green goods are they good or bad news for the environment evidence from a laboratory experiment on impure public goods green goods such as recycled paper stationary or carbon neutral flights provide increasingly popular examples of impure public goods motivated by theoretical treatments of green goods as a bundle of private and public characteristics in proportions fixed by the provider we design an experiment with two linked treatments to test how the presence of impure public goods affects behaviour towards public good causes we set parameters such that from a standard economic perspective the presence of the impure public good is behaviourally irrelevant in a treatment where the impure public good provides only small contributions to the public good we observe that on aggregate pro social behaviour is lower in the presence of the impure public good on the contrary in the treatment where the impure public good is more generous towards the public good component at the expense of private earnings individuals are unaffected in their behaviour we observe that impure public goods that are theoretically irrelevant and are mostly self interested may hinder pro social behaviour and look for explanations in social psychology such as the phenomenon of thoughtful anchoring motivated reasoning and reluctant altruism the results from this experiment question the role of green goods in enhancing environmentally friendly behaviours

relaxing intertemporal separability a rational habits model of labor supply estimated from panel data this article relaxes the assumption of separability of preferences over time that although implausible is usually maintained in life cycle labor supply models an empirically tractable rational habits model is specified and estimated on the basis of a 10 year sample of men from the michigan panel of income dynamics the effect of past hours of work in determining current hours decisions is found to be very important and well determined having allowed for permanent individual differences and for time effects

putting sustainable investing into practice a governance framework for pension funds this article presents a framework intended to provide pension funds with practical guidance for the successful implementation of a sustainable investing strategy the framework is developed with respect to the uk and us pension funds as these share certain common legal characteristics and focuses on the changes that pension funds adopting such a strategy should make to their investment strategies and governance particularly through the formulation and articulation of clear investment mission and strong investment beliefs the article proceeds with a review of socially responsible investment sri and more recent responsible investment ri literature in the context of growing public awareness but not necessarily understanding of the concept of sustainability literature review of sri field sri ri and sustainable investing section it then examines the literature on pension fund governance arguing the need for more detailed practical guidance for funds moving towards sustainable investing especially for those implementing a sustainable investing strategy anglo american pension fund governance section it presents the framework for the practical implementation of sustainable investing in the sustainable investing framework section finally we review the relevant anglo american legal backdrop outlining how pension funds adopting our framework should approach their fiduciary obligations and then discussing potential regulatory enablers of sustainable investment legal context barriers to and enablers of sustainable investing section

unpacking the public private partnership revival abstractthis paper examines the recent resurgence of interest in public private partnerships ppps to provide infrastructure in developing countries first the paper demonstrates that there has been a revival of support for private sector participation in infrastructure second the paper argues that this revival differs from earlier attempts to increase the involvement of the private sector in public service provision in a number of respects in particular the current support for ppps is related to an increased availability of global financial capital third the paper considers the implications of this distinct feature of the revival for development

a model of labor supply fixed costs and work schedules abstract to analyze labor supply allocations we propose a three dimensional labor supply framework that distinguishes between hours worked per day days worked per week and workweeks individuals make labor supply choices given heterogeneous schedule dependent fixed costs of work the three margins are not perfect substitutes leisure on days not worked in a workweek has the largest weight in preferences leisure on weeks off has the smallest weight we use the model to analyze heterogeneous response to changes in fixed costs schedule flexibility and restrictions on weekly hours fixed costs of work affect response to each policy and determine associated losses

incentive effects of the u s welfare system a review the author would like to acknowledge support for prior work on this topic from the u s department of health and human services and helpful comments from three anonymous referees rebecca blank howard chernick john fitzgerald irwin garfinkel peter gottschalk edward gramlich david greenberg judith gueron james heckman v joseph hotz robert hutchens michael keane frank levy larry mead michael murray robert plotnick anuradha rangarajan philip robins howard rolston jeffrey smith and daniel weinberg all opinions and errors are those of the author alone

the effect of income taxation on labor supply in the united states the effect of income taxation on the labor supply of prime age married men and women in the united states is examined using econometric methods similar to those used in the influential work of jerry hausman male labor supply is found to be relatively invariant to the net wage and virtual income in all specifications estimated the estimated impact of taxation on the labor supply of married women depends critically on the method used to estimate the labor supply function estimated net wage and virtual income elasticities are considerably larger when data on nonparticipants are included than when the estimation is conducted conditional on hours being greater than zero

