public investment and social risk sharing abstract how the government uses market rates of return to discount risky public projects is intrinsic to the efficient allocation of capital and the choice of public investment policy this paper shows that social discount rates for risk can be higher than lower than or equal to private rates previous analyses which argue for one sided rules where social discount rates are always lower or equal to private rates are shown to be inappropriate in general the paper shows in a general model that the difference between the social value of a public project and its market value is determined by the social insurance value that the project has from improving risk sharing relative to the market depending on the project and degree of market imperfection this term can be positive negative or zero explaining the different possibilities for the social evaluation of risk

maximizing welfare in customs unions the case of agricultural price policy within the eec a basic idea of economic integration is to increase welfare customs union theory consequently has concentrated upon welfare effects of such integrated economies krauss collier empirical studies have tried to measure potential gains balassa however there is another problem to be considered once a customs union is formed policy analysis becomes more complex than with single countries various interests of autonomous countries and the particular conditions of supranational integration must be taken into account in selecting policies which maximize welfare within a customs union the welfare maximization problem in customs unions is particularly relevant for agricultural price policy within the european economic community eec this policy must accommodate a complicated system of integrated markets and common financial responsibilities moreover an essential part of this policy involves common decisions on prices for most agricultural products within the eec differing national interests of eec countries make it difficult to determine which agricultural price policy will be optimal from a welfare point of view divergencies among eec countries since the introduction of monetary compensatory amounts mca have resulted in failure to establish common eec agricultural prices the purpose of this paper is to analyze formally the meaning of a welfare maximizing agricultural price policy within the eec the procedure is to formulate explicit welfare functions for eec agricultural markets and to maximize them with respect to relevant price variables with integrated economies we must distinguish between national welfare functions for eec countries and a supranational welfare function for the eec as a whole then the relevant optimum conditions will reveal an optimal agricultural price policy welfare functions

some neglected social costs of government spending in farm programs economic welfare analyses of farm programs typically assume that the direct social opportunity cost of subsidy payments is one dollar per dollar of government spending recent literature suggests that the marginal opportunity cost of a dollar of u s federal government spending is more likely to be in the range of 1 20 to 1 50 this implies that the net social costs of farm programs that involve government spending are significantly greater than the typical estimates in addition the normative efficiency ranking of alternative policies is sensitive to the marginal opportunity cost of government spending

oligopolistic behavior by public agencies in international trade the world wheat market a model of the world wheat market is presented which treats public policies as endogenous the oligopolistic nature of international wheat trade is captured by assuming policy makers form conjectures on the slope of the excess demand function they face and use that information to determine domestic and trade policies the policies reflect differing influences of political interest groups a u s crop shortfall scenario illustrates the different results with endogenous policies compared to the traditional model

a household model for work absence the economic incentives of work absence are empirically studied using a panel of swedish blue collar workers both men and women that either are married or living with a spouse as married a model for the daily absence decision is derived from standard economic utility theory an estimable form for the annual number of absence days is obtained by considering the data generating process in some detail the model is estimated using the first two moments with a generalized method of moment estimator the panel structure of the data is explicitly considered and a positive dependence between the number of days absent in the two time periods is found for females a 1 increase in the cost will lead to a decrease in the mean number of days absent by 1 8 and 2 7 for females and males respectively

asymmetric information in the credit market and discount rates for public investment abstract with asymmetric information in the credit market the optimal discount rate for public investment differs from the market interest rate this paper obtains the optimal discount rate for the two state case where returns on private projects can take only two values depending on the magnitudes of collateral costs screening through collateral requirements may or may not occur it is shown that the optimal discount rate is higher than the market interest rate in either case

