the democratic political economy of progressive income taxation why do both left and right political parties typically propose progressive income taxation schemes in political competition analysis of this problem has been hindered by the two dimensionality of the issue space to give parties a choice over a domain that contains both progressive and regressive income tax policies requires an issue space that is at least two dimensional nash equilibrium in pure strategies of the standard two party game whose players have complete preferences over a two dimensional policy space generically fails to exist i introduce a new equilibrium concept for political games based on the fact of factional conflict within parties each party is supposed to consist of reformists militants and opportunists each faction has a complete preference order on policy space but together they can only agree on a partial order nash equilibria of the two party game where the policy space consists of all quadratic income tax functions and each party is represented by its partial order exist and it is shown that in such equilibria both parties propose progressive income taxation

candidate reputations and the incumbency effect abstract a major shortcoming of the classical median voter model is that its central prediction convergence of platforms to the median voter s ideal is seldom observed one reason is that the classical model neglects the importance of voter expectations as a determinant of votes here we associate voters expectations about candidates with past as well as current candidate pronouncements and assume that incumbents whose actions are consistent with their reputations are perceived as less risky than challengers in equilibrium candidates choose distinct platforms typically neither adopts the median voter s ideal point either candidate may win depending on how well the incumbent s reputation reflects current voter tastes and how relatively risky the electorate perceives the challenger to be

wage formation towards isolating search and bargaining effects from the marginal product this article estimates the importance of workers outside options in wage determination the article uses the predictions of search and bargaining theory and proposes novel identification strategies to separate the respective effects of outside options from those of unobserved productivity using an administrative panel database for germany this study exploits differences in both the employment composition across cities of germany and mobility across jobs as sources of variation for identification the main finding of the article is that a 10 increase in the outside options of a worker generates a 7 wage increase

fairness self interest and the politics of the progressive income tax all advanced democracies have adopted income taxes with considerable progression in marginal tax rates to explain this we examine the nature of individual and collective preferences over alternative tax schedules in the context of a simple two sector model we first consider the case of altruistic or sociotropic citizens who view the income tax as a means of achieving a fairer or more egalitarian distribution of income we show that greater marginal rate progressivity may well be less fair that a fairest tax however defined is always a linear or flat rate schedule in which all incomes are taxed at the same marginal rate and that with a purely sociotropic electorate there exists a flat rate schedule which is a majority equilibrium we then show that with self interested voters who seek to minimize their own tax burdens greater marginal rate progression may well be preferred by middle and upper income voters that for middle income citizens the optimal schedule is a sharply progressive one and that within the set of individually optimal schedules there exists a majority equilibrium which is a progressive schedule which minimizes the burden on median income or middle class citizens at the expense of lower and upper income taxpayers

an economic model of representative democracy this paper develops an approach to the study of democratic policy making where politicians are selected by the people from those citizens who present themselves as candidates for public office the approach has a number of attractive features first it is a conceptualization of a pure form of representative democracy in which government is by as well as of the people second the model is analytically tractable being able to handle multidimensional issue and policy spaces very naturally third it provides a vehicle for answering normative questions about the performance of representative democracy

some models for estimating technical and scale inefficiencies in data envelopment analysis in management contexts mathematical programming is usually used to evaluate a collection of possible alternative courses of action en route to selecting one which is best in this capacity mathematical programming serves as a planning aid to management data envelopment analysis reverses this role and employs mathematical programming to obtain ex post facto evaluations of the relative efficiency of management accomplishments however they may have been planned or executed mathematical programming is thereby extended for use as a tool for control and evaluation of past accomplishments as well as a tool to aid in planning future activities the ccr ratio form introduced by charnes cooper and rhodes as part of their data envelopment analysis approach comprehends both technical and scale inefficiencies via the optimal value of the ratio form as obtained directly from the data without requiring a priori specification of weights and or explicit delineation of assumed functional forms of relations between inputs and outputs a separation into technical and scale efficiencies is accomplished by the methods developed in this paper without altering the latter conditions for use of dea directly on observational data technical inefficiencies are identified with failures to achieve best possible output levels and or usage of excessive amounts of inputs methods for identifying and correcting the magnitudes of these inefficiencies as supplied in prior work are illustrated in the present paper a new separate variable is introduced which makes it possible to determine whether operations were conducted in regions of increasing constant or decreasing returns to scale in multiple input and multiple output situations the results are discussed and related not only to classical single output economics but also to more modern versions of economics which are identified with contestable market theories

