household choices and child development the growth in labor market participation among women with young children has raised concerns about the potential negative impact of the mother s absence from home on child outcomes recent data show that mother s time spent with children has declined in the last decade while the indicators of children s cognitive and noncognitive outcomes have worsened the objective of our research is to estimate a model of the cognitive development process of children nested within an otherwise standard model of household life cycle behavior the model generates endogenous dynamic interrelationships between the child quality and employment processes in the household which are found to be consistent with patterns observed in the data the estimated model is used to explore the eects of schooling subsidies and employment restrictions on household welfare and child development

aid for the poorest some early lessons of uk experience the paper presents an interim review of recent attempts to reach the poorest people in developing countries through aid policy from the viewpoint of one donor the united kingdom it concludes that the uk has achieved a modest increase in the proportion of aid aimed at the poorest between 1974 and 1979 that poverty focused projects are in general more local cost intensive and have lower rates of return than others and that the principal difficulties in the way of successful implementation of poverty focused projects are excessive size an over rapid rate of disbursement inadequate local cost provisions and failure to specify the target group or the repayment strategy with sufficient precision it is argued that there are political obstacles to removing the second and third of these obstacles in donor countries and to removing the fourth in recipient countries also

the empirical content of the roy model this paper clarifies and extends the classical roy model of self selection and earnings inequality the original roy model based on the assumption that log skills are normally distributed is shown to imply that pursuit of comparative advantage in a free market reduces earnings inequality compared to the earnings distribution that would result if workers were randomly assigned to sectors aggregate log earnings are right skewed even if one sectoral distribution is left skewed most major implications of the log normal roy model survive if differences in skills are log concave however few implications of the model survive if skills are generated from more general distributions we consider the identifiability of the roy model from data on earnings distributions the normal theory version is identifiable without regressors or exclusion restrictions sectoral distributions can be identified knowing only the aggregate earnings distribution for general skill distributions the model is not identified and has no empirical content with sufficient price variation the model can be identified from multimarket data cross sectional variation in regressors can substitute for price variation in restoring empirical content to the roy model

optimal electricity market for wind power abstract this paper is about electricity market operation when looking from the wind power producers point of view the focus in on market time horizons how many hours there is between the closing and delivering the bids the case is for the nordic countries the nordpool electricity market and the danish wind power production real data from year 2001 was used to study the benefits of a more flexible market to wind power producer as a result of reduced regulating market costs from better hourly predictions to the market wind power producer would gain up to 8 more if the time between market bids and delivery was shortened from the day ahead elspot market hourly bids by noon for 12 36 h ahead an after sales market where surplus or deficit production could be traded 2 h before delivery could benefit the producer almost as much gaining 7

collateral effects of liberalisation metering losses load profiles and cost settlement in spain s electricity system european energy markets have undergone a major transformation as they have advanced towards market liberalisation and it is vital that the details of these developments be carefully examined the success of liberalisation is based on smart regulation which has been capable of providing solutions to unforeseen events in the process our paper seeks to contribute to existing understanding of the unexpected and collateral effects of the liberalisation process in the power system by examining a natural experiment that occurred in spain in 2009 in that year the electricity supply by distribution system operators disappeared this change in retail market competition as we demonstrate in this paper has had an unexpected effect in terms of the system s balancing requirements we undertake a rigorous assessment of the economic consequences of this policy change for the whole system in terms of its impact on final electricity prices

towards causal estimates of children s time allocation on skill development cognitive and noncognitive skills are critical for a host of economic and social outcomes as an adult while there is broad agreement that a significant amount of skill acquisition and development occurs early in life the precise activities and investments that drive this process are not well understood in this paper we examine how children s time allocation affects their accumulation of skill children s time allocation is endogenous in a model of skill production since it is chosen by parents and children we apply a recently developed test of exogeneity to search for models that yield causal estimates of the impact time inputs have on child skills we show that the test which exploits bunching in time inputs induced by a non negativity time constraint has power to detect endogeneity stemming from omitted variables simultaneity measurement error and several forms of model misspecification we find that with a sufficiently rich set of controls we are unable to reject exogeneity in our most detailed production function specifications the estimates from these models indicate that active time with adult family members such as parents and grandparents are the most productive in generating cognitive skill

