financial contracting theory meets the real world an empirical analysis of venture capital contracts we compare the characteristics of real world financial contracts to their counterparts in financial contracting theory we do so by studying the actual contracts between venture capitalists vcs and entrepreneurs the distinguishing characteristic of vc financings is that they allow vcs to separately allocate cash flow rights board rights voting rights liquidation rights and other control rights we describe and measure these rights we then interpret our results in relation to existing financial contracting theories we also describe the interrelation and the evolution across financing rounds of the different rights query 1 query 2

wages experience and seniority in this paper we study the sources of wage growth we identify the contribution to such growth of general sector specific and firm specific human capital our results are interpretable within the context of a model where the returns to human capital may be heterogeneous and where firms may offer different combinations of entry level wages and firm specific human capital development we allow for the possibility that wages are match specific and that workers move jobs as a result of identifying a better match to estimate the average returns to experience sector tenure and firm specific tenure within this context we develop an identification strategy which relies on the use of firm closures our data source is a new and unique administrative data set for germany that includes complete work histories as well as individual characteristics we find positive returns to experience and firm tenure for skilled workers the returns to experience for unskilled workers are small and insignificant after 2 years of experience their returns to sector tenure are also zero however their returns to firm tenure are substantial in this paper we study the growth of wages of young workers in germany knowing the extent and reasons for individual wage growth over the life cycle is important for a number of areas in economics just to mention two examples first it is a key element to understanding and designing active labour market programmes many such programmes offer temporary and often subsidized work opportunities examples are the new deal in the u k and the swedish programmes as well as a number of programmes in germany these programmes are based on the assumption that general skills are sufficiently enhanced while working so as to render the workers employable without a wage subsidy thus the success of these programmes depends on how skills improve on the job for the target population and whether this skill enhancement is transferable across jobs second it is a key to understanding the benefits and costs of job mobility this in turn matters for a number of policy issues including the design of pension policies relating for example to final salary schemes as a result of this widespread interest a large body of empirical research has focused on obtaining estimates for the returns of experience and seniority 1 our study uses a new and unique administrative data set with a number of features that are important for our analysis and allow us to avoid many problems encountered in earlier work in this field in our model wages grow due to learning by doing which may be heterogeneous across individuals moreover since firms offer different career profiles and because we allow for match specific effects on wages investments take the form of searching for the firm with the most desirable learning by doing characteristics career structure 2

does asymmetric information matter in the early insurance market evidence from the auto insurance market in the late 1960s the performance of automobile insurance declined dramatically in japan in spite of rapid growth in the diffusion rate and the premiums were sharply raised several times in order to improve the situation this observation indicates the possible presence of adverse selection death spiral and provides an ideal situation for assessing informational asymmetry using bodily injury liability bil insurance data from 46 japanese prefectures over the period 1966 to 1975 this article tests two hypotheses of adverse selection i high risk drivers were more likely to join the bil insurance market and ii sharp premium increases drove low risk policyholders away various empirical analyses show that there is little evidence for either type of adverse selection we also test whether a risk misperception hypothesis can explain our results and find some evidence that the population density have a significantly positive impact on the demand for bil insurance an earlier version of this artic

the role of income and health risk in the choice of health insurance evidence from australia abstract health insurance choice is investigated using individual data from australia where all people faced a common limited set of possible health insurance policies the data cover two separate regimes one in which insurance choice was for a more generous level of coverage and one in which the choice was a more dramatic one between insurance and no insurance coverage in determining health insurance choice the results indicate a major role for income a major role for premium notably in the first regime and a minor role for observed factors related to health risk aside from age and sex

hospital profits the effects of reimbursement policies this paper provides a theoretical and empirical analysis of the effect of cost based reimbursement cbr on hospital costs and charges it takes issue with previous analyses which have treated cbr as paying economic costs plus a mark up and have concluded that the mark up is too small to significantly distort hospital decision making the basic thesis here is that if reimbursement is based on costs accounting costs become a price to cost paying patients and will be optimized to maximize revenue a hospital serving both cost and charge paying private patients can set two price schedules accounting profits ratio of charges to costs are not a measure of economic profit but of relative prices to these two groups of patients in the absence of constraints from regulation or patient co payment the optimum level of accounting costs would be infinite in practice the medicare reimbursement formula links allowable costs to charges received from charge paying patients this formula creates incentives for the hospital to raise charges above the single price profit maximizing monopoly level this inflationary effect of the medicare formula does not presuppose that medicare pays less than full cost the empirical analysis of hospital laboratory costs and charges generally supports the predictions for other departments the conclusions are consistent but more tentative because of data limitations overall evidence suggests minimal cross subsidy between cost and charge paying patients comparisons of cost and charge levels in for profit voluntary non profit and government hospitals are presented but it is emphasized that inferences about relative efficiency and profitability cannot be drawn from accounting data given the incentives created by cbr