a time series analysis of representative agent models of consumption andleisure choice under uncertainty this paper investigates empirically a model of aggregate consumption and leisure decisions in which utility from goods and leisure is nontime separable the nonseparability of preferences accommodates intertemporal substitution or complementarity of leisure and thereby affects the comovements in aggregate compensation and hours worked these cross relations are examined empirically using postwar monthly u s data on quantities real wages and the real return on the one month treasury bill the estimated values of the parameters governing preferences differ significantly from the values assumed in several studies of real business models several possible explanations of these discrepancies are discussed

new evidence on labor supply employment versus hours elasticities by sex and marital status using the tri annual micro panel data of the survey of income and program participation we estimate fixed effects labor supply models separating the extensive and intensive margins the employment elasticity is 0 6 for single men versus 1 1 for married men the employment elasticity is 2 4 for single women versus 1 8 for married women the compensated hours worked elasticity is 0 4 for employed single and married men and 0 7 for employed single and married women the implied aggregate employment elasticity of 1 5 and hours per employee elasticity of 0 5 indicate employment fluctuations account for three fourths of wage induced variation in labor hours

assessing empirical approaches for analyzing taxes and labor supply recent surveys on the labor supply responses of men document a divergence in the estimates of substitution and income effects obtained using various estimation approaches generally studies accounting for nonlinear tax schedules in a static setting via a piecewise linear approach produce estimates that typically imply higher substitution and lower income responses than are suggested by empirical work applying other approaches this paper demonstrates that maximum likelihood estimation of a consumer choice problem with nonlinear budget sets implicitly relies on the satisfaction of inequality constraints that translate into behaviorally meaningful restrictions these constraints arise not as a consequence of economic theory but instead as a requirement to create a properly defined statistical model in the analysis of piecewise linear budget sets the implicit constraints required by maximum likelihood in estimation amount to imposition of slutsky conditions at all wage income combinations associated with kink points in the analysis of differentiable budget sets the tacit constraints invoked by maximum likelihood also involve inequality restrictions on slutsky terms the empirical work presented in this study supports the contention that these implicit constraints play a major role in explaining the discrepancies in estimates found in the literature on men s labor supply

an empirical model of labor supply in a life cycle setting this paper formulates and estimates a structural intertemporal model of labor supply using theoretical characterizations derived from an economic model of lifetime behavior a two step empirical analysis yields estimates of intertemporal and uncompensated substitution effects which provide the information needed to predict the response of hours of work to life cycle wage growth and shifts in the lifetime wage path

bounds on elasticities with optimization frictions a synthesis of micro and macro evidence on labor supply how can price elasticities be identified when agents face optimization frictions such as adjustment costs or inattention i derive bounds on structural price elasticities that are a function of the observed effect of a price change on demand the size of the price change and the degree of frictions the degree of frictions is measured by the utility losses agents tolerate to deviate from the frictionless optimum the bounds imply that frictions affect intensive margin elasticities much more than extensive margin elasticities i apply these bounds to the literature on labor supply the utility costs of ignoring the tax changes used to identify intensive margin labor supply elasticities are typically less than 1 of earnings as a result small frictions can explain the differences between micro and macro elasticities extensive and intensive margin elasticities and other disparate findings pooling estimates from existing studies i estimate a hicksian labor supply elasticity of 0 33 on the intensive margin and 0 25 on the extensive margin after accounting for frictions

welfare analysis of tax reforms using household data abstract this paper discusses a methodology for calculating the distribution of gains and losses from a policy change using data for a large sample of households estimates are based on the equivalent income function which is money metric utility defined over observable variables this enables calculations to be standardised and a computer program to compute the statistics presented in the paper is available for a general demand system equivalent income is related to measures of deadweight loss and standard errors are computed for each of the welfare measures an application to u k data for 5 895 households is given which simulates a reform that involves eliminating housing subsidies

