financial wealth consumption smoothing and income shocks arising from job loss one of the reasons for setting up an unemployment insurance scheme is to allow job losers to smooth consumption we test for the impact of unemployment benefits on changes in household food expenditure of individuals who have recently experienced a job loss we also study the relationship between unemployment benefits and the financial wealth of the unemployed from our empirical analysis we conclude that for households without financial wealth at the time of job loss unemployment benefits help to smooth food consumption for households running debt before job loss there is evidence that lower replacement rates lead to a postponement of debt repayment

consumer demand and the life cycle allocation of household expenditures the purpose of this paper is to estimate the parameters of household preferences that determine the allocation of goods within the period and over the life cycle using micro data in doing so the authors are able to identify important effects of demographics labor market status and other household characteristics on the intertemporal allocation of expenditure they test the validity of the life cycle model using excess sensitivity tests and find that controlling for demographics and labor market status variables can largely explain the excess sensitivity of consumption to anticipated changes in income

extrinsic versus intrinsic problems of agricultural cooperation anti incentivism in tanzania and china peasant willingness to engage in collective farming and the efficiency of collective farms once established may be preconditioned on local self determination participatory control discriminating work incentives and external manoeuvrability in the absence of such preconditions whether or not there exist economies of scale sufficient to offset effectively minimised incentive problems cannot be determined anti incentivism bureaucratic controls and extractive external environments are identified as factors inhibiting successful collective farming in both tanzania and china explanations of these tendencies in the two countries are sought in their political economies and ideological structures

the household responsibility system in china s agricultural reform a theoretical and empirical study the emergence and eventual prevalence of the household responsibility system which replaces the production team system as the unit of production and income distribution has brought about dramatic changes in china s rural areas since 1979 this institutional change has resulted in remarkable growth in agricultural productivity however in the literature on collective farms a theory that is capable of explaining the causes and effects of this change is yet to be developed the formal theory about collective economies developed so far by ward domar sen oi and clayton bradley maurice and ferguson cameron bonin chinn israelsen putterman and others suggests that the allocation of resources in a collective farm is efficient at least in

pigou s law and the proportionality of income and price elasticities of demand abstract pigou s law states that for preferences characterized by additively separable utility and constant marginal utility of income and goods with a negligible budget share there is a proportional relationship between the income and uncompensated own price elasticities of demand the factor of proportionality being the income elasticity of the marginal utility of income we derive a general version of pigou s law that relaxes these assumptions we then show that several published variants of pigou s law are special cases of the general version for the additional restrictions on preferences and budget shares they impose

luxuries are easier to postpone a proof we show that marshallian income elasticities are proportional to frisch own price elasticities if all goods are additively separable this implies that luxuries are likely to be easier to postpone it also implies that preferences over consumption are unlikely to display a constant elasticity of substitution

transition and enterprise restructuring the development of individual farming in romania economic reforms have induced enterprise restructuring in transition countries in agriculture the most dramatic form of restructuring is the break up of state and collective farms into individual farms the development of individual farming varies strongly between countries regions and households this paper uses household level data from a 1996 survey in romania to analyze which household and regional characteristics determine the shift to individual farming individual farming is influenced by several household characteristics such as the human capital education age farming experience physical capital endowments ownership of land buildings machinery livestock and access to other finance sources off farm wages pensions furthermore environmental factors such as infrastructure local access to inputs and the pre reform importance of individual farming in the region all affect the development of individual farming

distributional effects of agricultural cooperatives in china exclusion of smallholders and potential gains on participation abstract this paper examines the treatment effects of the agricultural cooperative and publicly funded extension services on individual household economy using data collected by the author from watermelon producing farm households in rural nanjing the cooperative addressed in this study restricts the participation of small scale farmers implying that selection into the program must be taken into consideration for an accurate assessment of the treatment effect the econometric analysis revealed that government extension services have a modest effect on farm income in contrast the treatment effect of the agricultural cooperative is robust and substantially large accounting for nearly 70 of the pre matching difference this suggests that the agricultural cooperative system is an important avenue for farmers to improve their economic status the treatment effect of the agricultural cooperative is highly heterogeneous the economic benefits arising from the cooperative are significant only for small scale farms we can argue that a coexistence of smallholder exclusion and the treatment effect in favor of small scale farms poses serious challenges to pro poor agricultural growth in china