industrial specialization and the returns to labor comparative advantage and the division of labor make geographic concentration of production within a nation profitable and cause many cities to be specialized in one or a few main industries specialized cities however suffer greater unemployment risk the theory of compensating wage differentials predicts that individuals living in more specialized cities will be compensated in the form of higher wage rates we study the effects of specialization on wages and unemployment in the united states we find evidence of compensating wage differentials that firms choose to locate in more specialized higher wage cities is indirect evidence of the gains to specialization

equilibrium in competitive insurance markets with ex ante adverse selection and ex post moral hazard abstract existence of pure strategy equilibria is studied in health insurance markets that exhibit both ex ante adverse selection of the rothschild stiglitz wilson type and ex post hidden information moral hazard it is found that ex post moral hazard has two offsetting effects on the existence of equilibrium and that in general it is difficult to say whether an equilibrium is more or less likely to exist numerical simulations and an analytical example confirm that moral hazard may increase the likelihood of equilibrium these results are interpreted as evidence that health maintenance organization hmo markets could be less likely to exhibit stable equilibria than are fee for service insurance markets

willingness to pay for parallel private health insurance evidence from a laboratory experiment debate over the effects of public versus private health care finance persists in both academic and policy circles this paper presents the results of a revealed preference laboratory experiment that tests how characteristics of the public health system affect a subject s willingness to pay wtp for parallel private health insurance consistent with the theoretical predictions of cuff et al 2010 subjects average wtp is lower and the size of the private insurance sector smaller when the public system allocates health care hurley is also affiliated with the centre for health economics and policy analysis mcmaster university cameron is also affiliated with the centre for health economics and policy analysis mcmaster university we acknowledge helpful comments from two anonymous referees andrew muller michel grignon and other members of the new and emerging team project on experimental methods applied to health economics at mcmaster university in particular we would like to acknowledge dale marsden and aleksandra gajic for research support and stuart mestelman for valuable input on the paper especially section 5 we would also like to thank conference participants from the 2009 canadian economics association meetings and seminar participants from university of innsbruck social science research centre berlin university of regensburg and york university for helpful comments this research was funded by the canadian institutes of health research grant no 76670 the views expressed are those of the authors alone email nbuckley yorku ca

city structure and the location of young college graduates abstract this paper investigates an equilibrium search model with on the job search endogenous wage formation and land allocation search frictions are increasing with the distance to a city s central business district we find a positive relationship between wage and distance to jobs this can be explained by the fact that the number of acceptable outside offers decreases with the wage we are able to relate our results to some empirically relevant aspects on gentrification

effects of the tax treatment of fringe benefits on labor market segmentation current federal tax law requires that all workers having the same experience with a firm must receive essentially the same package of fringe benefits in order for those benefits to qualify for preferential tax treatment the authors argue that this nondiscriminatory provision of fringe benefits promotes labor market segmentation by inducing workers to sort themselves across the economy according to their demand for fringe benefits several empirical tests using 1968 78 data confirm the existence of sorting and suggest that labor market segmentation increased over time as workers responded to changes in incomes and marginal tax rates

a microeconometric model of the demand for health care and health insurance in australia this paper develops a model for interdependent demand for health insurance and health care under uncertainty to throw light on the issue of insurance induced distortions in the demand for health care services the model is used to empirically analyse the determinants of the choice of health insurance type and seven types of health care services using micro level data from the 1977 78 australian health survey econometric implementation of the model involves simultaneously issues of discreteness of choice selectivity and stochastic dependence between health insurance and utilization health status appears to be more important in determining health care service use than health insurance choice while income appears to be more important in determining health insurance choice than in determining health care service use for a broad range of health care services both moral hazard and self selection are found to be important determinants of utilization of health care services