a caveat on the measurement of productive efficiency abstract the correspondence between used performance measures and enterprise objectives such as profit maximization and cost minimization is fundamental for manufacturing companies this paper identifies and critically examines a minimal set of relevant properties that a productivity index needs to satisfy to rightly assess performance development of a decision making unit commonly applied and suggested productivity measurement techniques such as partial efficiencies total factor productivity tfp index number approaches integrated partial efficiencies and operational competitiveness ratings are analyzed in order to assess the alignment with superior objectives there is a considerable spread in the results of this class of models and the interpretation may prove difficult or misleading as these apparently less complicated productivity measures increasingly are employed as a component in evaluation of manufacturing efficiency the question is of high managerial relevance in particular the paper points out inconsistencies with properties related to commensurability monotonicity and implications of maximizing behavior based on this viewpoint issues such as the consistency with profit maximization will be shown extra interest the paper also provides a critique of previous work in non parametric efficiency analysis where properties have been postulated or based on other arguments the findings suggest that there is no globally superior measurement technique to be found in this class and that care should be taken when evaluating managerial performance not to penalize rational behavior

in search of labor demand we propose and estimate a novel specification of labor demand which encompasses search frictions and the role of entrepreneurs in new firm creation using city industry variation over four decades we estimate the wage elasticity of employment demand to be close to 1 at the industry city level and 0 3 at the city level we argue that the difference between these estimates reflects the congestion externalities predicted by the search literature our estimates also indicate that entrepreneurship should be treated as a scarce factor in the determination of labor demand we use our estimates to evaluate the impact of large changes in the minimum wage on employment

chasing after good jobs do they exist and does it matter if they do most people believe that there are such things as good jobs jobs that a worker would consider herself lucky to get but for economists the existence of good jobs is debatable in this paper i provide a definition of a good job based on various theories of the labour market a job that involves a surplus captured partly by the worker i use that definition to guide an empirical investigation of the existence and importance of good jobs i conclude that good jobs do exist that the labour market does not just function according to a roy model with wage differentials reflecting only skill differentials compensating differentials or bond posting and that their impact on the overall wage structure is substantial finally i discuss the implications of the existence of good jobs for policy setting and for assessments of the justice of a society resume la chasse aux bons emplois est ce qu ils existent et est ce que cela importe qu ils existent la plupart des gens croient qu il y a telles choses que de bons emplois des emplois qu un travailleur se trouverait chanceux d avoir mais pour les economistes l existence de bons emplois est discutable dans ce texte l auteur propose une definition de bon emploi fondee sur diverses theories du marche du travail un emploi qui engendre un surplus capture en partie par le travailleur il utilise cette definition pour guider son enquete empirique sur l existence et l importance de bons emplois on conclut que les bons emplois existent que le marche du travail ne fonctionne pas seulement selon le modele de roy avec des differentiels de salaires qui refletent seulement les differentiels d habiletes les differentiels compensatoires ou le depot d une caution et que leur impact sur la structure globale des salaires est substantielle finalement l auteur discute les implications de l existence de bons emplois sur la definition de politiques et sur l evaluation du caractere juste d une societe

voting over income taxation abstract a major problem of the positive theory of income taxation is to explain why statutory income tax schedules in practice are marginal rate progressive while it is commonly believed that this is but a simple consequence of the fact that the number of relatively poor voters exceeds that of richer voters in general putting this contention in a voting equilibrium context is not a trivial task we do this here in the context of nonlinear taxation and attempt to provide a formal argument in support of this heuristic claim we first establish the existence of mixed strategy equilibria and identify certain cases in which marginal rate progressive taxes are chosen almost surely by the political parties unfortunately we also find that if the tax policy space is not artificially constrained the support of at least one equilibrium cannot be contained within the set of marginal rate progressive taxes

the effects of partisan alignment on the allocation of intergovernmental transfers differences in differences estimates for spain abstract in this paper we test the hypothesis that municipalities aligned with upper tier grantor governments i e controlled by the same party will receive more grants than those that are unaligned we use a rich spanish database which provides information on grants received by nearly 900 municipalities during the period 1993 2003 from three different upper tier governments i e central regional and upper local since three elections were held at each tier during this period we have enough within municipality variation in partisan alignment to provide differences in differences estimates of the effects of alignment on the amount of grants coming from each source moreover the fact that a municipality may simultaneously receive grants from aligned and unaligned grantors allows us to use a triple differences estimator which consists of estimating the effects of changing alignment status on the change in grants coming from the aligned grantors relative to the change in grants coming from the unaligned ones the results suggest that partisan alignment has a sizeable positive effect on the amount of grants received by municipalities for example with majority governments at the two layers aligned municipalities receive over 40 more grants than unaligned ones

does industrial composition matter for wages a test of search and bargaining theory does switching the composition of jobs between low paying and high paying industries have important effects on wages in other sectors in this paper we build on search and bargaining theory to clarify a key general equilibrium channel through which changes in industrial composition could have substantial effects on wages in all sectors in this class of models wage determination takes the form of a social interaction problem and we illustrate how the implied sectoral linkages can be empirically explored using u s census data we find that sector level wages interact as implied by the model and that the predicted general equilibrium effects are present and substantial we interpret our results as highlighting the relevance of search and bargaining theory for understanding the determination of wages and we argue that the results provide support for the view that industrial composition is important for understanding wage outcomes

