supply in which agents are characterized by their own possibly altruistic preferences and household decisions are only assumed to be pareto efficient an alternative interpretation is that there are two stages in the internal decision process agents first share nonlabor income according to some given sharing rule then each one optimally chooses his or her own labor supply and consumption this setting is shown to generate testable restrictions on labor supplies moreover the observation of labor supply behavior is sufficient for recovering individual preferences and the sharing rule up to a constant finally the traditional tools of welfare analysis can be adapted to the new setting

married with children a collective labor supply model with detailed time use and intrahousehold expenditure information we propose a collective labor supply model with household production that generalizes an original model of blundell chiappori and meghir 2005 in our model adults individual preferences not only depend on own leisure and individual private consumption of market goods they also depend on the consumption of domestic goods which are produced by combining goods bought on the market with individuals time we apply our model to new and unique data on dutch couples with children the data contains detailed information about the spouses time use and the intrahousehold allocation of all expenditures our application uses a novel estimation strategy that builds upon the familiar two stage allocation representation of the collective model we obtain interesting and plausible empirical results spouses preferences depend on the consumption of domestically produced goods including children s welfare in addition pareto weights depend on variables like the individual wages and the share in the household s nonlabor income finally and perhaps surprisingly we do not nd evidence that mothers care more for their children than fathers this paper draws on data of the liss panel of centerdata special thanks go to marika de bruijne and arthur van soest who helped to construct the questionnaire and to guillaume schollier

the role of tax bases and collections costs in the determination of income tax rates seigniorage and inflation a growing theoretical literature on optimal taxation predicts that governments will set the tax rates on money holdings and on more traditional tax bases to minimize the deadweight losses of collecting government revenue under the presumption that relative collection costs and tax bases have not changed significantly over time the empirical time series seigniorage literature has focused on the theory s tax smoothing implication finding only weak support we show that changes in collections costs and tax bases played an important role in the determination of tax composition and find stronger support for tax smoothing when this is taken into account

economic integration and the relationship between profit and wage taxes this paper analyzes the development of the ratio of corporate taxes to wage taxes using a simple political economy model with workers and capitalists that own internationally mobile and immobile firms among other results our model predicts that countries reduce their corporate tax rate relative to the wage tax when preferences for public goods increase or when the share of capital employed in multinational firms is rising we further show how an increase in the wage share changes both the relative size of tax bases and the political influence of different income groups the predicted relationships are tested using panel data for 23 oecd countries for the period 1980 through 2004 the results of the empirical analysis support our main hypotheses

collective household labor supply nonparticipation and income taxation in this paper we adopt the usual assumptions of the collective approach i e individualism and efficiency to study household labor supply the theoretical innovation is 2 fold first we incorporate the decision to participate in the labor market in the initial setting second we abandon the assumption of linearity of the budget constraint we show that i structural elements such as preferences or the outcome of the decision process can be recovered and ii testable restrictions are generated from the observation of the household labor supplies we also examine for this model how to simulate the incidence of fiscal reforms

the risk of financial intermediaries this paper reconsiders the formal estimation of bank risk using the variability of the profit function in our model point estimates of the variability of profits are derived from a model where this variability is endogenous to other bank characteristics such as capital and liquidity we estimate the new model on the entire panel of us banks spanning the period 1985q1 2012q4 the findings show that bank risk was fairly stable up to 2001 and accelerated quickly thereafter up to 2007 we also establish that the risk of the relatively large banks and banks that failed in the subprime crisis is higher than the industry s average thus we provide a new leading indicator which is able to forecast future solvency problems of banks

a test of the unitary and collective models of household labour supply this paper tests the unitary and the collective household labour supply models within a structural framework a nonlinear unrestricted household labour supply system is postulated and the set of parametric restrictions imposed by each model is derived our results generally reject the income pooling restrictions embodied in the unitary model also the symmetry of cross wage effects is rejected however the collective model is not rejected for groups with no pre school children

marital matching economies of scale and intrahousehold allocations we propose a novel nonparametric method to empirically identify economies of scale in multiperson household consumption we assume consumption technologies that define the public and private nature

market wages and youth crime to study the problem of widespread youth crime i analyze a timeallocation model in which consumers face parametric wages and diminishing marginal returns to crime the theory motivates an econometric model that i estimate using data from the national longitudinal survey of youth my estimates suggest that youth behavior is responsive to price incentives and that falling real wages may have been an important determinant of rising youth crime during the 1970s and 1980s moreover wage differentials explain a substantial component of both the racial differential in criminal participation and the age distribution of crime

additive general error models for production cost and derived demand or share systems many empirical studies of production specify a deterministic model of the firm derive the implied behavioral equations input demand or share system and then embed this system in a stochastic framework by tacking on linear error terms in contrast this paper proposes general error models gems in which the error specification is an integral part of the optimization model these models are the statistical embodiment of stigler s view that apparent observed inefficiencies reflect the investigator s ignorance of the true optimization problem additive gems are proposed and interpreted specification tests indicate that a translog additive gem is superior to the standard translog specification

collective decisions household production and labor force participation in this paper we generalize the collective model of household labor supply with domestic production to allow for the possibility of nonparticipation in the labor market we also relax the marketability assumption according to which domestic goods and market goods are perfectly substitutable our results are twofold first we show that the main structural components of the decision process can be retrieved from observed behavior second we estimate a system of market and domestic labor supply using the panel study of income dynamics and apply the theoretical results to recover the intra household sharing of resources

