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

globalization poverty and inequality what is the relationship what can be done forbes online of 27 february 20031 offers some information about the world s ten richest people much of the information would cause little surprise the list shows that big money comes from software innovation retailing scale economies the business of oil investment luck and inheritance what is however really striking more so as one ponders the matter is just how rich these ten people are 2 together they had in 2002 a net worth of us 217 billion ranging from bill gates in the lead with us 40 7 billion to john walton son of sam walton founder of wal mart at the rear with us 16 5 billion

a status based model of market competition this article explores the significance of status processes for generating and reproducing hierarchy among producers in a market it develops a conception of a market as a status order in which each

risk and precautionary saving in two person households the existing literature on precautionary saving is based almost entirely on the assumption that the household acts as if it consisted of a single individual decision taker in reality saving decisions are typically taken by two person households this paper examines the implications of this observation for the existence of precautionary saving and shows that the assumption that the individual utility functions satisfy the conditions for precautionary saving to exist can imply that the household exhibits precautionary saving but only under strong assumptions on the type of risk change being considered

hearts and spades paradigms of household economics abstract this paper explains why the feminist critique of inequalities within the family poses a serious challenge to conventional economic theories of the household but it also discusses those aspects of both neoclassical and marxian theory that are useful to an analysis of conflict within the family arguing that the bargaining power models being developed by some neoclassical theorist are complementary to marxist influenced structural accounts

endogenous gender power household labor supply and the demographic transition abstract we present a microeconomic model of the household in which there exists no difference in spousal preferences but childrearing is more time costly for women bargaining between the wife and the husband forms the basis of household decisions marital bargaining power is determined according to the incomes of the spouses which in turn help to determine their reservation utility levels outside the marriage the endogeneity of bargaining power introduces a non cooperative element to the couples decision making problem because both the husbands and the wives take into account how their pre marital education decisions affect their marital power and the share they extract from household resources in the future the model predicts that wives invest more than is pareto efficient in their education in order to increase their bargaining power in marriage as a consequence couples have fewer children and consume more when exogenous structural changes lead women to invest more in education a corollary of the model is that empowering women directly through social reforms such as a lower gender wage gap leads to lower fertility and higher spousal consumption and leisure

inside the hybrid iron cage political origins of hybridization this paper examines how social movement type political interactions between conflicting parties within an organization influence the adoption of a hybrid practice we argue that a hybrid practice is likely to be adopted when power balance between challengers and incumbents is achieved to shed light on conditions for organizational settlement based on such power balance we focus on three factors structures actors and processes of social movement type political interactions within organizations by studying changes in the presidential selection systems of korean universities between 1988 and 2006 this paper illustrates how organizational settlement resulted in the adoption of a hybrid system by combining elements of two previous competing presidential selection systems appointment and direct voting systems the general implications for the understanding of hybridization organizational settlement and organizational heterogeneity are discussed

how institutions create historically rooted trajectories of growth this paper is concerned with approaches to growth theory that argue for historically created institutionally rooted national development trajectories there are varied ways of organizing market economies and there is more than just one kind of capitalism the institutional approach begins with the observation that markets embedded in political and social institutions are the creation of government and politics indeed all economic interchange takes place within institutions and groups markets do not exist or operate apart from the rules and institutions that establish them and that structure how buying selling and the very organization of production takes place consequently there are multiple market capitalisms and in a global economy international competition among members must be understood as an interplay of these various national market systems focus is on the historically rooted national institutions which frame the choices of individuals and structure the terms on which issues such as agency problems and contract problems are confronted the approach proposed in this paper is a necessary complement to an institutionalism more familiar in economics this historical institutionalism frames problems and provides answers to puzzles that concern microeconomic based institutionalism the particular historical course of each nation s development creates a political economy with a distinctive institutional structure for governing the markets of labor land capital and goods the institutional structure induces particular kinds of corporate and government behavior by constraining and by z laying out a logic to the market and policy making process that is particular to that s political economy these typical strategies routine approaches to problems and shared o decision rules create predictable patterns in the way governments and companies go v about their business in a particular national political economy the paper then applies 1 these notions to the debate about national systems of innovation empirically there is evidence of distinct national technological trajectories the questions are why the j trajectories exist and why they have particular form national systems arguments need an institutional theory that would permit us to apply both evolutionary and new growth arguments about economic development to particular national cases