the incentive effect of fiscal equalization transfers on tax policy abstract a theoretical analysis considers the impact of a typical system of redistributive fiscal equalization transfers on the tax effort of local jurisdictions more specifically it shows that the marginal contribution rate i e the rate at which an increase in the tax base reduces those transfers might be positively associated with the local tax rate while the volume of grants received is likely to be inversely related to the tax rate these predictions are tested in an empirical analysis of the tax policy of german municipalities in order to identify the incentive effect the analysis exploits discontinuities in the rules of the fiscal equalization system as well as policy changes the empirical results support the existence of an incentive effect suggesting that the high marginal contribution rates induce the municipalities to set significantly higher business tax rates compared with a situation without fiscal equalization

fiscal decentralization and government size numerous studies have attempted to model the possible factors contributing to universal growth in public sectors this paper analyzes one device that appears capable of controlling some of that growth fiscal decentralization the results reported here also support the use of monopoly government assumptions in models of public policy

on the determinants of local government performance a two stage nonparametric approach abstract this article analyzes the efficiency of local governments in the comunitat valenciana spain and their main explanatory variables the analysis is performed in two stages firstly efficiency is measured via nonparametric activity analysis techniques specifically we consider both data envelopment analysis dea and free disposable hull fdh techniques the second stage identifies some critical determinants of efficiency focusing on both political and fiscal policy variables in contrast to previous two stage research studies our approach performs the latter attempt via nonparametric smoothing techniques rather than econometric methods such as ols or tobit related techniques results show that efficiency scores especially under the nonconvexity assumption fdh are higher for large municipalities thus there is empirical evidence to suggest that resources may be better allocated by large municipalities however the inefficiency found is not entirely attributable to poor management as second stage analysis reveals both fiscal and political variables to be explicably related to municipality performance moreover the explanatory variables impact on efficiency is robust to the chosen technique either convex dea or nonconvex fdh

redistributing income under proportional representation although majoritarian decision rules are the norm in legislatures relatively few democracies use simple majority rule at the electoral stage adopting instead some form of multiparty proportional representation moreover aggregate data suggest that average income tax rates are higher and distributions of posttax income flatter in countries with proportional representation than in those with majority rule while there are other differences between these countries this paper explores how variations in the political system per se influence equilibrium redistributive tax rates and income distributions a three party proportional representation model is developed in which taxes are determined through legislative bargaining among successful electoral parties and the economic decision for individuals is occupational choice political economic equilibria for this model and for a two party winner take all majoritarian system are derived and compared

analisis de la eficiencia del gasto municipal y de sus determinantes en este estudio se analizo la eficiencia del gasto local en 1686 municipalidades del pais para elano 2003 mediante la interpretacion de las actividades publicas locales como un proceso de produccion que transforma inputs en outputs bradford et al 1969 y fisher 1996 se establecieron para ello diversas fronteras de produccion construidas a partir de los mejores resultados dentro de grupos de municipalidades y luego se estimo la eficiencia relativa como la distancia a dichas fronteras se utilizaron cinco metodologias para la estimacion de las fronteras de produccion i 3 no parametricas free disposal hull fdh y data envelopment analysis dea crs ydea vrs y ii dos parametricas una deterministica y otra estocastica las cuales se estimaron a traves de las diez categorias de municipalidades cuatro provinciales y seis distritales definidas mediante una metodologia de conglomerados finalmente a partir del empleo de modelos de regresion de tipo tobit se analizaron los determinantes fiscales socioeconomicos y demograficos de los niveles de eficiencia encontrados los resultados obtenidos son diversos y varian segun la categoria del municipio analizado a pesar que fue posible identificar algunas buenas practicas municipales los resultados a nivel nacional son preocupantes puesto que indican que se podria alcanzar la misma provision de bienes y servicios municipales con 57 6 menos recursos entre los principales determinantes de este gasto ineficiente se encontraron las transferencias de los recursos del foncomun y del canon sobre todo a nivel distrital mientras que uno de los factores que permitio una provision mas eficiente de los servicios publicos locales fue la participacion ciudadana aproximada por la presencia de los consejos de coordinacion local en el marco de la promulgacion del decreto supremo 068 2006 pcm en octubre de 2006 por el cual se establece la culminacion de las transferencias de competencias y funciones inicialmente programadas para el periodo 2006 2010 hacia fines del ano 2007 los resultados obtenidos resaltan la necesidad de concentrar mayores esfuerzos para mejorar la eficiencia del gasto a nivel local in this study we analyzed the efficiency of the spending of 1686 peruvian municipalities for the year 2003 through the evaluation to the municipal public activities as a process of production which transforms inputs in outputs bradford et al 1969 and fisher 1996 in doing so we established several best practice production frontiers in order to estimate the extent of municipal spending that seems to be wasted relative to that frontier five methodologies for the production frontier estimations were used i three non parametric i free disposal hull fdh and data envelopment analysis dea crs and dea vrs and ii two parametric one deterministic and the other stochastic which were estimated through ten categories of municipalities four groups of provincial and six of district municipalities defined through a cluster methodology finally using tobit regression models we analyzed the fiscal socioeconomics and demographic determinants of the efficiency levels we found different levels of efficiency and although we identified some good practices the result at the national level is matter of concern because the same results could have been obtained with 57 6 less resources among the main determinants of this inefficiency spending the foncomun and canon transfers were found mainly at the district municipal level one of the factors that allowed for a more efficient provision of local services was the civil participation represented in the study by the local coordination council the results of the study show that there is a need to make more efforts to improve the local government spending even more so after the promulgation of the supreme decree 068 2006 pcm in october 2006 by virtue of which the culmination of the competences and function transfers process initially programmed for 2006 2010 brought forward to the end of 2007