price elasticity and adverse selection in the demand for supplementary health insurance probit regression estimates show the effects of the price of insurance anticipated medical expenditures and other factors on reported decisions about purchasing hypothetically offered supplementary insurance policies the demand estimates can characterize how much supplemental insurance would be purchased under different tax policies affecting health insurance purchases although eliminating the current tax subsidy to insurance is shown to decrease demand the results indicate a substantial demand for supplementary insurance even in the absence of present tax incentives however our results on adverse selection raise concerns about the potential stability of supplemental insurance markets

the wealth effects of premium subsidies on moral hazard in insurance markets abstract insurance premium subsidies are present in many insurance markets the swiss government for example paid out chf 4 26 billion or 0 72 of the swiss gdp for health insurance premium subsidies in 2011 analyses of premium subsidies have often highlighted that the increased insurance demand due to premium subsidies increases the effects of moral hazard in the market other consequences of premium subsidies however have mostly been neglected by the literature we show in our theoretical model that the wealth effects of premium subsidies decrease the sensitivity of the insured towards the monetary consequences of losses this leads to less prevention efforts by the insured and thus increases moral hazard in the market the effect is preserved if the subsidy is financed through proportional taxation using two alternative models we show that providing state dependent subsidies can either increase or reverse this effect depending on which state subsidies are paid we argue that whether demand effects or wealth effects of premium subsidies will dominate the insured s behavior depends on the market structure

regional disadvantage employee non compete agreements and brain drain abstract a growing body of research has documented the local impact of employee non compete agreements but their effect on interstate migration patterns remains unexplored exploiting an inadvertent policy reversal in michigan as a natural experiment we show that non compete agreements are responsible for a brain drain of knowledge workers out of states that enforce such contracts to states where they are not enforceable importantly this effect is felt most strongly on the margin of workers who are more collaborative and whose work is more impactful

immigrant links to the home country empirical implications for u s bilateral trade flows immigrants ties to their home countries can play a key role in fostering bilateral trade linkages immigrant ties include knowledge of home country markets language preferences and business contacts that have the potential to decrease trading transaction costs empirical results for the united states suggest that immigrant links have historically been important in increasing bilateral trade flows with immigrants home countries copyright 1994 by mit press

does city structure affect job search and welfare we develop a model in which workers search efficiency is negatively affected by access to jobs workers location in a city is endogenous and reflects a trade off between commuting costs and the surplus associated with search different configurations emerge in equilibrium notably the unemployed workers may reside far away segregated city or close to jobs integrated city we prove that there exists a unique and stable market equilibrium in which both land and labor markets are solved for simultaneously we find that despite inefficient search in the segregated city equilibrium the welfare difference between the two equilibria is not so large due to differences in commuting costs we also show how a social planner can manipulate wages by subsidizing taxing the transport costs and can accordingly restore the efficiency

compensating wage differentials and the duration of wage loss a formal model of occupational choice is developed that shows the extent to which the compensation for increased duration exceeds that for increased risk using the panel study of income dynamics linked to industry data on injuries and unemployment we find nearly all the compensating wage differential for losses due to workplace injuries is for increases in the duration of loss and similarly for losses due to cyclical unemployment the compensating differentials for risk of injury are larger for union than for nonunion workers while those for cyclical unemployment are smaller for union workers

how local are labor markets evidence from a spatial job search model this paper models the optimal search strategies of the unemployed across space to characterize local labor markets our methodology allows for linkages between numerous areas while preserving tractability we estimate that labor markets are quite local as the attractiveness of jobs to applicants sharply decays with distance also workers are discouraged from searching in areas with strong job competition from other jobseekers however as labor markets overlap a local stimulus or transport improvements have modest effects on local outcomes because ripple effects in job applications dilute their impact across a series of overlapping markets

the firm strikes back non compete agreements and the mobility of technical professionals this study explores how firms shape labor markets and career paths using employee non compete agreements the sociology of work has overlooked non competes but data indicate that nearly half of technical professionals in the united states are asked to sign such employment contracts fearing loss of investments in talent and trade secrets firms use non competes to strike back against technical professionals increased mobility following the decline of internal labor markets in depth interviews with 52 randomly sampled patent holders in a single industry coupled with a survey of 1 029 engineers across a variety of industries reveal that ex employees subject to non competes are more likely to take career detours that is they involuntarily leave their technical field to avoid a potential lawsuit moreover firms strategically manage the process of getting workers to sign such contracts waiting for workers bargaining position to weaken these findings inform our understanding of the social organizati