the economics of child labor if child labor as a mass phenomenon occurs not because of parental selfishness but because of the parents concern for the household s survival the popular argument for banning child labor loses much of its force however this assumption about parental decision making coupled with the assumption of substitutability in production between child and adult labor could result in multiple equilibria in the labor market with one equilibrium where children work and another where adult wage is high and children do not work the paper establishes this result and discusses its policy implications copyright 1998 by american economic association

political losers as a barrier to economic development per capita income in many sub saharan african countries such as chad and niger is less than 1 30th of that of the united states most economists and social scientists suspect that this is in part due to institutional failures that stop these societies from adopting the best technologies a particularly interesting historical example comes from the diffusion of railways in the 19th century while railways are regarded as a key technology driving the industrial revolution there were large lags in their diffusion for example in 1850 the united states had 14 518 km of track britain 9 797 km and germany 5 856 km in the russian and hapsburg empires there were just 501 km and 1 357 kim respectively all data from brian r mitchell 1993 why do societies as in this example fail to adopt the best available technologies one answer is that existing powerful interest groups block the introduction of new technologies in order to protect their economic rents and societies are able to make technological advances only if they can defeat such groups economic monopolies may be one example a monopolist might wish to block the introduction of a new technology by a rival that will capture the market this idea which we call the economic losers hypothesis was discussed by simon kuznets 1968 developed at length by joel mokyr 1990 in the context of technology adoption and formalized by per krusell and jose victor rios rull 1996 and stephen l parente and edward c prescott 1997 related ideas are widely discussed in the literature on international trade policy with many formal models e g gene m grossman and elhanan helpman 1994 there are problems with this story however first despite the intuitive appeal of the idea there are relatively few instances where major economic change was blocked by economic losers mokyr 1990 emphasizes the attempts of many skilled artisans to block the introduction of new machines the most famous example is the luddites skilled weavers who were thrown out of work by mechanization interestingly however many of these groups including the luddites were ultimately unable to block economic progress equally important the economic losers hypothesis relies on the presumption that certain groups have the political power to block innovation but if so why not use this power to simply tax the gains generated by the introduction of the new technology this might be because there are limits on the nature of fiscal instruments though it seems plausible that groups with sufficient political power to block innovation would be able subsequently to lobby effectively for redistribution a more important reason however may be that the introduction of new technology and economic change more generally may simultaneously affect the distribution of political power we argue that the effect of economic change on political power is a key factor in determining whether technological advances and beneficial economic changes will be blocked in other words we propose a political loser hypothesis we argue that it is groups whose political power not economic rents is eroded who will block technological advances if agents are economic losers but have no political power they cannot impede technological progress if they have and maintain political power i e are not political losers then they have no incentive to block progress it is therefore agents who have t discussant gene grossman princeton university

household bargaining and the design of couples income taxation this paper studies the design of couples income taxation when consumption and labor supply decisions within the couple are made by maximizing a weighted sum of the spouses utilities bargaining weights are given but specific to each couple information structure and labor supply decisions follow the mirrleesian tradition however while the household s total consumption is publicly observable the consumption levels of the individual spouses are not observable with a utilitarian social welfare function we show that the expression for a spouses marginal income tax rate includes a pigouvian paternalistic and an incentive term the pigouvian term favors a marginal subsidy tax for the high weight low weight spouse whose labor supply otherwise tends to be too low high the sign and the magnitude of the incentive term depends on the weight structure across couples in some cases both terms have the same sign and imply a positive marginal tax for the low weight spouse who may be female and a negative one for the high weight spouse possibly the male this is at odds with the traditional boskin and sheshinski results our conclusions can easily be generalized to more egalitarian welfare functions finally we present numerical simulations based on a calibrated specification of our model the calculations confirm that the male spouse may well have the lower and possibly even negative marginal tax rate