community composition and the provision of local public goods abstract there is considerable evidence suggesting that the composition of the community that is the characteristics of the residents themselves plays a central role in determining levels of important public outputs such as education and public safety this paper explores the normative implications of this evidence we show that optimal community composition involves a trade off between the gains from homogeneity in demands among residents and the gains from heterogeneity in the production of those goods the analysis establishes a role for equalizing intergovernmental grants on efficiency grounds such grants can provide the needed incentives for sustaining heterogeneous communities

estimating labour supply responses using tax reforms the 1980 s tax reforms and the changing dispersion of wages offer one of the best opportunities yet to estimate labor supply effects nevertheless changing sample composition aggregate shocks the changing composition of the tax paying population and discontinuities in the tax system create serious identification and estimation problems we develop grouping estimators that address these issues our results reveal positive and moderately sized wage elasticities we also find negative income effects for women with children

workers machines and economic growth this paper models technology adoption as replacing workers by machines which perform the same job in the production process the paper shows that such modelling of technology adoption affects significantly the analysis of economic growth this model can explain large and persistent international differences in output levels and growth rates caused by small differences in underlying parameters

recent technological and economic change among industrialized countries insights from population growth cross country observations on the effects of population growth are used to show why differences in rates of growth in working age population may be a key to understanding differences in economic performance across industrialized countries over the period 1975 1997 versus 1960 1974 in particular we argue that countries with lower rates of adult population growth adopted new capital intensive technologies more quickly than their high population growth counterparts therefore allowing them to reduce their work time without deterioration of growth in output per adult

decomposing changes in wage distributions a unified approach over the last fifteen years many researchers have attempted to explain the determinants and changes of wage inequality i propose a simple procedure to decompose changes in the distribution of wages or in other distributions into three factors changes in regression coefficients the distribution of covariates and residuals the procedure requires only estimating standard ols regressions augmented by a logit or probit model it can be extended by modelling residuals as a function of unmeasured skills and skill prices two empirical examples showing how the procedure works in practice are considered in the first example sources of differences in the wage distribution in alberta and british columbia are considered in the second sources of change in overall wage inequality in the united states 1973 99 are re examined finally the proposed procedure is compared with existing procedures jel classification j3 la decomposition des changements dans les distributions de salaires une approche unifee au cours des quinze dernieres annees nombre d etudes se sont penchees sur les determinants et les changements de la distribution des salaires ce memoire propose une procedure pour decomposer les changements de la distribution des salaires en trois elements les changements dans les coefficients de regression la distribution des regresseurs et les changements residuels cette procedure ne necessite que l estimation de regressions par moindre carres ordinaires et d un modele probit ou logit l auteur montre aussi comment modeliser les residus en fonction de competences non mesurees la procedure proposee est mise en application dans le contexte de deux exemples la distribution des salaires en alberta et en colombie britannique et les changements dans la distribution des salaires de 1973 a 1999 aux etats unis le memoire examine aussi comment cette procedure se compare aux methodes proposees par d autres chercheurs

the effectiveness of hiring credits this article analyses the effectiveness of hiring credits using comprehensive administrative data we show that the french hiring credit implemented during the great recession had significant positive employment effects and no effects on wages relying on the quasi experimental variation in labour cost triggered by the hiring credit we estimate a structural search and matching model simulations of counterfactual policies show that the effectiveness of the hiring credit relied to a large extent on three features it was non anticipated temporary and targeted at jobs with rigid wages we estimate that the cost per job created by permanent hiring credits either countercyclical or time invariant in an environment with flexible wages would have been much higher