health insurance and the demand for medical care evidence from a randomized experiment we estimate how cost sharing the portion of the bill the patient pays affects the demand for medical services the data come from a randomized experiment a catastrophic insurance plan reduces expenditures 31 percent relative to zero out of pocket price the price elasticity is approximately 0 2 we reject the hypothesis that less favorable coverage of outpatient services increases total expenditure for example by deterring preventive care or inducing hospitalization

the welfare effects of restricted hospital choice in the us medical care market summary managed care health insurers in the usa restrict their enrollees choice of hospitals to within specific networks this paper considers the implications of these restrictions a three step econometric model is used to predict consumer preferences over health plans conditional on the hospitals they offer the results indicate that consumers place a positive and significant weight on their expected utility from the hospital network when choosing plans a welfare analysis assuming fixed prices implies that restricting consumers choice of hospitals leads to a loss to society of approximately 1 billion per year across the 43 us markets considered this figure may be outweighed by the price reductions generated by the restriction copyright 2006 john wiley sons ltd

adverse selection moral hazard and wealth effects in the medigap insurance market using data from a longitudinal study of the recently retired we attempt to separate the moral hazard effect of medicare supplementary medigap insurance on health care expenditures from the adverse selection effect of poor health on medigap coverage we find evidence of adverse selection but its magnitude is unlikely to create serious efficiency problems taking adverse selection into account reduces the estimate of the moral hazard effect in addition we find a strong positive wealth effect on the demand for supplementary insurance

non compete clauses employee effort and spin off entrepreneurship a laboratory experiment abstract we experimentally test the effect of enforceable non compete clauses on working effort and spin off entrepreneurship an employee invests effort in the probability of a profitable innovation after a successful innovation the employee may want to start her own spin off firm and compete with her prior employer in the baseline setup without non compete clause spin offs result from failed negotiation about employee compensation even though they reduce the joint payoffs of both parties in two treatments with non compete clause the employer can prevent successful innovators from leaving the firm we find no significantly negative effect of non compete clauses on employee effort even if compensation is low

optimal non linear health insurance abstract most theoretical and empirical work on efficient health insurance has been based on models with linear insurance schedules a constant co insurance parameter in this paper dynamic optimization techniques are used to analyse the properties of optimal non linear insurance schedules in a model similar to one originally considered by spence and zeckhauser american economic review 1971 61 380 387 and reminiscent of those that have been used in the literature on optimal income taxation the results of a preliminary numerical example suggest that the welfare losses from the implicit subsidy to employer financed health insurance under us tax law may be a good deal smaller than previously estimated using linear models

efficiency in employment based health insurance the potential for supra marginal cost pricing currently the majority if privately insured individuals in the u s are insured through their employers this has significant implications for competition and the ability qf a competitive insurance industry to assure marginal cost pricing the central barrier to competition arises when employers restrict their employees ability to select among insurance carriers several models 4 insurer proft maximization are explored which demonstrate that supra marginal cost pricing is likely to persist euen when the insurance market appears cornpetitiue

publicly provided disaster insurance for health and the control of moral hazard abstract this paper looks at the moral hazard due to health insurance offering a subsidy to the consumption of health care at the margin we show how the institution of publicly provided disaster insurance yields a welfare improvement this result is obtained since public insurance encourages insured individuals to reduce the amount of private insurance that they buy and hence diminishes the moral hazard problem