labor supply deadweight loss and tax reform act of 1986 a nonparametric evaluation using panel data abstract tax reform act of 1986 tra 1986 has provided an invaluable source of variation in tax rates to study the effects of tax reforms on labor supply in the us most existing studies exploiting variation generated by tra 1986 have used cross sectional variation in tax rates or assumed a linear labor supply function or have not couched their analysis in a nonlinear budget set framework this paper uses the drastic variation in the budget set induced by tra 1986 as a source of identification and combines two novel approaches to estimate behavioral effects of tax reforms i first use nonparametric estimation methods with nonlinear budget sets blomquist soren newey w 2002 nonparametric estimation with nonlinear budget sets econometrica 70 6 2455 2480 to estimate a labor supply function using waves of psid just before and after tra 1986 nonparametric method developed in hausman and newey hausman j whitney newey 1995 nonparametric measurement of exact consumer s surplus and deadweight loss econometrica 63 1145 76 is then applied to estimate the deadweight loss from tra 1986 the nonparametric estimate of the compensated wage elasticity is 0 22 i find that tra 1986 had a small but positive effect on labor supply of men of about 2 at the sample mean tra 1986 was associated with robust reduction in deadweight loss from the pre tra 1986 level and this reduction is positively correlated with income and wages

the labor supply response to mismeasured but predictable wage changes most panel data studies of intertemporal labor supply assume classical measurement error recent validation studies refute this assumption in this study i address nonclassical measurement error explicitly i use data on males from the panel study of income dynamics validation study to purge measurement error from the panel study of income dynamics i find a large amount of predictable wage variation in the data even after allowing for measurement error however there is almost no labor supply response to these predictable wage changes therefore failure to control for nonclassical measurement error cannot explain the low estimated labor supply elasticities in other papers

nonparametric estimation of the impact of taxes on female labor supply this paper proposes a simple extension of nonparametric estimation methods for nonlinear budget set models derived in blomquist and newey 2002 to censored dependent variables the nonparametric method is applied to estimate female labor supply elasticities using data on married women from the 1985 and 1989 waves of the panel study of income dynamics exploiting the substantial variation in budget sets caused by the tax reform act of 1986 as a source of identification the estimated wage elasticities from this new method are 0 56 overall and 0 27 on the intensive margin the income elasticity estimates are close to 0 67 overall and 0 13 on the intensive margin compared with the linear labor supply model the estimated elasticities are usually larger for the nonparametric specifications that account for nonlinear budget sets copyright 2010 john wiley sons ltd

the financialization of business property and what it means for cities and regions halbert l henneberry j and mouzakis f the financialization of business property and what it means for cities and regions regional studies the papers in the special issue examine the strategies and practices of investors and their relations with other actors involved in the production of business property although the globalization of these activities has occurred largely in the last 10 20 years it has prompted marked changes in the geography of commercial property investment international capital has flowed to a limited number of favoured locations but because of the spatial fixity of real property local actors and institutions remain an important influence on investment decisions this poses challenges for urban development and regeneration policies that depend on private investment capital

social image concerns and welfare take up abstract using a laboratory experiment we present first evidence that social image concerns causally reduce the take up of an individually beneficial transfer our design manipulates the informativeness of the take up decision by varying whether transfer eligibility is based on ability or luck and how the transfer is financed we find that subjects avoid the inference both of being low skilled ability stigma and of being willing to live off others free rider stigma using a placebo treatment we exclude other explanations for the observed stigma effects although stigma reduces take up elicitation of political preferences reveals that only a minority of taxpayers vote for the public transfer

the taxation of superstars how are optimal taxes affected by the presence of superstar phenomena at the top of the earnings distribution to answer this question we extend the mirrlees model to incorporate an assignment problem in the labor market that generates superstar effects perhaps surprisingly rather than providing a rationale for higher taxes we show that superstar effects provide a force for lower marginal taxes conditional on the observed distribution of earnings superstar effects make the earnings schedule convex which increases the responsiveness of individual earnings to tax changes we show that various common elasticity measures are not sufficient statistics and must be adjusted upwards in optimal tax formulas finally we study a comparative static that does not keep the observed earnings distribution fixed when superstar technologies are introduced inequality increases but we obtain a neutrality result finding tax rates at the top unaltered