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

understanding preferences for income redistribution abstract recent research suggests that income redistribution preferences vary across identity groups we employ statistical learning methods that emphasize pattern recognition classification and regression trees cart and random forests randomforests to uncover what these groups are using data from the general social survey we find that out of a large set of identity markers only race gender age and socioeconomic class are important classifiers for income redistribution preferences further the uncovered identity groupings are characterized by complex patterns of interaction amongst these salient classifiers we explore the extent to which existing theories of income redistribution can explain our results but conclude that current approaches do not fully explain the findings

mobility and the return to education testing a roy model with multiple markets self selected migration presents one potential explanation for why observed returns to a college education in local labor markets vary widely even though u s workers are highly mobile to assess the impact of self selection on estimated returns this paper first develops a roy model of mobility and earnings where workers choose in which of the 50 states plus the district of columbia to live and work available estimation methods are either infeasible for a selection model with so many alternatives or place potentially severe restrictions on earnings and the selection process this paper develops an alternative econometric methodology that combines lee s 1983 parametric maximum order statistic approach to reduce the dimensionality of the error terms with more recent work on semiparametric estimation of selection models e g ahn and powell 1993 the resulting semiparametric correction is easy to implement and can be adapted to a variety of other polychotomous choice problems the empirical work which uses 1990 u s census data confirms the role of comparative advantage in mobility decisions the results suggest that self selection of higher educated individuals to states with higher returns to education generally leads to upward biases in ols estimates of the returns to education in state specific labor markets while the estimated returns to a college education are significantly biased correcting for the bias does not narrow the range of returns across states consistent with the finding that the corrected return to a college education differs across the u s the relative state to state migration flows of college versus high school educated individuals respond strongly to differences in the return to education and amenities across states

beneficiaries from federal transfers to municipalities the case of israel in this paper we have shown which variables affect the size of grants given by the government to cities in israel we have also shown that aside from demographic variables which alone account for a very large portion of the variance there is also a political residual effect where cities with mayors who are members of the in political party fared better than other cities this effect is felt mainly through the general and not the earmarked portion of the grant and was more prevalent when the likud was in power than when labor ruled

party politics and fiscal discipline in a federation evidence from the states of india theoretical and empirical analysis suggests that federations are prone to fiscal indiscipline because of intergovernmental bargaining over the allocation of national resources what role do political parties play in mediating this bargain if the national government is dominated by a single political party does the party discipline those states where its affiliates are in power if the national government consists of a coalition of political parties do states ruled by coalition partners bargain for higher deficits this article provides evidence on these questions from india a large federation in the developing world that serves as a valuable laboratory for this purpose the authors find that those state governments that belong to the same party as that leading the national government run higher than average deficits correspondingly states governed by rival political parties have lower deficits even if these parties are members of a coalition government at the center

innis lecture explorations in medium run macroeconomics medium run macroeconomics refers to aggregate economic phenomena that manifest over periods of 10 to 25 years this area of research has emerged over the last decade as a new and distinct field of enquiry in this paper i overview a set of personal attempts aimed at understanding certain medium run phenomena such as changes in the wage structure changes in the world distribution of income per capita and changes in growth patterns across oecd countries the goal of the paper is to extract general lessons from these experiences in particular i will discuss why models of endogenous technological choice may be a good starting point for studying medium run phenomena jel classification e00 o00 explorations du monde macroeconomique a moyen terme la macroeconomie a moyen terme s attache aux phenomenes economiques agreges qui se manifestent sur des periodes de 10 a 25 ans ce champ de recherche a emerge au cours de la derniere decennie en tant que chantier nouveau et distinct dans ce texte je fais le tour d un ensemble de tentatives personnelles pour comprendre certains phenomenes de moyen terme comme les changements dans les structures de salaires les changements dans la distribution des revenus per capita dans le monde et les changements dans les patterns de croissance a travers les pays de l ocde l objectif de ce memoire est d extraire certaines lecons generales de ces experiences en particulier on discute des raisons pour lesquelles les modeles de choix technologiques endogenes constituent un bon point de depart pour l etude des phenomenes de moyen terme

the political economy of intergovernmental grants evidence from a maturing democracy we evaluate the impact of political forces in the allocation of intergovernmental grants in portugal as it matured from a young to an established democracy using a large and unexplored dataset we show that political variables condition the granting system and that their importance changed over time while tactical manipulation in the distribution of grants among municipalities seems to exist only in the early years of democracy opportunistic effects are stronger in the latter years we argue that the latter effect is due to a change in the political environment and to the electorate s lack of information on intergovernmental grants