farm strategy self selection and productivity can small farming groups offer production benefits to farmers in post socialist romania abstract this paper addresses two questions why are romanian farmers continuing to place land in cooperative forms of farming when theory suggests that private farming is more productive and are there efficiency gains to be had from cooperative farming endeavors results from an econometric selection model suggest that smaller endogenously developed farming cooperatives such as family societies provide benefits over private farming strategies under certain conditions this paper questions the wholesale rejection of cooperation around production and challenges policy to move away from the typically dichotomized presentation of agrarian structure as being a trade off between private small scale farming and large scale collective farming

the reaction of household consumption to predictable changes in social security taxes the key implication of rational expectations and the basic life cycle permanent income hypothesis that predictable changes in income have no effect on the growth rate of consumption expenditures is examined this implication is important for understanding the effectiveness and optimal timing of fiscal policy the causes and propagation of business cycles and the effects of income fluctuations on the growth rate of the economy using household level consumption data from the consumer expenditure survey whether expenditures on nondurable goods increase contemporaneously with predictable changes in social security tax withholding is tested it is found that households do change their consumption expenditures in response to the predictable fluctuations in income induced by the social security tax system

access to capital and agrarian production organisation there are two problems both universal that entrepreneurs in any economy must contend with firstly an agent generally has access only to a limited amount of working capital secondly workers hired by an agent are subject to moral hazard and this necessitates their supervision this paper models for an agrarian economy the constraints imposed on entrepreneurs activities by these two problems and endogenously determines the various organisational forms of production as well as the allocation of resources that will obtain with a simple model we endeavour to explain a diverse set of empirical observations pertaining to the less developed countries in terms of the general processes that determine the distribution of income among the various agents and the hierarchical relationships that develop among them agricultural production typically involves a period of several months between the time the inputs are purchased and the time the output is marketed access to working capital and hence to the credit market thus plays an important role in a farmer s production decisions the distribution of access to credit in turn tends to be an important determinant of income distribution in poor agrarian economies credit is invariably rationed according to the ability to offer collateral the amount of working capital a farmer can mobilise therefore depends on the amount of land he owns which is often a good proxy for his overall wealth and thus his ability to offer collateral further since hired hands have a propensity to shirk they need to be supervised and therefore the

the importance of modeling spatial spillovers in public choice analysis it is frequently assumed that regional observations on local government behavior voters regional taxes etc can be analyzed using ordinary least squares ols methods we discuss spatial regression models in empirical studies of public choice issues using impacts arising from population migration on the provision of county level government services as an illustration spatial regressions allow an examination of the direct and indirect spatial spillover effects which taken together determine the total impact on the dependent variable arising from a change in the explanatory variables this decomposition should be quite useful in empirical public choice studies

deconstructing life cycle expenditure we revisit two well known facts regarding life cycle expenditures the hump shaped profile of nondurable expenditures and the increase in cross household consumption inequality we document that the behavior of total nondurables masks surprising heterogeneity in the life cycle profile of individual consumption subcomponents we provide evidence that the categories driving life cycle consumption either are inputs into market work or are amenable to home production using a quantitative model we document that the disaggregated life cycle consumption profiles imply a level of uninsurable permanent income risk that is substantially lower than that implied by a model using a composite consumption good

production organization and efficiency during transition an empirical analysis of east german agriculture enterprise restructuring is expected to improve efficiency in transition economies with data from former east germany we compare the efficiency of family farms and partnerships with large scale successor organizations of the collective and state farms lsos using parametric and nonparametric techniques we show that lsos display lower technical efficiency than do family farms and partnerships but that this difference is small and declining during transition mainly as a result of structural changes in agriculture family farms are not as scale efficient as partnerships and lsos and partnerships are superior to all other organizational forms