a life cycle consistent empirical model of family labour supply using cross section data this paper estimates a utility maximising model of the joint determination of male and female labour supplies using a sample of married couples from the u k family expenditure survey the emphasis is on the estimation of within period preferences that are consistent with intertemporal two stage budgeting under uncertainty however the approach we adopt provides an alternative method of estimating certain aspects of life cycle behaviour to the fixed effects constant approach of heckman and macurdy 1980 macurdy 1981 and browning deaton and irish 1985 moreover it relaxes some of the underlying restrictions that are implicit in these constant models under uncertainty

does the choice of consumption measure matter an application to the permanent income hypothesis abstract food consumption in the panel study of income dynamics is used as a proxy for total consumption in many applications in economics including tests of the permanent income hypothesis tests of separability between consumption and leisure and tests of intergenerational altruism food however explains only a small fraction of the variation in total consumption i propose a measure of composite consumption based on predicted wealth and compare it both to food consumption and to skinner s 1987 measure of predicted consumption in a test of the permanent income hypothesis using a log linear intertemporal consumption function i find that food does not reject the permanent income hypothesis but both skinner s predicted consumption and the composite measure proposed here to reject the hypothesis

workers should want to pay more for social security i introduction although economic theory cannot resolve all the controversies concerning social security simple supply and demand analysis can helpfully change the terms of the debate concerned with how the social security tax is divided between employers and workers defenders of the existing system typically argue that workers pay only half the tax 6 2 because as required by law the other half is paid by employers opponents of the existing system typically argue that workers pay all of the social security tax because their compensation is reduced by employers to offset their portion of the tax for example former house majority leader dick armey 2005 states that social security alone takes 12 4 percent of workers incomes that s more than most workers pay in income taxes in a reply to armey marilyn scheiner 2005 states that armey should have said that social security alone takes 6 2 percent of workers income the employer matches the employee s contribution for a total of 12 4 percent going into the social security coffers 1 the first thing economic analysis tells us about this debate is that both sides are wrong on the facts barring unlikely conditions the second and more interesting insight is that each side of the debate is making a claim that supports the position of the other side any student in an economic principles course should know that the distribution of a payroll tax burden depends on the relative elasticities of the labor demand and supply curves if the labor supply curve is very inelastic relative to the labor demand curve then most of the burden of a payroll tax will fall on the workers on the other hand if the labor demand curve is very inelastic relative to the labor supply curve most of the burden will fall on the employer so the debate over who bears most of the cost of the social security tax has to consider the relative elasticities of labor supply and demand what the social security legislation states about the distribution of the tax burden is completely irrelevant 2 this may seem to suggest that the opponents supporters of social security should argue that labor supply is less more elastic than labor demand because this implies that less most of the tax burden is borne by the employer but why should the desirability of social security depend on the distribution of the tax burden supposedly there are benefits from social security so its desirability should depend on how those benefits compare to the tax and how the net benefits are distributed even though labor supply and demand elasticities are relevant to the distribution of gains or losses from social security we shall see that the desirability of social security as measured by its net value and its benefits to workers is completely independent of those elasticities once we take into consideration the benefits of social security we find that when advocates and opponents argue over the incidence of the tax they have their arguments completely backward the strongest argument in favor of social security is that workers are paying more than its cost on the other hand the strongest argument against social security is that the burden of financing it falls mostly on employers if employers are paying most of the cost of social security then for the sake of workers it should be scrapped immediately ii social security and shifts in the labor supply and demand curves our argument is based on straightforward implications of labor supply and demand curves shifts in response to the costs and benefits of social security 3 we begin in figure 1 with labor supply curve s and labor demand curve d assumed relevant without before social security the vertical axis represents the monetary wage and the horizontal axis represents the quantity of labor the equilibrium wage and labor quantity are given by w sub b and l sub b respectively

the effects of progressive taxation on labor supply when hours and wages are jointly determined this paper extends a standard intertemporal labor supply model to account for progressive taxation as well as the joint determination of hourly wages and hours worked we show that these two factors can have implications for both estimating labor supply elasticities as well as for using these elasticities in tax analysis failure to account for wage hours ties and progressive taxation may cause the hours response to marginal tax rate changes to be understated by 5 to 30 percent for men