child labor school attendance and intrahousehold gender bias in brazil an extensive survey data set of brazilian households is used to test whether intrahousehold gender bias affects the decisions of mothers and fathers to send their sons and daughters to work and to school an intrahousehold allocation model is examined in which fathers and mothers may affect the education investment and the child labor participation of their sons and daughters differently because of differences in parental preferences or differences in how additional schooling affects son s and daughter s acquisition of human capital brazilian household survey data for 1998 are used to estimate the impact of each parent s education on the labor market participation and school attendance of their sons and daughters for labor market participation the father s education has a greater negative impact than the mother s education on the labor status of sons the father s education also has a greater impact on son s labor status than on daughter s for schooling decisions the mother s education has a greater positive impact than the father s education on daughter s school attendance but fathers have a greater positive impact on sons school attendance than on daughter s

organizational inertia and momentum a dynamic model of strategic change this study provides an empirical test of hannan and freeman s theory of structural inertia we examined the changes organizations undertook in response to a major environmental change in addition

gender and say a model of household behaviour with endogenously determined balance of power the evidence that the same total income can lead a household to choose different consumption vectors depending on who brings in how much of the income has led to an effort to replace the standard unitary model of the household with the collective model which recognizes that the husband and the wife may have different preferences and depending on the balance of power between them the household may choose differently one weakness of this new literature is that it fails to recognize that the household s choice could in turn influence the balance of power once this two way relation between choice and power is recognized we are forced to confront some new questions concerning how to model the household this paper tries to answer these by defining a household equilibrium examining its game theoretic properties and drawing out its testable implications it is shown for instance that once we allow for dynamic interaction a household can exhibit inefficient behavior and that for a certain class of parameters children will be less likely to work in a household where power is evenly balanced than one in which all power is concentrated in the hands of either the father or the mother the paper also draws out the implications for female labor supply

do husbands and wives pool their resources evidence from the united kingdom child benefit common preference models of family behavior imply income pooling a restriction on family demand functions such that only the sum of husband s income and wife s income affects the allocation of goods and time testing the pooling hypothesis is difficult because most family income sources are not exogenous to the allocations being analyzed in this paper we present an alternative test based on a natural experiment a policy change in the united kingdom that transferred a substantial child allowance to wives in the late 1970s using family expenditure survey data we find strong evidence that a shift toward greater expenditures on women s clothing and children s clothing relative to men s clothing coincided with this income redistribution

child labor cause consequence and cure with remarks on international labor standards although the literature on child labor is enormous it lacks a common theoretical foundation in this paper analytical survey of this field is provided keeping in mind that this is an area where the primary reason for theorizing is ultimately to influence policy overall it is noted that the literature on child labor is an illustration of abundance and anarchy although empirical writings on child labor are numerous they are not usually founded on theory it is argued that there is much that can be done in curbing the issue of child labor several theories were studied in this paper including collaborative intervention such efforts include public action which alters the economic environment such that the parents of their own accord prefer to withdraw the child from labor force another strategy involves the government a legal intervention is enforcing a total ban on the subject although such interventions have good intentions some of them may not be feasible in general it is better to take economy wide measures against child labor and if there is to be a sector specific ban it should be based on the working conditions of that sector rather than the destination of the goods

household decisions and equilibrium efficiency a general equilibrium model is introduced where a household may consist of several members each with individual preferences and or resources when households obey collective rationality certain intrahousehold externalities can be fully internalized by the respective households so that competitive exchange among households is efficient as a rule however such intrahousehold externalities are not fully internalized by individual household members acting in their personal interest so that competitive exchange among such individuals is only efficient in exceptional cases

how cynical can an incumbent be strategic policy in a model of government spending abstract when parties with different preferences compete for election strategic manipulation of state variables for electoral purposes can occur even with rational voters this paper presents a model in which government resources can be used productivity for the benefit of everybody or unproductively for the benefit of the ruling party s constituency a government more inclined to unproductive spending may choose to collect public resources inefficiently in order to produce the importance of spending decisions in the election the model highlights the strategic role of policy decisions that affect incentives and constraints faced by future governments and their impact on election results