beneficial or detrimental ignorance the straw man fallacy of flyvbjerg s test of hirschman s hiding hand summary in a recent paper in this journal the fallacy of beneficial ignorance a test of hirschman s hiding hand professor bent flyvbjerg claims that there is no such thing as beneficial ignorance and that ignorance is detrimental to project success moreover he argues that if hirschman s principle of the hiding hand were correct then benefit overruns would exceed cost overruns thus with a statistical test he demonstrates that the hiding hand is in fact less common than its evil twin the planning fallacy in this rejoinder the author shows that flyvbjerg s test is built on a straw man fallacy and that he fails to refute the hiding hand contrary to flyvbjerg who focuses on the narrow costs and benefits this paper provides evidence that while the hiding hand is found among projects that are project management failures but project successes the planning fallacy fits with projects that are both project management and project failures on that basis the author analyzes a sample of 161 world bank funded projects of different types and finds that the hiding hand prevails while future research should ascertain this finding the author then points out the methodological limitations of flyvbjerg s test indeed it is ironic that the hiding hand a principle crafted against the very idea of cost benefit analysis is refuted on that very basis even worse flyvbjerg in his cost benefit analysis ignores the full life cycle project costs and benefits the unintended project effects the difficulties and problem solving abilities so dear to hirschman and thus treats the management of projects as a kind of black box finally the author submits that hirschman was a behavioral project theorist and argues that it is more important to shed light on the circumstances where the hiding hand works than to question whether the principle of the hiding hand is right

understanding the mechanisms through which an influential early childhood program boosted adult outcomes a growing literature establishes that high quality early childhood interventions targeted toward disadvantaged children have substantial impacts on later life outcomes little is known about the mechanisms producing these impacts this paper uses longitudinal data on cognitive and personality traits from an experimental evaluation of the influential perry preschool program to analyze the channels through which the program boosted both male and female participant outcomes experimentally induced changes in personality traits explain a sizable portion of adult treatment effects

survival of the unfittest why the worst infrastructure gets built and what we can do about it the article first describes characteristics of major infrastructure projects second it documents a much neglected topic in economics that ex ante estimates of costs and benefits are often very different from actual ex post costs and benefits for large infrastructure projects the consequences are cost overruns benefit shortfalls and the systematic underestimation of risks third implications for cost benefit analysis are described including that such analysis is not to be trusted for major infrastructure projects fourth the article uncovers the causes of this state of affairs in terms of perverse incentives that encourage promoters to underestimate costs and overestimate benefits in the business cases for their projects but the projects that are made to look best on paper are the projects that amass the highest cost overruns and benefit shortfalls in reality the article depicts this situation as survival of the unfittest fifth the article sets out to explain how the problem may be solved with a view to arriving at more efficient and more democratic projects and avoiding the scandals that often accompany major infrastructure investments finally the article identifies current trends in major infrastructure development it is argued that a rapid increase in stimulus spending combined with more investments in emerging economies combined with more spending on information technology is catapulting infrastructure investment from the frying pan into the fire

education choices and returns on the labor and marriage markets evidence from data on subjective expectations in this paper we analyze the role of expected labor and marriage market returns as determinants of the college enrollment decisions of mexican high school graduates moreover we investigate whether the relative weights of these factors differ by gender we use data on individuals expectations regarding future labor market outcomes which we directly elicited from the youths and two different measures of marriage market returns first marriage market returns are proxied by the net supply of potential partners in the youths local marriage markets second we use data which elicits youths beliefs about their future spouse s earnings conditional on their own education level we find that labor market as well as marriage market returns are important determinants of the college enrollment decision however boys and girls preferences differ in terms of the relative role of the two determinants in that the relative weight of labor market versus marriage market returns is larger for boys than for girls