conspicuous consumption and race using nationally representative data on consumption we show that blacks and hispanics devote larger shares of their expenditure bundles to visible goods clothing jewelry and cars than do comparable whites these differences exist among virtually all subpopulations are relatively constant over time and are economically large although racial differences in utility preference parameters might account for a portion of these consumption differences we emphasize instead a model of status seeking in which conspicuous consumption is used as a costly indicator of a household s economic position using merged data on race and state level income we demonstrate that a key prediction of the status signaling model that visible consumption should be declining in reference group income is strongly borne out in the data for each racial group moreover we show that accounting for differences in reference group income characteristics explains most of the racial difference in visible consumption

the contributions of the economics of information to twentieth century economics in the e eld of economics perhaps the most important break with the past one that leaves open huge areas for future work lies in the economics of information it is now recognized that information is imperfect obtaining information can be costly there are important asymmetries of information and the extent of information asymmetries is affected by actions of e rms and individuals this recognition deeply affects the understanding of wisdom inherited from the past such as the fundamental welfare theorem and some of the basic characterization of a market economy and provides explanations of economic and social phenomena that otherwise would be hard to understand i introduction the century coming to a close has seen vast changes in economics in both ideas and methodology upon ree ection it is remarkable however how many of the seeds of advances in this century were sowed in the previous i would argue that perhaps the most important break with the past one that leaves open huge areas for future work lies in the economics of information the recognition that information is imperfect that obtaining information can be costly that there are important asymmetries of information and that the extent of information asymmetries is affected by actions of e rms and individuals has had profound implications for the wisdom inherited from the past and has provided explanations of economic and social phenomena that otherwise would be hard to understand in this essay i wish to argue that information economics has had directly and indirectly a profound effect on how we think about economics today eighteenth and nineteenth century antecedents to be sure marshall and other nineteenth century economists talked about problems of imperfect information but with one exception discussions of information were obiter dicta caveats at the end of the analysis they were never at the center

running to keep in the same place consumer choice as a game of status if individuals care about their status defined as their rank in the distribution of consumption of one positional good then the consumer s problem is strategic as her utility depends on the consumption choices of others in the symmetric nash equilibrium each individual spends an inefficiently high amount on the status good using techniques from auction theory we analyze the effects of exogenous changes in the distribution of income in a richer society almost all individuals spend more on conspicuous consumption and individual utility is lower at each income level in a more equal society the poor are worse off

intertemporal preferences and labor supply in this paper the authors examine whether nonseparable preference structures ar e important in characterizing life cycle labor supply using longitud inal data on prime age males from the panel study of income dynamics they estimate a model of life cycle leisure and consumption under un certainty in which intertemporal preferences are allowed to be nonsep arable in leisure the model tests several alternative specifications considered in the literature they investigate the robustness of the ir findings to certain forms of population heterogeneity and types of model misspecification across alternative specifications the autho rs find that the standard assumption of intertemporally separable pre ferences for leisure is not consistent with the data copyright 1988 by the econometric society

the elasticity of intertemporal substitution new evidence from 401 k participation abstract using health and retirement study data and a structural econometric model we exploit variation in employer matching rates in 401 k plans to generate new estimates of the eis 0 74 in our richest specification with a 95 confidence interval of 0 37 1 21

intertemporal substitution in labor supply evidence from micro data the sensitivity of the supply of labor to intertemporal variation in the wage is an important issue in macroeconomics the analysis of social security and pensions and the study of life cycle patterns of work this paper explores two approaches to the measurement of intertemporal substitution that have appeared in the literature the first approach is to use consumption to control for wealth and unobserved expectations about future wages in the labor supply equation the second approach is to estimate a first difference equation for hours in which labor supply from the previous period serves as a control for wealth and wage expectations the results indicate that intertemporal substitution elasticity for married men is positive but small

new finance for america s cities hebb t and sharma r new finance for america s cities regional studies in the past investment in cities built environment was primarily carried out by government with public good as the primary motivation but governments are increasingly struggling to find the available capital required for public financing of cities investment needs this paper suggests that there are new sources of finance available for investment in america s cities retirement savings are being used to invest in these cities future growth while such investment generates positive ancillary benefits for the cities it is not the primary purpose of this capital the motivation for large institutional investors including pension funds and sovereign wealth funds is the risk adjusted rate of return this private profit driven motivation leads to different investment decision making than was found in the past when public good was the primary driver