noncooperative bargaining models of marriage in this paper we discuss some simple noncooperative models of distribution within marriage in which the equilibria are not necessarily pareto optimal in which history and culture can affect which equilibrium is realized and in which distribution may depend on whether resources are controlled by the husband or by the wife recent moves away from single decision maker models of the family have permitted economists to address distribution within marriage and cooperative bargaining models have played the central role in these moves the next step is to permit strategic interaction between family members by modeling distribution within marriage as a noncooperative game noncooperative game theory allows great flexibility in specifying the rules of the game and unlike cooperative game theory imposes few a priori restrictions on the nature of equilibrium outcomes in particular noncooperative models neither assume nor imply that all equilibria are pareto optimal

static and intertemporal household decisions we discuss the most popular static and dynamic models of household behavior our main objective is to explain which aspects of household decisions different models can account for using this insight we describe testable implications identification results and estimation findings obtained in the literature particular attention is given to the ability of different models to answer various types of policy questions

the dynamics of political compromise we characterize efficient self enforcing divisions of political or economic surplus between two parties that interact repeatedly the party in power can decide the allocation and the parties political strength changes according to a markov process we find that the share of the party currently in power depends not only on its current strength but also on whether it had previously been even stronger since it last came to power we find that the constitutional supermajority requirements that attempt to constrain the use of power can counterproductively create less compromise

short term generation asset valuation a real options approach this paper discusses using real options to value power plants with unit commitment constraints over a short term period we formulate the problem as a multistage stochastic problem and propose a solution procedure that integrates forward moving monte carlo simulation with backward moving dynamic programming we assume that the power plant operator maximizes expected profit by deciding in each hour whether or not to run the unit that a certain lead time for commitment and decommitment decisions is necessary to start up and shut down a unit and that these commitment decisions once made are subject to physical constraints such as minimum uptime and downtime we also account for the costs associated with starting up and shutting down a unit last we assume that there are hourly markets for both electricity and the fuel used by the generator and that their prices follow ito processes using numerical simulation we show that failure to consider physical constraints may significantly overvalue a power plant

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

the paradox of group size in collective action a theory of the critical mass ii many sociologists incorrectly believe that larger groups are less likely to support collective action than smaller ones the effect of group size infact depends on costs if the costs of collective goods rise with the number who share in them larger groups act less frequently than smaller ones if the costs vary little with group size larger groups should exhibit more collective action than smaller ones because larger groups have more resources and are more likely to have a critical mass of highly interested and resourceful actors the positive effects of group size increase with group heterogeneity and nonrandom social ties paradoxically when groups are hetero geneous fewer contributors may be needed to provide a good to larger groups making collective action less complex and less expensive

gender agricultural production and the theory of the household virtually all models of the household assume that the allocation of resources is pareto efficient within many african households agricultural production occurs on many plots controlled by different members of the household pareto efficiency implies that factors should be allocated efficiently across these plots i find in contrast that plots controlled by women are farmed much less intensively than similar plots within the household controlled by men the estimates imply that about 6 percent of output is lost because of inefficient factor allocation within the household the paper suggests a new approach to modeling intrahousehold allocation consistent with the empirical results

the effects of male and female labor supply on commodity demands we examine the effects of male and female labor supply on household demands and present a simple and robust test for the separability of commodity demands from labor supply using data on individual households from six years of the uk fes we estimate a demand system for seven goods which includes hours and participation dummies as conditioning variables allowance is made for the possible endogeneity of these conditioning labor supply variables we find that separability is rejected furthermore we present evidence that ignoring the effects of labor supply leads to bias in the parameter estimates

shared agency the dominant spouse s impact on education expenditure summary in this paper we consider whether it is the gender of the decision maker or the extent of agency that they wield that is crucial to increasing household welfare this is an important question as development policy is often formed on the basis that placing resources in the hands of women results in greater household welfare indonesia provides the ideal opportunity to study this issue because it is home to ethnic groups with very different gender norms from male dominance the patrilineal batak to female dominance the matrilineal minangkabau using ifls data for three rounds we consider the impact of decision making by the dominant spouse on household expenditure on education we find that in indonesia when the dominant spouse male or female has sole control of decision making there is an overall negative impact on education expenditure this leads us to argue that it is more important to consider the issue of spousal dominance than to wholly focus on gender