institutions investment and growth new cross country and panel data evidence this paper outlines the alternative channels through which institutions affect growth and studies the empirical relationship between institutions investment and growth the empirical results indicate that i free market institutions have a positive effect on growth ii economic freedom affects growth through both a direct effect on total factor productivity and an indirect effect on investment iii political and civil liberties may stimulate investment iv an important interaction exists between freedom and human capital investment v milton friedman s conjectures on the relation between political and economic freedom are correct vi promoting economic freedom is an effective policy toward facilitating growth and other types of freedom jel o17 o40 p51

wealth varying intertemporal elasticities of substitution evidence from panel and aggregate data abstract this paper constructs and estimates a model of consumer preferences in which the intertemporal elasticity of substitution ies of consumption expenditure rises with the level of wealth the purpose of this paper is to measure the effect that systematic variation in the ies of poor and rich consumers has on the ies of aggregate consumption expenditure we find economically significant differences in the ies of poor and rich consumers in indian panel data on the consumption of individual households we also find economically significant differences in the ies measured in aggregate time series data for the u s and india

safety in small numbers local strategies for survival and growth in romania and the kyrgyz republic abstract using a comparative study of farm households from poor rural communities in kyrgyzstan and north east romania this paper explores the intricacies of a variety of forms of cooperation in agriculture the findings highlight the safety net labour specialisation asset pooling and service delivery functions of different groups that enable rural livelihoods to at times cope and at times improve in situations of imperfect information sluggish labour and land markets and constrained capital markets the research presented here indicates that small to medium forms of cooperation provide the rural poor with predictable livelihood strategies under conditions of uncertainty specifically cooperative action in the form of groups substitutes for imperfect markets despite the push for decollectivisation and privatisation across transition countries there remains a place for encouraging group initiatives at least for the medium term on the grounds of both poverty alleviation and agricultural growth

the political economy of benefits and costs a neoclassical approach to distributive politics this essay offers a rational political explanation for the notorious inefficiency of pork barrel projects with an optimization model of legislative behavior and legislative institutions the model emphasizes the economically arbitrary from a welfare point of view importance of the geographic incidence of benefits and costs owing to the geographic basis for political representation we explore the implications of a legislator s objective function and derive conditions under which a representative legislature will select an omnibus of projects each of which exceeds the efficient scale

job creation or destruction labor market effects of wal mart expansion this paper estimates the effect of wal mart expansion on retail employment at the county level using an instrumental variables approach to correct for both measurement error in entry dates and endogeneity of the timing of entry i find that wal mart entry increases retail employment by 100 jobs in the year of entry half of this gain disappears over the next five years as other retail establishments exit and contract leaving a long run statistically significant net gain of 50 jobs wholesale employment declines by approximately 20 jobs due to wal mart s vertical integration no spillover effect is detected in retail sectors in which wal mart does not compete directly suggesting wal mart does not create agglomeration economies in retail trade at the county level

income and consumption a micro semistructural analysis with pervasive heterogeneity we develop a model of consumption and income that allows for pervasive heterogeneity in the parameters of both processes introducing codependence between household income parameters and preference

the spending and debt response to minimum wage hikes abstract immediately following a minimum wage hike household income rises on average by about 250 per quarter and spending by roughly 700 per quarter for households with minimum wage workers most of the spending response is caused by a small number of households who purchase vehicles furthermore we find that the high spending levels are financed through increases in collateralized debt our results are consistent with a model where households can borrow against durables and face costs of adjusting their durables stock jel d12 d14 d91 j38