a survey of the economics of fair trade fair trade has spread in developing countries as an initiative aimed at lifting poor smallholder farmers out of poverty by providing them with premium prices availability of credit and improved community development and social goods fair trade is also viewed as a niche market for high value products in a context of globalization and trade liberalization policies that affect smallholder farmers in developing countries the question of whether fair trade affects the welfare of rural farmers however is particularly contentious this paper provides a review of the fair trade literature both theoretical and empirical with a specific focus on the analysis of small scale producer s welfare in developing countries our review shows that while most empirical papers have focused on the impacts of fair trade on prices and income our review highlights the importance of limited market access and changes in productivity likewise little is known about the impacts of fair trade on labor markets and human capital investments persistent methodological challenges make it challenging however to assess the causal impact of this certification and labelling initiative

estimating life cycle labor supply tax effects we present an econometrically tractable life cycle labor supply model for panel data including intertemporally progressive taxes on uncertai wage and nonwge incomes our two stage fixedeffects generalized method of moments approach first extimates intretemporal and then intertemporal preferences specification testing domonstrates the value of incorporating joint progressive taxation of labor and nonlabor incomes results for prime age men emphasize the roles played by hourly wage endogeneity worker specific effects the measure of the rate of pay and intemporal budget constaint nonseparability simulations indicate that recent tax reform while not self financing stimulated made labor supplied by about 3 percent and reduced deadweight loss about 16 percent

a partnership model of corporate ethics the stock market crash of 1987 had a profound effect on corporate australia and the australian community in general the fall out revealed that some of our most respected business figures had not been as ethical or even as lawful as we would have hoped this impropriety produced in australia an awakening to business ethics whilst many companies endeavoured to introduce ethical practices into their corporations they perceived ethics as a way of minimising damage to the corporation and in some cases as a means of competitive advantage what was lost was the reason that one should embark on business ethics and that is to make the society and corporate australia a more ethical place in which to exist this paper proposes a model based on 2 factors commitment and partnerships as a means of enabling corporate australia to refocus attention on the main purpose of being inherently ethical in all that we do this ethical model requires a commitment to partnerships with all stakeholders both internal and external in an attempt to enhance the level of ethical business practices that are contemplated and pursued within corporate australia whilst the research agenda and the information collected is australian based it is hoped that the ideas contained within this paper will have a wider appeal to corporations in similar cultural settings

finance business property and urban and regional development halbert l henneberry j and mouzakis f finance business property and urban and regional development regional studies compared with other factors of production the supply of business property and its role in urban and regional development has received comparatively little attention traditional analyses assume that the supply of such property responds to demand in a relatively unproblematic way however there is evidence that institutional structures and processes in the property and capital markets have produced regional imbalances in the quantity quality and price of business accommodation benefiting some places and handicapping others such imbalances are present to different degrees internationally and their characteristics and causes are similarly varied the special issue addresses this gap in knowledge

do fair trade and eco labels in coffee wake up the consumer conscience abstract in this study a face to face survey was conducted in order to reveal consumer preferences for ethical and environmentally sound labeling programs in coffee valuation questions regarding the fair trade shade grown and organic coffee labels were asked using a payment card format after consumers were previously informed about each of the labeling programs results suggest that consumers are very receptive toward both fair trade and shade grown coffee labels and consequently are willing to pay higher premiums for these labeling programs than for the organic coffee

conspicuous conservation the prius halo and willingness to pay for environmental bona fides abstract this paper develops a theory of conspicuous conservation a phenomenon related to conspicuous consumption in which individuals seek status through displays of austerity amid growing concern about environmental protection we identify a statistically and economically significant conspicuous conservation effect in vehicle purchase decisions and estimate a mean willingness to pay for the green signal provided by the distinctively designed toyota prius in the range of 430 4200 depending upon the owner s location results are related to the growing literature on green markets and suggest that policy should target less conspicuous conservation investments that will be under provided relative to those that confer a status benefit