sources of inefficiency in a representative democracy a dynamic analysis this paper studies the efficiency of policy choice in representative democracies it extends the citizen candidate model of democratic policy making to a dynamic environment equilibrium policy choices are shown to be efficient in the sense that in each period conditional on future policies being selected through the democratic process there exists no alternative current policy choices which can raise the expected utilities of all citizens however policies that would be declared efficient by standard economic criteria are not necessarily adopted in political equilibrium the paper argues that these divergencies are legitimately viewed as politicalfailures

demand competition and policy compromise in legislative bargaining i propose a new majoritarian bargaining model in which more than one implicit proposal can be on the table at the same time institutional differences from system to system affect the order of play the equilibrium majorities and the policy outcome the ex post distribution of payoffs within a winning coalition is however invariant to fundamental institutional differences and it is always proportional to the distribution of relative ex ante bargaining power the bargaining process is modeled as a sequential demand game in which players are called to propose a policy and to specify their desired share of the private benefits related to being in office the order of play is endogenous and the distribution of payoffs within an equilibrium majority usually does not depend on who is the proposal maker the role of the head of state and the advantages to center parties are also studied

intra household resource allocation an inferential approach if household income is pooled and then allocated to maximize welfare then income under the control of mothers and fathers should have the same impact on demand with survey data on family health and nutrition in brazil the equality of parental income effects is rejected unearned income in the hands of a mother has a bigger effect on her family s health than income under the control of a father for child survival probabilities the effect is almost twenty times bigger the common preference or neoclassical model of the household is rejected if unearned income is measured with error and income is pooled then the ratio of maternal to paternal income effects should be the same equality of the ratios cannot be rejected there is also evidence for gender preference mothers prefer to devote resources to improving the nutritional status of their daughters fathers to sons

children and household economic behavior this paper looks at some of the methodological issues that arise in modeling the effects of children on household behavior and presents some estimates for selected areas for our purposes household behavior will be taken to refer to household decisions on labor supply the allocation of expenditure to different periods and the decision as to what to do with the difference between income and expenditure i shall be concerned mainly with the effects of dependent children and i restrict attention largely to western societies excerpt

institutional emergence in an era of globalization the rise of transnational private regulation of labor and environmental conditions1 why have systems of transnational private regulation recently emerged to certify corporate social and environmental performance different conceptions of institutional emergence underlie different answers to this question many scholars argue that firms create certification systems to solve problems in the market a view rooted in a conception of institutions as solutions to collective action problems the author develops a different account by viewing institutions as the outcome of political contestation and by analyzing conflict and institutional entrepreneurship among a wide array of actors using a comparative case study design the analysis shows how these arguments explain the formation of social and environmental certification associations both theoretical approaches are needed but strong versions of the market based approach overlook an important set of dynamics that the author calls the political construction of market institutions the analysis shows how both problem solving in markets and

separate spheres bargaining and the marriage market this paper introduces the separate spheres bargaining model a new model of distribution within marriage it differs from divorce threat bargaining models e g manser brown mcelroy horney in that the threat point is not divorce but a noncooperative equilibrium within marriage this noncooperative equilibrium reflects traditional gender roles the predictions of our model thus differ from those of divorce threat bargaining models in the separate spheres model cash transfer payments to the mother and payments to the father can but need not imply different equilibrium distributions in existing marriages in the long run the distributional effects of transfer policies may be substantially altered by changes in the marriage market equilibrium

income and outcomes a structural model of intrahousehold allocation there is evidence from several sources that one cannot treat many person households as a single decision maker if this is the case then factors such as the relative incomes of the household members may affect the final allocation decisions made by the household we develop a method of identifying how incomes affect outcomes given conventional family expenditure data the basic assumption we make is that household decision processes lead to efficient outcomes we apply our method to a sample of canadian couples with no children we find that the final allocations of expenditures on each partner depend significantly on their relative incomes and ages and on the level of lifetime wealth