bank income structure and risk an empirical analysis of european banks the purpose of this paper is to investigate the relationship between bank risk and product diversification in the changing structure of the european banking industry based on a broad set of european banks for the period 1996 2002 our study first shows that banks expanding into non interest income activities present higher risk and higher insolvency risk than banks which mainly supply loans however considering size effects and splitting non interest activities into both trading activities and commission and fee activities we show that the positive link with risk is mostly accurate for small banks and essentially driven by commission and fee activities a higher share of trading activities is never associated with higher risk and for small banks it implies in some cases lower asset and default risks

political influence economic interests and endogenous tax structure in a computable equilibrium framework with application to the united states 1973 and 1983 we consider the properties of a computable equilibrium model ofa competitive political economy in which the economic interestsof groups of voters and their effective influence on equilibriumpolicy outcomes can be explicitely distinguished and computed the model incorporates an amended version of the gemtap taxmodel calibrated to data for the united states for 1973 and1983 emphasis is placed on how the aggregation of gemtaphouseholds into homogeneous groups affects the numericalrepresentation of interests and influence for representativemembers of each group

collective labour supply with children we extend the collective model of household behavior to allow for the existence of public consumption we show how this model allows the analysis of welfare consequences of policies aimed at changing the distribution of power within the household our setting provides a conceptual framework for addressing issues linked to the targeting of specific benefits or taxes we also show that the observation of the labor supplies and the household demand for the public good allow one to identify individual welfare and the decision process this requires either a separability assumption or the presence of a distribution factor

a theory of competition among pressure groups for political influence this paper presents a theory of competition among pressure groups for political influence political equilibrium depends on the efficiency of each group in producing pressure the effect of additional pressure on their influence the number of persons in different groups and the deadweight cost of taxes and subsidies an increase in deadweight costs discourages pressure by subsidized groups and encourages pressure by taxpayers this analysis unifies the view that governments correct market failures with the view that they favor the politically powerful both are produced by the competition for political favors

legislators and interest groups how unorganized interests get represented this paper derives a supply price for public policy using a constrained maximization model in the model three sets of agents each have preferences over outcomes organized interest groups offer campaign contributions to improve their own wealth voters offer votes to obtain outcomes closer to their most preferred outcomes and legislators seek both campaign contributions and votes to obtain reelection a given legislator s supply price for policy is shown to depend on the productivity of his effort as determined by committee assignments priority and ability and by the preferences of his unorganized constituency in the home district two extreme assumptions about the effectiveness of campaign spending in eliciting votes are used to illustrate the comparative statics properties of the model the prediction of the model is that interest groups will in general seek out legislators whose voters are indifferent to the policy the interest group seeks thus voters who do have preferences over policy are in effect represented even though they are not organized

labor supply home production and welfare comparisons abstract we consider the collective model of labor supply with marketable domestic production we first show that if domestic production is mistakenly ignored the collective indirect utility functions that are retrieved from observed behavior will be unbiased if and only if the retrieved from observed behavior will be unbiased if and only if the profit function is additive otherwise in the non additive case the direction and the size of the bias will depend on the complementarity substitutability of spouses time inputs in the production process we then show that even if domestic labor supply functions are not observed valid welfare comparisons are possible this identification result generalizes that in chiappori chiappori p a 1992 collective labor supply and welfare journal of political economy 100 437 467

information acquisition and learning from prices over the business cycle abstract we study firms incentives to acquire costly information in booms and recessions to investigate the role of endogenous information in accounting for business cycles our model predicts that for a wide range of parameter values firms have a stronger incentive to acquire information when the economy has been in a recession and a pessimistic belief about the state of the economy prevails than after a boom when firms share an optimistic belief the equilibrium price system which features endogenous information transmission dampens aggregate fluctuations by discouraging information acquisition our welfare analysis reveals that information acquisition in the decentralized economy is not efficient this is due to inefficient employment dispersion arising from information heterogeneity in equilibrium time series data for the u s economy support the model s prediction of wages being more informative about total factor productivity after recessions than following booms

a simple approach to investigate intrahousehold allocation of private and public goods abstract we adopt the collective approach to consumer behavior with egoistic agents and assume that household consumption is either private or public we then show that 1 household demand functions have to satisfy testable constraints and 2 some elements of the decision process can be retrieved from observed behavior these results are based on a conditional demand m demand framework in which household demand functions are directly derived from the individual marginal rates of substitution finally we present an empirical illustration of these theoretical results using the u s consumer expenditure survey

tests of the rational expectations hypothesis this paper reviews evidence on the structure of anticipation from a number of empirical studies jack muth s rational expectations hypothesis is compared with a variety of alternative models including ferber s law the implicit expectations model of edwin mills and muth s new errors in the variables model the cumulative evidence is of such strength as to compel the suspension of belief in the concept of rational expectations this implies that it is a mistake to proceed under the maintained hypothesis that expectations are rational instead it is necessary to test the sensitivity of empirical and theoretical results to alternative assumptions about the structure by which anticipations are generated copyright 1986 by american economic association

the identification of unobservable independent and spousal leisure this paper is based on the idea that for each partner in a marriage there are two distinct types of leisure one type is each person s independent or private leisure and the other type is spousal leisure whose importance has long been emphasized in the literature of psychology while each type of leisure is unobservable only total leisure is observed it is shown that the recent collective models of the intrahousehold allocation initiated by chiappori can be extended to identify each type of leisure up to an additive constant in particular the effects of each member s wage household unearned income and extrahousehold environmental parameters on the independent and spousal leisure and on the sharing rule are fully identified the observational requirement here is the same as in other studies namely the observation of individual labor supply individual wages household unearned income one assignable good and consumption expenditure at the household level