unionization and absenteeism until recently any labour economist doing empirical work on unionization was concerned almost exclusively with the effect of unionization on wages but beginning with freeman s 1976 analysis of the rich institutional structure of unions economists have been considering the role of unions in for example increasing productivity lowering quit rates enhancing fringe benefits reducing income inequality improving working conditions and affecting a variety of other attributes at the workplace 1 to date however no study has directly addressed a question that appears ripe for empirical analysis does unionization affect absenteeism this paper presents results from a study designed to answer that question the first section presents a simple model of absenteeism the second section discusses the five mechanisms through which unionization influences absenteeism the third section describes the data and variable selection results from logit regressions are presented in the fourth section and the paper cl

economic theory and farm politics what can economics offer in the explanation of politics the first accomplishment is to reduce the subject to a maximization problem analogous to others encountered in economic theory a second accomplishment is to make this problem interesting to make it really illuminating about politics both steps are difficult and the accomplishments have been only partial viewing politics as maximization may seem unreasonably austere and narrow but it is what distinguishes the contribution of economics from that of political scientists or more general social observers empirical work by economists on farm politics typically brings in these broader concerns but this paper attempts instead to justify the narrower approach and to explore its implications its organization is first to spell out details of the contribution of economic theory to explaining politics second to review work on agricultural policies in relation to this theory and finally to discuss implications for positive versus normative economics in policy analysis

dynamic implications of absence behaviour this paper analyses the absence behaviour of workers in the context of a two period model the theoretical results that emerge highlight the potential benefits of analysing absenteeism within a multi time period model as opposed to a single time period model which has generally been adopted by the theoretical models of absenteeism to date workers are employed under a two period contract which is characterized by an experience rated sick pay scheme the theoretical results of the model indicate that if a worker faces such a sick pay scheme the theoretical results of the model indicate that if a worker faces such a sick pay scheme then the probability of absence in the current period is reduced the empirical analysis explores the absence rates observed from a set of workers who face an experience rated sick pay scheme the empirical results present some support in favour of the predictions which arise from the theoretical model

how much does absenteeism cost this paper presents evidence on the output loss resulting from absenteeism hedonic wage equations are estimated over two different data sets the 1972 1973 quality of employment survey and the pooled may 1973 1975 current population survey to calculate the cost in terms of reduced output and increased labor costs per payroll hour also a manufacturing production function is estimated to directly compute the productivity loss the results indicate that the effect of absenteeism on output is quite small a 10 percentage point increase in the absence rate is associated with at most a 2 1 percent decrease in the wage

women and absenteeism health or economics full time workers in the united states lost 3 5 percent of scheduled work time due to unscheduled work absences in 1978 nearly 7 out of 100 workers experience at least one spell of absence a week however u s absentee rates have remained fairly constant over the past several years and are generally well below the rates of western europe for example west germany lost 11 percent of scheduled work time to unscheduled work absences holland lost 10 percent and italy lost 15 percent in 1972 73 part of the higher absentee rates in western europe is thought to be caused by the high prevalence of sick leave availability in these countries work loss from unscheduled absences is substantially higher among female workers than among male workers in the united states in may 1978 women lost 4 3 percent of scheduled work time compared to 3 1 percent for men absence incidence rates are also higher for women 8 6 percent of women workers experience a spell of absence during a typical work week compared to 5 4 percent of men workers the large majority of unscheduled work absences are due to illness and injury the average female worker lost 5 4 days from work for health reasons compared to 4 7 days for the average male worker in 1979 there have been several recent research efforts on the causes and consequences of worker absenteeism steve allen 1981 found evidence that observed differences in absentee rates between the sexes could be accounted for by differences in marginal earnings and the flexibility of the work schedule my 1978 study found that women generally lost fewer days from work than men for most common illnesses there has been little research to date on gender differences in work loss due to illness that takes into account differences in the occupational distribution of workers and differences in marginal earnings as well as variations in health status this paper reports on an empirical investigation of the determinants of gender differences in illness related absentee rates in this investigation labor market characteristics such as differences in earnings and occupational mix between men and women differences in health status and the impact of family are analyzed using a regression framework