labor market effects of employer provided health insurance i introduction increasing health insurance coverage is arguably an important policy goal the congressional budget office 2003 estimates that in 1998 20 30 million americans had no health insurance for the entire year approximately 40 million were uninsured at a specific point in time in the year and nearly 60 million were without coverage some time during the year most individuals who have health insurance in the united states obtain it through their employer in 1999 65 8 of nonelderly americans had employer provided insurance also called group insurance or employer sponsored insurance either through their own employer or through the employer of another household member see gruber 2001 employer provided insurance plans generally have lower premiums and offer more benefits than individual insurance plans health insurance providers can offer cheaper and better plans to company employees for at least two reasons first the average administrative cost of such plans is lower than individual plans second employment based plans are typically subject to less adverse selection than individual plans particularly so for large employers furthermore the tax subsidy afforded employment based health insurance renders the effective consumer price substantially lower than the cost see pauly 1986 and gruber 2001 together these various factors give a strong incentive for employers to offer and employees to accept coverage as part of their employment contract as employer provided insurance is by far the most prevalent form of coverage in the private sector policy makers look for further expansion of this base as a way to insure the uninsured while avoiding direct public financing as a way to increase employer based health insurance coverage some states either have or are considering government mandates that require employers to provide insurance to certain types of workers 1 the state of hawaii requires private sector employers to offer health insurance to all workers who work for more than 20 h a week and requires these workers to have insurance the state of california is currently considering a similar mandate there is a considerable interest from policy makers on the effects of such mandates on labor market outcomes in this study we report on an experiment that was designed to provide some insights about possible effects of alternative health insurance regulations on the competitive labor market with a particular focus on mandates since we only considered a competitive market setting with complete contracts and no wage rigidities our results may not be directly applicable to all labor market situations 2 however the study provides useful insights about the interaction of health insurance benefit provision wages and employment structure for labor markets where the competitive wage setting and the complete contracts assumptions are reasonable with these limitations in mind our results can be also generalized to other types of employer provided fringe benefits such as paid vacations or pension plans as any government intervention health insurance regulation may affect the labor market theory predicts that in perfectly competitive labor markets health insurance creates no distortionary effects on the labor market equilibrium as long as the coverage is not mandated and there are no wage rigidities 3 all workers who value insurance above its cost of provision are offered insurance and accept it the wages are adjusted downward see rosen 1986 and gruber 2000 summers 1989 used a simple supply and demand analysis to show that the effect of increases in premiums on equilibrium labor hours and wage depends both on the elasticity of labor demand and labor supply and on how fully workers value changes in the cost of health insurance if the demand or the supply of labor is completely inelastic or if workers fully value the insurance then an increase in the premium would result in an equal decrease shift in wages

private health insurance and utilization of health services in chile this paper analyses the choice of private health insurance in chile and how this relates to the utilization of health services the results show the importance of some demographics on the insurance decision particularly age gender and marital status socio economic factors such as education income employment status and zone of residence all influence the probability of purchasing private insurance the relevance of these determinants is confirmed using a simulation analysis with four representative decision makers this simulation also provides evidence of a positive selection into private insurance although this would be driven by the different criteria used to set premiums under private and public insurance schemes the potential linkage between utilization of health services and private health insurance is examined using a simultaneous two equation framework two measures of utilization are estimated outpatient health services and length of stay in hospital a number of explanatory variables s

on the job search mismatch and efficiency this paper characterizes the equilibrium for a large class of search models with two sided heterogeneity and on the job search besides the well known congestion externalities we show that on the job search in combination with monopsonistic wage setting without commitment creates a business stealing externality in the absence of congestion effects this leads to excessive vacancy creation under wage setting with commitment this externality is absent because when posting a wage firms take into account the expected productivity of future workers in their current jobs if firms are able to make and respond to counteroffers then they will not have to pay no quit premia and this also leads to excessive vacancy creation

spatial mismatch search effort and urban spatial structure abstract the aim of this paper is to provide a new mechanism for the spatial mismatch hypothesis spatial mismatch can here be the result of optimizing behavior on the part of the labor market participants in particular the unemployed can choose low amounts of search and long term unemployment if they reside far away from jobs they choose voluntary not to relocate close to jobs because the short run gains low land rent and large housing consumption are big enough compared to the long run gains of residing near jobs higher probability of finding a job

income tax deductions for losses as insurance the federal income tax allows deductions for some categories of personal losses notably for casualty losses such as destruction of one s home or car and medical expenses above a threshold the latter even with lower marginal rates and further restrictions brought about by the 1986 tax reform involves more than a 3 billion annual revenue loss office of management and budget 1990 1 deductions like these act as partial insurance individuals receive a tax benefit equal to their marginal rate multiplied by the magnitude of their loss however this form of insurance is unnecessary when private insurance is available moreover as will be emphasized here these deductions have a perverse effect because they are allowed only for the uninsured portion of losses this induces individuals to be less protected against risk in the aggregate than if the implicit insurance provided by the tax system were unavailable if the tax rate is sufficiently high individuals would forgo insurance coverage altogether 2 it will be demonstrated that a tax system with no deductions for personal losses pareto dominates the current system these conclusions are demonstrated in section i using a simple model in which risk averse individuals may purchase actuarially fair insurance against loss and individual behavior does not affect the risk of loss no moral hazard section ii considers the applicability of the results when one allows for moral hazard administrative costs and other imperfections it also discusses the applicability of traditional notions of tax equity