appropriate technology and balanced growth we provide a general theoretical characterization of how firms technology choice on a technology frontier determines the long run elasticity of substitution between capital and labour we show that the shape of the frontier determines factor shares and the elasticity of substitution between capital and labour if there are adjustment costs to technology choice the short and long run elasticities differ with the long run always higher if the technology frontier is log linear the production function becomes cobb douglas in the long run but consistent with empirical evidence short run dynamics are characterized by gross complementarity the approach is easily implementable and yields a powerful way to introduce ces type production functions in macroeconomic models we provide an illustration within an estimated dynamic general equilibrium model and show that the use of our production technology provides a good match for the short and medium run behaviour of the u s labour share

ideology tactics and efficiency in redistributive politics we model the electoral politics of redistribution when voters and parties care about inequality in addition to their private concerns for consumption and votes respectively ideological concerns about income redistribution lead each party to adopt a general proportional income tax adjusted to appeal to the ideological leanings of high clout groups with disproportionately many swing voters which the parties also ply with pork barrel projects our results relate to director s law which says that redistributive politics favors middle classes at the expense of both rich and poor

the flypaper effect and other anomalies abstract i develop a model in which income both in its own right and as a proxy for other socioeconomic characteristics is an input in the production function for local public services the most obvious example is education though there are other applications as well the comparative statics results from this model yield the following results 1 the observed flypaper effect the tendency for local government to spend a higher fraction of unrestricted grants than income of residents may be due at least in part to the fact that own income but not grants is a substitute for purchased inputs in the technology hence the propensity to spend on purchased inputs out of own income is lower than out of grants 2 the income elasticity of demand for public sector output may be higher than the observed income elasticity of demand for purchased inputs 3 equalization of educational opportunity via wealth neutrality as suggested by feldstein requires major changes in education finance once we recognice the distinction between purchased inputs and output

demographics and recent productivity performance insights from cross country comparisons over the last few decades countries have experienced quite different patterns of productivity growth in this paper we emphasize the role of country level demographics in explaining these differences in particular looking over the period 1960 2002 we show that cross country data support the notion that starting in the late 1970s countries went through a period of technological transition that lasted at least until the mid 1990s for the fastest adjusting countries and is still proceeding for the slower adjusting countries the main claim of the paper is that the country level rate of labour growth was a key factor driving the speed of adjustment to the new technological paradigm implying that much of the cross country difference in economic performance over recent decades can be explained by demographic differences across countries as opposed to the many other factors emphasized in the literature jel classification o33 o41 demographie et productivite eclaircissements et conjectures derives de comparaisons entre pays au cours des quelques dernieres decennies divers pays ont fait l experience de patterns differents dans la croissance de la productivite dans ce memoire les auteurs presentent une interpretation des patterns recents de productivite du travail qui met l accent sur la demographie du pays comme facteur explicatif de ces differences en particulier pour la periode 1960 2002 on montre que les donnees comparatives entre pays supportent l hypothese que a partir de la fin des annees 1970 les pays ont vecu une periode de transition technologique qui a dure jusqu au milieu des annees 1990 pour les pays qui se sont ajustes le plus vite et qui est encore en cours pour ceux qui se sont ajustes plus lentement la proposition principale mise de l avant dans le memoire est que la croissance de la main d oeuvre d un pays a ete un facteur cle dans la definition de la vitesse d ajustement au nouveau paradigme technologique ceci suggere qu une bonne partie des differences de performance economique entre pays au cours des dernieres decennies est attribuable aux differences dans la demographie de ces pays plutot qu aux multiples facteurs mentionnes habituellement dans la litterature compte tenu du fait que la transition technologique met du temps a s accomplir 20 a 30 ans cette perspective suggere que qu il faut etre extremement prudent quand on se fonde sur des comparaisons de croissance de productivite entre pays et sur des periodes courtes de 5 a 10 ans pour tirer des conclusions quant aux politiques economiques a mettre en place

changes in wage inequality in canada an interprovincial perspective this paper uses the canadian labour force survey to understand why the level and dispersion of wages have evolved differently across provinces from 1997 to 2013 the faster increase in the level of wages and the decline in wage dispersion in newfoundland saskatchewan and alberta are the starkest interprovincial differences we find that they are accounted for by the growth in the extractive resources sectors which benefited less educated and younger workers the most increases in minimum wages since 2005 are found to be the main reason why wages at the very bottom grew more than those in the middle of the distribution

electoral goals and center state transfers a theoretical model and empirical evidence from india we construct a model of redistributive politics where the central government is opportunistic and uses its discretion to make transfers to state governments on the basis of political considerations these considerations are the alignment between the incumbent parties at the central and state levels and whether a state is a swing state or not a testable prediction from the model is that a state that is both swing and aligned with the central government is especially likely to receive higher transfers we test this prediction using indian data for 14 states from 1974 75 to 1996 97 we find that a state which is both aligned and swing in the last state election is estimated to receive 16 higher transfers than a state which is unaligned and non swing