institutional change in the common agricultural policy of the european community the common agricultural policy cap of the european community ec is a complex institutional structure with major effects on world agriculture this study analyzes the cap from a public choice perspective as a case of induced institutional innovation the demand for change is analyzed as a function of a newly enlarged community time consuming decisions unequal distribution of net benefits increasing budget expenditures and rising pressures to renationalize farm subsidies drive the demand for change alternative institutional arrangements respond to these demands which reflect preferences for fairness and equity as well as improved efficiency in the cap

on the marginal welfare cost of taxation this paper develops a rigorous partial equilibrium analysis of the determinants of margin al welfare cost mwc of taxes on labor earnings it shows that four key parameters interact to determine the magnitude of mwc using aggregate data and plausible ranges of values for the parameters mwc can vary from under 10 percent to more than 300 percent of marginal tax revenue intermediate parameter values sugge st mwc is in the 25 50 percent range however the more extreme estimates cannot be ruled out on the basis of available evidence suggesting that mwc cannot yet be copyright 1987 by american economic association

absenteeism efficiency wages and shirking we investigate the absence behaviour of workers when there is asymmetric information regarding worker health an individual s health is assumed to be private information to that individual and only observable to a third party at cost our aim is to complement the existing largely empirical studies of absence behaviour which have tended to treat the phenomenon exclusively as a labour supply decision on the part of workers cf allen 1981 barmby and treble 1991 barmby orme and treble 1991 and dunn and youngblood 1986 our approach is to draw out the interactive aspects of the employment relationship we assume that workers are ex ante uncertain as to their state of health and supply labour on the basis of an all or nothing utility maximising decision taken once a realisation of this state has been received utility is a function of income leisure and health and workers value leisure more the sicker they are firms are able to exert some control over individual behaviour by monitoring workers and threatening to fire shirkers that is workers absenting themselves with unacceptable sickness our model highlights an efficiency wage effect through which wages may be used as a method of absence control in particular the optimal response of the firm to an increase in the cost of monitoring is to discourage shirking by raising wages furthermore to the extent that

absenteeism in a medium sized manufacturing plant 1991 absenteeism in a medium sized manufacturing plant applied economics vol 23 no 1 pp 161 166

discount rates and shadow prices for public investment abstract this paper extends the harberger sandmo dreze model for public discount rates to a many good economy it derives a formula for discount rates which are specific to each public enterprise or agency and used by them to discount future outputs and inputs evaluated at market prices such an approach is shown to be more efficient than that of simply using a single rate for all public projects it is also more practical than asking each public firm to use second best shadow prices in their analyses of investment projects the general results are first provided then simple cases are considered and numerical examples presented to help interpret our formula and analyse its main determinants

national interests and the cap abstract development of the cap is heavily circumscribed by differing national interests reflecting the usual agricultural policy conflicts between different regional and sectoral interests but as a supranational policy with principles of community preference and common financing the cap also redistributes the burdens and benefits of agricultural support between member states the implications of these features of the cap with reference to specified alternative policies are explored and conclusions drawn the conflict between national and supranational interests is inadequately reflected to decision makers the single instrument of price support at a common level is inadequate to meet a mix of differing national objectives and the assumption that the common policy serves unification and integration of the community may be incorrect

costly monitoring loan contracts and equilibrium credit rationing this paper develops a model with asymmetrically informed agents and costly monitoring of loan contracts where an equilibrium can exhibit credit rationing borrowers are identical ex ante but some receive loans and others do not in contrast to existing credit rationing theories rationing does not occur here due to inflexible prices adverse selection or moral hazard optimizing behaviour produces a standard debt contract in equilibrium the aggregate quantity of loans and equilibrium interest rates respond differently depending on whether there is rationing in equilibrium