the effect of income taxation on consumption and labor supply we estimate the incentive effects of income taxation in a life cycle model of consumption and labor supply without intratemporal strong separability we find that consumption and hours worked are direct complements in utility both increase with a compensated increase in the net wage the compensated net wage elasticity is about 0 3 nearly double estimates for u s men from a linear labor supply specification estimated intertemporal elasticities indicate significant intertemporal smoothing of utility the estimated marginal welfare cost of government revenue is 6 20 which is about half the estimated welfare cost when additivity between consumption and leisure is incorrectly imposed

labour supply in a two period model the effect of a nonlinear progressive income tax earlier studies of labour supply in a life cycle context have typically either neglected taxes completely or represented the income tax by a linear function the present paper studies how the qualitative conclusions of a traditional life cycle model of labour supply are changed when a nonlinear tax is introduced into the model it is shown that the comparative statics results and the characterization of the consumption and labour supply paths depend critically on whether capital and labour income are taxed jointly or separately and on the progressivity nonlinearity of the income tax few of the results valid for a linear income tax carry over to the nonlinear case

a signaling explanation for charity this article examines a novel but plausible motive for charitable giving charitable donations which are observable can signal wealth or income the signaling equilibrium of charitable donations has attractive properties donations increase proportionally with population size governmental funding for public goods affects private charity only through an income effect crowding out need not be complete income redistribution is generically nonneutral increasing the spread between the poorest and richest person in a community tends to increase private donations our theory are based on the assumption that people are willing to make charitable donations even if they will not increase provision of the public good the data on charitable giving support the hypothesis that donors donate at least partly for signaling purposes rather than only to aid the recipient or to obtain satisfactions unrelated to status though charitable organizations usually report donations within categories thus not allowing perfect revelation for analytical tractability we shall consider an equilibrium with perfect revelation and a continuum of types as characterized in george j mailath 1987 and norman j ireland 1994

who cares about social image this paper experimentally investigates how concerns for social approval relate to intrinsic motivations to purchase ethically participants state their willingness to pay for both a fair trade and a conventional chocolate bar in private or publicly a standard model of social image predicts that all participants increase their fair trade premium when facing an audience we find that the premium is indeed higher in public than in private this effect however is driven by participants who preferred a conventional chocolate bar over a fair trade one in a pre lab choice for those who chose the fair trade chocolate bar public exposure does not change the fair trade premium this is captured by a generalized model where intrinsic preferences and the concern for social approval are negatively correlated

the role of food stamps in consumption stabilization although the food stamp program is the largest universal entitlement program in the social safety net little is known about its stabilizing role in household income and consumption using data from the panel study of income dynamics spanning 1980 99 we estimate the volatility of income with and without food stamps coupled with a variance decomposition of consumption among families at high ex ante risk of food stamp participation food stamps reduced income volatility by about 12 percent and food consumption volatility by about 14 percent there was however a marked decline in consumption smoothing benefits of the program in the early 1990s relative to the 1980s

labour supply the roles of human capital and the extensive margin we specify and estimate a life cycle labour supply model that expands on earlier work by simultaneously including human capital accumulation saving and bequests an active extensive margin a realistic specification of the progressive tax structure and the social security system and an accounting for private pensions and health expenditures by incorporating all these features we develop new insights into how taxes affect life cycle labour supply for instance we find that labour supply elasticities vary in important ways with age education and the tax structure itself we also show how human capital affects elasticities differently on the intensive versus extensive margins

infrequent housing adjustment limited participation and monetary policy this paper asks why monetary contractions have strong effects on the housing market the paper presents a model with staggered housing adjustment in which monetary policy has real effects in the absence of any rigidity in producer pricing or wages limited participation in financial markets leads to a rise in the real mortgage rate following an increase in the nominal short rate since households must take on a mortgage to consume housing the rise in the real interest rate reduces the share of residential investment in output

corrigendum on a life cycle model of female labour supply in the empirical work in our article on the intertemporal substitution of leisure time for married women heckman and macurdy 1980 we inadvertently constrained the estimated intertemporal substitution elasticity to be too high since this parameter plays a prominent role in discussions of equilibrium models of the business cycle and since our empirical work has been cited in discussions on this topic e g hall 1980 we would like to present a corrected set of empirical results for our model the period t utility function adopted in this note is in the notation of our original paper equation 15