stability in the federal employees health benefits program recently the federal employees health benefits program has been the subject of much discussion in washington as a result of the rather large premium increases in 1982 and 1983 the delayed open season of 1981 and the benefit reductions enrollees responded in may 1982 to the changes a record number switched plans it appears that enrollees were simply responding to the new premiums and benefits in this paper we describe the economic incentives faced by enrollees in the fehbp we find that due to the strong incentives for enrollees to leave certain high cost plans continued instability should be expected in fact the disparity between expected benefits and premium is so great for some plans e g the blue cross high option that their survival is questionable this lack of stability raises important questions about the viability of some pro competition proposals involving multiple insurer systems

the dynamics of u s internal migration in this paper we have theoretically derived a net migration equation and estimated it using time series data for 51 u s regions over the period 1971 1988 the results indicate that the dynamic response of net migration is stable and is significantly related to stock equilibrium changes induced by amenity differentials relative employment opportunities relative real wages and industry composition excerpt

the effects of rate regulation on demand for supplemental health insurance many developed countries have a market for private health insurance that supplements publicly funded universal coverage government regulation of the supplemental market including the extent to which insurers are permitted to adjust premiums based on individual characteristics such as age sex and health status varies across countries oecd 2004 proponents of rate regulation argue that the resulting crosssubsidization from low to high risks is necessary to maintain the affordability of coverage for high risks economic theory however raises the concern that the inability to adjust premiums to reflect individual risk could create adverse selection by driving low risks from the market michael rothschild and joseph stiglitz 1976 little empirical evidence exists to determine the optimal role of rate regulation in private supplemental insurance markets existing studies of the consequences of rating restrictions focus on markets for primary health insurance and find that these laws have had surprisingly little effect on overall rates of coverage simon 2004 in this paper we study the effects of rate regulation in supplemental health insurance markets by examining the market for individually purchased coverage that supplements medicare among the elderly in the united states while the publicly financed medicare program provides nearly universal coverage of a standard set of benefits for those 65 and over beneficiaries are exposed to significant financial risk due to the cost sharing associated with covered services and a lack of coverage for some important services the vast majority of medicare beneficiaries obtain supplemental coverage through a complex system of publicly and privately funded sources state medicaid programs provide publicly financed supplemental coverage for low income and disabled beneficiaries and employers provide highly subsidized retiree supplemental health insurance for other beneficiaries but the remainder rely on highly regulated private insurance markets medicare s part c managed care plans are a voluntary private replacement for traditional medicare while medigap coverage is a private policy bought by about 30 percent of medicare beneficiaries that provides only supplemental benefits franklin j eppig and george s chulis 1997 our study examines the effects of regulations limiting the information on individual characteristics insurers can use in setting premiums for medigap coverage

tax policy and the demand for health insurance estimates of the price and income elasticities of demand for health insurance are derived from econometric estimates of the parameters of a discrete choice model of health insurance demand using data from a survey of plan choices among a sample of federal government employees the estimated income elasticity 0 01 is similar to most previous estimates the estimated price elasticity 0 16 is in absolute value much less than the earlier previous estimates and somewhat less than the more recent previous estimates possible causes of these differences in price elasticity estimates are discussed

a penny for your quotes patent citations and the value of innovations the use ofpatents in economic research has been seriously hindered by the fact that patents vary enormously in their importance or value and hence simple patent counts cannot be informative about innovative output the purpose of this article is to put forward patent counts weighted by citations as indicators of the value of innovations thereby overcoming the limitations of simple counts the empirical analysis of a particular innovation computed tomography scanners indeed shows a close association between citation based patent indices and independent measures of the social value of innovations in that field moreover the weighting scheme appears to be nonlinear increasing in the number of citations implying that the informational content of citations rises at the margin as in previous studies simple patent counts are found to be highly correlated with contemporaneous rd however here the association is within afield over time rather than cross sectional