the costs of low birth weight birth weight has emerged as the leading indicator of infant health and welfare and the central focus of infant health policy this is because low birth weight lbw infants experience severe health and developmental difficulties that can impose enormous costs on society but would the prevention of lbw generate equally sizable cost savings and health improvements estimates of the return to lbwprevention from cross sectional associations may be biased by omitted variables that cannot be influenced by policy such as genetic factors to address this we compare the hospital costs health at birth and infant mortality rates between heavier and lighter infants from all twin pairs born in the united states we also examine the effect of maternal smoking during pregnancy the leading risk factor for lbw in the united states on health among singleton births after controlling for detailed background characteristics both analyses imply substantially smaller effects of lbw than previously thought suggesting two possibilities 1 existing estimates overstate the true costs and consequences of lbw by at least a factor of four and by as much as a factor of 20 or 2 different lbw preventing interventions have different health and cost consequences implying that policy efforts that presume a single return to reducing lbw will necessarily be suboptimal

from the cradle to the labor market the effect of birth weight on adult outcomes lower birth weight babies have worse outcomes both short run in terms of one year mortality rates and longer run in terms of educational attainment and earnings however recent research has called into question whether birth weight itself is important or whether it simply reflects other hard to measure characteristics by applying within twin techniques using an unusually rich dataset from norway we examine the effects of birth weight on both short run and long run outcomes for the same cohorts we find that birth weight does matter despite short run twin fixed effects estimates that are much smaller than ols estimates the effects on longer run outcomes such as adult height iq earnings and education are significant and similar in magnitude to ols estimates

effects of large scale penetration of renewables the italian case in the years 2008 2015 abstract italy has experienced a revolution in the electricity production mix in the years 2008 2015 when a large scale deployment of intermittent renewables caused a high volatility of electricity prices stopped the investments in both fossil and renewable power plants and caused a high degree of uncertainty in matching electricity demand and supply the current legislation gives renewable energy the priority of dispatchment producing a significant decrease of the operational hours of all kinds of power plants which caused economic problems to utilities that had started investments in new high efficiency combined cycles before 2008 and reduced the overall efficiency of fossil fired power generation in order to restore the opportunities for further investments in renewable energy systems it is very important to develop long term policies and interventions to improve the capacity to balance the electricity demand and supply

a test of exogeneity without instrumental variables in models with bunching this paper presents a test of the exogeneity of a single explanatory variable in a multivariate model it does not require the exogeneity of the other regressors or the existence of instrumental variables the fundamental maintained assumption is that the model must be continuous in the explanatory variable of interest this test has power when unobservable confounders are discontinuous with respect to the explanatory variable of interest and it is particularly suitable for applications in which that variable has bunching points an application of the test to the problem of estimating the effects of maternal smoking in birth weight shows evidence of remaining endogeneity even after controlling for the most complete covariate specification in the literature

the impact of regulatory quality and corruption on residential electricity prices in the context of electricity market reforms abstract the european electricity markets have been undergoing significant regulatory reforms since the introduction of the first liberalisation directive in 1996 theory predicts that liberalisation promotes cost efficient production and competition and hence leads to lower prices the goal of this paper is to assess the impact of regulatory quality and non compliance with the law on electricity prices in the context of electricity market reforms we address problems of endogeneity by using the blundell blond system gmm estimator and find that vertical integration and market concentration lower end user prices all else equal moreover improving regulatory quality and reducing corruption both have a negative impact on prices when holding other factors constant the intensity of the reforms has limited impact on electricity prices when these reforms are introduced in an institutional environment characterised by high levels of corruption and low quality regulation

life cycle schooling and dynamic selection bias models and evidence for five cohorts of american males this paper examines an empirical regularity found in many societies that family influences on the probability of transiting from one grade level to the next diminish at higher levels of education we examine the statistical model used to establish the empirical regularity and the intuitive behavioral interpretation often used to rationalize it we show that the implicit economic model assumes myopia the intuitive interpretive model is identified only by imposing arbitrary distributional assumptions onto the data we produce an alternative choice theoretic model with fewer parameters that rationalizes the same data and is not based on arbitrary distributional assumptions