judging agricultural policies a survey this survey provides a structured picture of 40 years of literature which uses welfare economic tools to judge agricultural policy challenges and developments of normative agricultural policy analysis are discussed in an easily accessible graphical framework it is shown how the literature has gone from examining a very small discrete set of simple policies to a much broader often continuous set of policies that combine policy instruments simultaneously the importance of the pareto criterion used to explore the limits of how government can affect welfare is revealed moreover given the importance of the objective of income redistribution in agricultural policy agricultural economists have often departed from the purely efficiency oriented tradition in economics it is shown that they have tried to incorporate equity considerations by either adding these criteria as constraints to the social welfare function or directly incorporating these criteria in the functional form of the social welfare function

efficient redistribution through commodity markets efficiency in redistribution is measured in terms of deadweight loss generated per dollar of economic surplus transferred between consumers and producers of a commodity by means of market intervention the implications of supply and demand elasticities for efficiency in redistribution are examined with special attention to the comparison of production control and deficiency payment programs the results may be used to aid in the evaluation of commodity programs and as a basis for consideration of the hypothesis that observed policies are efficient given the political power of interest groups

policy dependency and reform economic gains versus political pains economic analysis condemns market intervention in favour of farmers as inefficient and ineffective and therefore worthy of radical reform practical experience however indicates that such lessons are hard to learn and implement economic analysis tends to ignore the path dependencies generated by the policy evolution process without reform strategies that take full account of these dependencies policy reform will continue to be reluctant slow and frequently counterproductive this paper reconsiders the evolution of farm policies and the economic assessment of their costs and benefits in so doing it re phrases conventional economic arguments in terms which seem to accord better with sensible intuition which may prove more accessible and credible to policymakers and advisors the difficulties of reconciling economic efficiency with political acceptability are identified the paper concludes with a substantial challenge to the agricultural economics profession

family illness and temporary work absence the literature contains much research examining the economics of absenteeism and the relationship between an individual s labour supply and his or her own health status but very little has examined the effect of a family illness on an individual s labour supply this paper presents an analysis of the length of temporary work absences subsequent to a family illness conceptually workers have varying degrees of family specific psychic work costs the greater those costs the greater the familial pull in the event of a family problem and therefore the greater the degree of work loss subsequent to a family illness empirical results obtained using microdata from the university of michigan psid indicate that family factors do have a significant impact on the duration of work absence the results would seem to carry policy relevance in light of the passage of the family and medical leave act of 1993

explaining price policy bias in agriculture the calculus of support maximizing politicians a model is developed to explain observed patterns of policy intervention in agriculture we analyze the interaction between political support seeking politicians and supportsupplying citizens society consists of a rural and urban group we determine the effects on transfers of relative group size disparities in income endowments between groups and the deadweight loss of redistribution the framework advanced is an alternative to that of the interest group model and is used to explain for example why the export sectors in developing countries are taxed more and why the united kingdom is less adamant for higher price supports than germany

eu agri environmental programs and the restaurant table effect the share of agricultural area enrolled in eu agri environmental programs varies significantly between eu member states these national differences are explained based on a model that reflects both that these programs internalize externalities and the political economy we identify six factors that affect the extent to which agri environmental programs are implemented environmental benefits opportunity costs of participation budgetary pressure the share of program expenditures financed by the eu the political weight attributed to farmers at the national and the political influence of each country at the eu level in addition we demonstrate that if the policy decision making process is noncooperative at the eu level countries that contribute less to the eu budget will ceteris paribus implement more programs using data of four years and feasible generalized least square methods we are able to confirm our theoretical results including a noncooperative behavior of eu member states

germany and the cap a bargaining model of ec agricultural policy formation a bargaining model of ec agricultural policy formation is formulated the model allows for more explicit consideration of political factors than is possible in standard political economy models it shows how the political system in germany has increased the power of german farm interests relative to farm interests elsewhere in the ec the paper recognizes cap negotiations are an on going process results of the previous bargaining round form the basis for the current round and give momentum to price changes understanding this momentum provides insight into the fluctuating price supports that have characterized the cap