location search costs and youth unemployment experimental evidence from transport subsidies do high search costs affect the labour market outcomes of jobseekers living far away from jobs i randomly assign transport subsidies to unemployed youth in urban ethiopia treated respondents increase job search intensity and are more likely to find good permanent jobs subsidies also induce a short term reduction in temporary work i use a high frequency phone call survey to track the trajectory of search behaviour over time to show that the subsidies significantly increased job search intensity and the use of formal search methods the evidence suggests that cash constraints cause young people to give up looking for good jobs too early

marriage and the city search frictions and sorting of singles this paper develops and tests a model where cities play an important role as marriage markets the idea is simple cities are dense areas where singles can meet more potential partners than in rural areas to enjoy those benefits they are willing to pay a premium in terms of higher housing prices once married the benefits from meeting more potential partners vanish and married couples move out of the city attractive singles benefit most from a dense market and are therefore more likely to move to the city those predictions are tested and confirmed with a unique danish data set

the income tax and nonwage compensation d ramatic changes in the division of labor compensation between wage and nonwage payments have occurred since world war ii voluntary employer contributions to private pension and welfare funds have risen from 1 2 of wage and salary compensation in 1947 to 8 3 in 1979 with half the increase taking place since 1969 see table 1 major changes in the composition of the fringe benefit package have also taken place during this period employer contributions to group health insurance plans have risen from 24 of total fringe benefits in 1947 to 40 o in 1979 if this growth continues group health insurance will replace pension and profit sharing plans as the largest fringe benefit expenditure by employers these trends in the compensation mix have long been noted by researchers and various factors have been offered as explanations including the favorable tax treatment of fringe benefits demographic changes such as increased life expectancy and unionization rice 1966 ture 1976 mabry 1973 freeman 1978 however most explanations have not been subjected to rigorous empirical testing and the few results that have been published are both questionable and dated for example rice 1966 estimated that changes in the tax rate structure had little influence on the relative increase in fringe benefits from world war ii to 1963 more recent studies schiller and weiss 1979 1980 have examined a specific fringe benefit the private pension plan for its impact on turnover and its role as an equalizing difference but these studies have not analyzed the determinants of the compensation mix this paper discusses the theoretical determinants of the division of labor compensation between fringe benefits and cash income and empirically estimates their importance it concentrates on the impact of taxation on the compensation mix for several reasons first the assumption that rising tax rates encourage individuals to substitute fringe benefits for cash income underlies estimates of the welfare cost of tax preferences browning 1979 second proposals to fully tax employee fringe benefits under a comprehensive9 income tax have surfaced in recent years nolan 1977 clotfelter 1979 finally current federal tax policy is calling for large tax rate reductions to increase supply incentives unlike the determinants of the compensation mix that change slowly over time such as life expectancy tax rate changes can occur rapidly through legislative action reducing tax rates might enlarge the tax base by increasing the fraction of labor income received as taxable cash wages and salaries section ii outlines the tax treatment of various forms of labor compensation and in section iii other factors thought to influence the choice between wage and nonwage compensation are discussed empirical analyses of the compensation mix are presented in section iv a brief summary and implications of the major findings for the future growth of fringe benefits follow in section v

the determinants of the demand for private health insurance under medicare since the introduction of medicare in 1984 the proportion of the australian population with private health insurance has declined considerably insurance for health care consumption is compulsory for the public health sector but optional for the private health sector in this paper we explore a number of important issues in the demand for private health insurance in australia the socio economic variables which influence demand are examined using a binary logit model a number of simulations are performed to highlight the influence and relative importance of various characteristics such as age income health status and geographical location on demand a number of important policy issues in the private health insurance market are highlighted first evidence is provided of adverse selection in the private health insurance pool second the notion of the wealthy uninsured is refuted and finally it is confirmed that there are significant interstate differences in the demand for private health insurance