balancing power and variable renewables three links abstract balancing power is used to quickly restore the supply demand balance in power systems the need for this tends to be increased by the use of variable renewable energy sources vre such as wind and solar power this paper reviews three channels through which vre and balancing systems interact the impact of vre forecast errors on balancing reserve requirements the supply of balancing services by vre generators and the incentives to improve forecasting provided by imbalance charges the paper reviews the literature provides stylized facts from german market data and suggests policy options surprisingly while german wind and solar capacity has tripled since 2008 balancing reserves have been reduced by 15 and costs by 50

a review of balancing costs in italy before and after res introduction abstract the massive introduction of res in electricity markets is recognized to have induced a merit order effect on wholesale prices while day ahead prices are likely to decline as res e production increases the effects on balancing market sessions are more ambiguous taking into account the northern italian zone characterized by a high solar pv and hydro penetration we provide empirical evidence that balancing quantities decreased while costs increased between two samples associated with low 2006 08 and high 2013 15 res levels we estimate balancing costs for different technologies and compare their dynamics across specific hours we find evidence of increasing balancing prices in particular market conditions that we interpret as a signal of strategic use of real time sessions by conventional producers prone to the merit order effect in the day ahead market we compare our results to those obtained in the german market where on the contrary balancing costs have decreased and postulate that the different market designs may explain these results our findings suggest that the italian policy makers should carefully monitor all trading sessions especially those close to real time to avoid the exercise of market power by few operators allowed to guarantee system security and additionally to promptly adopt a capacity market

analysis of the imbalance price scheme in the spanish electricity market a wind power test case this work investigates the interaction between wind power and electricity markets the paper is focused on balancing markets pricing policies the proposal of a new imbalance price scheme is included and conveniently evaluated this proposed scheme tries to minimise the use of ancillary services to compensate for deviations in searching for a more efficient market design the effectiveness of imbalance prices as market signals is also examined and policy recommendations regarding imbalance services are discussed two test cases are included that analyse the participation of a wind power producer in the spanish electricity market using a stochastic optimisation strategy for this purpose the uncertainty of the variables is considered i e wind power production and prediction intraday and imbalance prices test cases were run with real data for 10 months and realistic results are presented along with a hypothetical test case the regulation of the imbalance prices may not be adequate for the spanish electricity market because an error drop is not sufficiently encouraged therefore we suggest the application of a new imbalance price scheme which includes an additional constraint the conclusions of this paper can be assumed to be general policy recommendations

the fallacy of beneficial ignorance a test of hirschman s hiding hand albert o hirschman s principle of the hiding hand stands stronger and more celebrated today than ever the principle states that ignorance is good in planning because if decision makers knew the real costs and difficulties of projects few ventures would ever get started the paper presents the first systematic test of the principle of the hiding hand including a test of whether hirschman s theory may be replicated with more and better data this was found not to be the case first statistical tests reject the principle of the hiding hand at an overwhelmingly high level of significance p 0 0001 in reality the exact opposite happens of what the principle states instead of project success being secured by creative error and beneficial ignorance where higher than estimated costs are outweighed by even higher than estimated benefits the average project is in fact undermined by a double whammy of substantial cost overruns compounded by substantial benefit shortfalls second hirschman was found to have made the error of sampling on the dependent variable undermining the validity of his findings third hirschman s sample of projects on which he built his principle is too small to support his wide conclusions fourth hirschman misrepresented his findings and misled his readers in sum the data do not support hirschman s proposition that ignorance is good in planning ignorance is bad if by bad we mean that ignorance leads to starting projects that should not have been started finally the data also do not support an interpretation of hirschman as an early behavioral economist as proposed by sunstein hirschman was a victim not a student of bias

college entry by blacks since 1970 the role of college costs family background and the returns to education college enrollment of black 18 19 year old high school graduates declined from 1980 through 1984 and then rebounded after 1984 this paper presents data from a time series of cross sections of 18 19 year old youths from 1973 through 1988 to test the role of family background direct college costs local economic conditions and returns to college in driving these trends the evidence suggests that on the one hand increases in direct college costs were driving enrollment rates downward throughout the eighties on the other hand dramatic increases in average parental education for black youths exerted upward pressure on college enrollment by blacks particularly in the latter half of the decade the net effect of these two factors contributed to the pattern of decline and recovery observed during the eighties