immigration and public finances in oecd countries abstract this paper shows that the macroeconomic and fiscal consequences of international migration are positive for oecd countries and suggests that international migration produces a demographic dividend by increasing the share of the workforce within the population the estimation of a structural vector autoregressive model on a panel of 19 oecd countries over the period 1980 2015 reveals that a migration shock increases gdp per capita through a positive effect on both the ratio of working age to total population and the employment rate international migration also improves the fiscal balance by reducing the per capita transfers paid by the government and per capita old age public spending to rationalize these findings an original theoretical framework is developed this framework highlights the roles of both the demographic structure and intergenerational public transfers and shows that migration is beneficial to host economies characterized by aging populations and large public sectors

identification of endogenous social effects the reflection problem this paper examines the reflection problem that arises when a researcher observing the distribution of behaviour in a population tries to infer whether the average behaviour in some group influences the behaviour of the individuals that comprise the group it is found that inference is not possible unless the researcher has prior information specifying the compisition of reference groups if this information is available the prospects for inference depend critically on the population relationship between the variables defining reference groups and those directly affecting outcomes inference is difficult to implossible if these variables are functionally dependent or are statistically independent the prospects are better if the variables defining reference groups and those directly affecting outcomes are moderately related in the population

on the political and fiscal determinants of income redistribution under federalism and democracy evidence from germany several recent studies suggest that transfers from central to regional governments are motivated by political considerations in this paper we examine if this is also the case for transfers from regional to central governments in the context of the german fiscal equalization system we examine the factors that contribute to differences in tax revenues across german states the evidence indicates that both fiscal incentives and political factors can explain these differences although in germany the former are more important moreover accounting for fiscal institutions has important consequences for the empirical assessment of political influences on taxation overall we find that the political affiliation of the state governor is an important factor in explaining differences in state tax revenues thus the right wing party cdu csu is effective in relaxing the tax burden at the state level in contrast partisan alignment between the state government and the federal government loses its importance once fiscal conditions enter the empirical model

globalization returns to accumulation and the world distribution of output abstract this paper examines the extent to which the process of globalization can explain the observed widening in the cross country distribution of output per worker on the theoretical front the model highlights why when the labor market is subject to a holdup problem the opening up of trade will cause an increase in the dispersion of income across countries similar to that observed in the data the increase in dispersion in the model arises due to the emergence of a discrepancy between the private and social returns to capital accumulation that favors capital abundant countries on the empirical front we document the relevance of the model by examining whether growth patterns decomposition exercises and specialization patterns support the model s predictions overall we find that over 50 of the recently observed increase in income dispersion across countries can be accounted for by the mechanism exemplified by the model

on the evolution of the world income distribution the post world war ii period has seen substantial changes in the distribution of gdp per worker around the world in the upper half of the distribution a number of countries have exhibited large increases in income relative to the richest countries in the bottom half several countries have seen incomes fall relative to the richest countries the net result of these changes is a movement in the shape of the world income distribution from something that looks like a normal distribution in 1960 to a bi modal twin peaks distribution in 1988 projecting these changes into the future suggests a number of interesting ndings first it seems likely that the united states will lose its position as the country with the highest level of gdp per worker second growth miracles have been more common in recent decades than growth disasters if these dynamics continue the future income distribution will involve far more rich countries and far fewer poor countries than currently observed

ranking firms using revealed preference this article estimates workers preferences for firms by studying the structure of employer to employer transitions in u s administrative data the article uses a tool from numerical linear algebra to measure the central tendency of worker flows which is closely related to the ranking of firms revealed by workers choices there is evidence for compensating differentials when workers systematically move to lower paying firms in a way that cannot be accounted for by layoffs or differences in recruiting intensity the estimates suggest that compensating differentials account for over half of the firm component of the variance of earnings

the political costs of tax increases and expenditure reductions evidence from state legislative turnover this paper estimates the political costs of increasing taxes and cutting expenditures for members of a legislature it is found that both costs are individually significant but that they are not significantly different this coincides with the first order condition for maximization of the probability of reelection republican legislatures have a higher political cost for taxes thus the party s relative bias toward smaller government is founded in stronger constituent preferences against taxes not for lower spending additionally by being ideologically conservative republicans lower the political costs of taxes while by being more liberal democrats lower the cost of cutting expenditures

fiscal transfers and fiscal sustainability we examine whether the u s and german state governments pursue sustainable fiscal policies taking into account fiscal transfers using panel data techniques we investigate whether the debt to gdp ratio had a positive influence on the primary surplus bohn model we show that including excluding fiscal transfers changes the results if fiscal transfers are not included in the primary surplus the test results do not indicate that the u s and german state governments pursued sustainable fiscal policies our results also suggest that fiscal transfers were positively related to debt these findings indicate that intergovernmental transfers have implicitly subsidized debts