incentive and selection effects of medigap insurance on inpatient care the medicare program which provides insurance coverage to the elderly in the united states does not protect them fully against high out of pocket costs for this reason private supplementary insurance named medigap has been available to cover medicare gaps this paper studies how medigap affects the utilization of inpatient care separating the incentive and selection effects of supplementary insurance for this purpose we use two alternative estimation methods a standard recursive bivariate probit and a discrete multivariate finite mixture model we find that estimated incentive effects are modest and quite similar across models there seems to be very significant selection with the presence of both adversely and advantageously selected individuals stemming from the multidimensional nature of residual heterogeneity

willingness to pay for lipid lowering a health production function approach this paper reports the results of an experiment of measuring willingness to pay wtp for lipid lowering wtp is derived from a theoretical model of health risk reductions using a health production function approach a survey of about 700 persons randomized into a lipid lowering trial in sweden is used to estimate wtp the willingness to give up time wtgt to take part in a lipid lowering programme is also measured in the survey to assess its relationship to wtp the response rates on the wtp and wtgt qusetions are 94 and 96 respectively and the patients are on average perpared to pay about skr 350 per month or devote about 5 h of leisure time per week to get normal lipid levels the correlation of wtp and wtgt is 0 45 and highly significant the results of regression of wtp and wtgt are in accordance with the theoretical predictions with a higher valuation for a greater perceived difference in health status with and without treatment the income elasticity is also positive as expected

self selection and internal migration in the united states abstract within the conceptual framework of the roy model this paper provides an empirical analysis of internal migration flows using data from the national longitudinal survey of youth the theoretical approach highlights regional differences in the returns to skills regions that pay higher returns to skills attract more skilled workers than regions that pay lower returns our empirical results suggest that interstate differences in the returns to skills are a major determinant of both the size and skill composition of internal migration flows persons whose skills are most mismatched with the reward structure offered by their current state of residence are the persons most likely to leave that state and these persons tend to relocate in states which offer higher rewards for their particular skills

an economic model of the brain drain asymmetric information in the labor market is discussed as a major cause of the exodus of foreign trained students from developing countries the authors suggest that employers in the country in which the students have been trained have a more accurate judgment of the true productivity of students than have employers in the students native country an illustrative numerical model is developed and its implications are analyzed annotation

wage differentials employer size and unemployment the unique equilibrium solution to a game in which a continuum of individual employers choose permanent wage offers and a continuum of workers search by sequentially sampling from the set of offers is characterized wage dispersion is a robust outcome provided that workers search while employed as well as when unemployed the unique nondegenerate equilibrium distribution of wage offers is constructed for three cases 1 identical workers and employers 2 identical employers and an atomless distribution of worker supply prices and 3 identical workers and an atomless distribution of job productivities copyright 1998 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

the economics of medicare equilibrium within the medical community this paper partially fills a theoretical void by developing an integrated model of the various branches of the medical community a consistent and general framework is adopted to analyze equilibrium within the market for medical services under a stylized form of socialized medicine without invoking demand shifting the optimization problem faced by each agent is specified and the equilibrium is defined the effect of various parameter changes on the market for medical services is analyzed the predictions are not contradicted by the stylized facts

substitution between wage and nonwage benefits you gotta be kidding ollie you re just robbing yourself schuylkill mutual offers a terrific deal on keogh and we could plug you in in fact we advise plugging you in on the corporate end so not a nickel comes out of your personal pocket it comes out of the corporate pocket and there s that much less for uncle to tax these poor saps carrying their own premiums with no company input are living in the dark ages there s nothing shady about rigging it this way we re just using the laws the government has put there they want people to take advantage it all works to up the gross national product you know what i mean by keogh don t you you re looking kind of blank john updike p 296

the role of relative performance in inter firm mobility of inventors abstract prior research has emphasized the influence of inter firm mobility on knowledge flows and innovation yet we have an incomplete picture of the antecedents of inventor mobility building on theoretical traditions related to decision making based on limited asymmetric bounded information and economic and other incentives our paper suggests that after controlling for individual performance and other variables previously shown to affect inter organizational mobility an inventor s performance relative to his co patenting group alters his likelihood of mobility our analysis of 2648 inventors in the pharmaceutical industry shows that for those performing above their reference group of past and current co inventors in patenting an increase in relative performance decreases the likelihood of mobility and for those performing below the reference group a decrease in relative performance decreases the likelihood of mobility we also find that when inventors have more external scientific collaborations their likelihood of mobility increases and this variable moderates the relationship between the performance gap and mobility but only for those performing above their peers