managerial efficiency in local government implications on jurisdictional consolidation using data from maine estimates of size economies in the production of public education services are provided under the alternative assumptions of managerial efficiency and inefficiency while size economies were identified under the traditional assumption of managerial efficiency limited or no size economies were identified under the more general assumption of managerial inefficiency these results question the validity of the traditional economies of size literature and the jurisdictional consolidation policy which follows from the traditional literature

spatial equilibrium with unemployment and wage bargaining theory and estimation abstract in this paper we present a spatial equilibrium model where search frictions hinder the immediate reallocation of workers both within and across local labor markets because of the frictions firms and workers find themselves in bilateral monopoly positions when determining wages although workers are not at each instant perfectly mobile across cities in the baseline model we assume that workers flows are sufficient to equate expected utility across markets we use the model to explore the joint determination of wages unemployment house prices and city size or migration a key role of the model is to clarify conditions under which this type of spatial equilibrium setup can be estimated we then use u s data over the period 1970 2007 to explore the fit and quantitative properties of the model our main goal is to highlight forces that influence spatial equilibria at 10 year intervals

diversity and redistribution abstract in this paper we analyze the interaction of income and preference heterogeneity in a political economy framework we ask whether the presence of preference heterogeneity arising for example from different ethnic groups or geographic locations affects the ability of the poor to extract resources from the rich we study the equilibrium of a game in which coalitions of individuals form parties parties propose platforms and all individuals vote with the winning policy chosen by plurality political parties are restricted to offering platforms that are credible in that they belong to the pareto set of their members the platforms specify the values of two policy tools a general redistributive tax which is lump sum rebated or used to fund a general public good and a series of taxes whose revenue is used to fund specific targeted goods tailored to particular preferences or localities our analysis demonstrates that taste conflict first dilutes but later reinforces class interests when the degree of taste diversity is low the equilibrium policy is characterized by some amount of general income redistribution and some targeted transfers as taste diversity increases in society the set of equilibrium policies becomes more and more tilted towards special interest groups and against general redistribution as diversity increases further however the only policy that can emerge supports exclusively general redistribution

a model of political competition with citizen candidates the authors develop a model of electoral competition in which citizens choose whether or not to run as candidates a winner implements her favorite policy the equilibrium number of candidates depends negatively on the cost of running and positively on the benefits of winning for some parameter values all equilibria under plurality rule have exactly two candidates whose positions are distinct two candidate elections are more likely under plurality rule than under a runoff system the candidates positions are less differentiated under a runoff system there exist equilibria under both systems in which some candidates have no chance of winning

wages and the value of nonemployment nonemployment is often posited as a worker s outside option in wage setting models such as bargaining and wage posting the value of nonemployment is therefore a key determinant of wages we measure the wage effect of changes in the value of nonemployment among initially employed workers our quasi experimental variation in the value of nonemployment arises from four large reforms of unemployment insurance ui benefit levels in austria we document that wages are insensitive to ui benefit changes point estimates imply a wage response of less than 0 01 per 1 00 ui benefit increase and we can reject sensitivities larger than 0 03 the insensitivity holds even among workers with low wages and high predicted unemployment duration and among job switchers and recently unemployed workers the insensitivity of wages to the nonemployment value presents a puzzle to the widely used nash bargaining model which predicts a sensitivity of 0 24 0 48 our evidence supports wage setting models that insulate wages from the value of nonemployment

cohort patterns in canadian earnings assessing the role of skill premia in inequality trends in this paper we document the pattern of change in age earnings profiles across cohorts and evaluate its implications using synthetic cohorts from the survey of consumer finances over the period 1971 to 1993 wwe show that the age earnings profiles of canadian men have been deteriorating for more recentcohorts in comparison with older cohorts we find this pattern for both high school and university educated workers in no case do we find evidence that the return to gaining experience has been increasing over time nor do we find increased within cohort dispersion of earnings we view these findings as conflicting with the hypothesis that increased skill premia largely explain the observed increase in dispersion of male weekly earnings jel classification j31 o33 ce memoire documente le pattern de changements dans les relations ges gains d une cohorte a l autre et en analyse les implications utilisant des cohortes synthetiques pour la periode 1971 93 on montre que les profils ges gains des hommes au canada se sont deteriores dans les cohortes les plus recentes on ne trouve pas de resultats qui montreraient que le rendement sur l experience accumulee s est accru dans le temps ou qu il y a dispersion accrue des gains a l interieur des cohortes les auteurs suggerent que ces resultats contredisent l hypothese que des primes accrues pour les habiletes expliqueraient l accroissement qu on a observe dans la dispersion des gains des hommes au canada