has wal mart buried mom and pop the impact of wal mart on self employment and small establishments in the united states this paper explores the widely accepted view that wal mart causes significant harm to the traditional small mom and pop business sector of the u s economy we present the first rigorous econometric investigation of this issue by examining the rate of self employment and the number of small employer establishments using both time series and cross sectional data we also examine alternative measures and empirical techniques for robustness contrary to popular belief our results suggest that the process of creative destruction unleashed by wal mart has had no statistically significant long run impact on the overall size and profitability of the small business sector in the united states jel l81 d59 c21 wal mart has indeed set prices low enough to drive mom pop stores out of business all over the country and kept the prices that low forever 1 during the last 20 years wal mart has moved into communities and destroyed them wiping out stores slashing the tax base and turning downtown areas into ghost towns 2 i introduction the argument that wal mart inflicts significant harm on the small mom and pop business sector of the u s economy is so widely accepted that one of the paper s opening quotes is actually from a pro wal mart article which goes on to discuss the merits and efficiency enhancements that result claiming that i n a free market large suppliers of nearly every thing will drive most small suppliers out of business even president clinton s former secretary of labor robert b reich writes in the new york times that wal mart will turn main streets into ghost towns by sucking business away from small retailers 3 wal mart watch one of the largest anti wal mart organizations features an article claiming that in iowa wal mart s expansion has been responsible for widespread closings of mom and pop stores including 555 grocery stores 298 hardware stores 293 building suppliers 161 variety shops 158 women s stores and 116 pharmacies previous estimates of the negative impact of wal mart on other businesses such as the numbers cited above however are misleading for several reasons first these estimates come from a series of applied policy studies that simply compare averages for counties with wal mart stores to those without wal mart stores 5 while the findings from these studies have garnered significant media publicity and widespread public acceptance they are problematic because no econometric methods are employed making it hard to know if the differences are statistically significant and whether or not the difference is really due to the many other economic and demographic factors that differ between counties with wal mart stores and those without the second and biggest problem with these previous studies is that they employed data only for directly competing retail business sectors within that specific county 6 because of its sheer size wal mart s true impact on the overall u s small business sector stretches far beyond the impact any one store has in any one county the idea of creative destruction first eloquently stated by schumpeter 1934 explains how entrepreneurs like sam walton are a disruptive force in an economy 7 schumpeter emphasized the beneficial aspects of this process of creative destruction one in which the introduction of new products results in the obsolescence or failure of others schumpeter pointed out that while these inventions do indeed result in business failures in certain areas they result in overall net gains because of the positive impacts on economic activity in other areas 8 these impacts are however widespread and often hard to identify 9 similarly wal mart s openings while resulting in the failure of some small businesses create opportunities for new businesses both large and small not only in that local area but also in other more distant places

success and failure of reform insights from the transition of agriculture this paper analyzes the linkages between the reform strategies in transition countries and economic performance the authors focus on agriculture because of the sharpness of the policy changes fundamental differences among countries and relative simplicity of agricultural relationships the authors document post reform performance in the transition countries of asia and europe the authors show how a pricing reform and subsidy reductions b land rights reform and policies that affect farm restructuring and c the presence institutions that facilitate exchange either markets or market substitutes affect output and productivity the paper ends with general lessons on reforms and transition

consumption responses to a large shock to financial wealth evidence from italy we estimate marginal propensities to consume from wealth shocks for italian households early in the great recession large asset price shocks in 2007 2008 underpin instrumental variables a euro fall in risky financial wealth resulted in cuts in annual total non durable consumption of 8 5 9 5 5 5 7 cents we find small effects on food spending counterfactuals indicate financial wealth effects were relatively important for consumption falls in italy in 2007 08 the estimated effects are consistent with a simulated lifecycle model that captures the wealth shock also consistent with the model are findings of stronger wealth effects for agents who were pessimistic about stock returns

does wal mart reduce social capital social capital has attracted increasing attention in recent years we use county level and individual survey data to study how wal mart affects social capital estimates using several proxies for social capital such as club membership religious activity time with friends and other measures do not support the thesis that wal mart destroys communities by reducing social capital we measure exposure to wal mart two ways wal marts per 10 000 residents and wal marts per 10 000 residents aggregated over the years since 1979 to capture a more cumulative wal mart effect we find that the coefficients on wal mart s presence are statistically insignificant in most specifications

reforms globalization and endogenous agricultural structures in this paper i draw lessons from two quasi natural experiments the transition process in former communist countries and the rapid globalization of food chains on the optimality of farms and agricultural structures more generally i argue that a the farm structures that have emerged from the transition process are much more diverse than expected ex ante b this diversity is to an important extent determined by economic mechanisms which are influenced by initial conditions eg technology and reform policies c non traditional farm structures have played an important role during transition since they were optimal to address the specific institutional and structural constraints imposed by the transition process d there is more diversity than often argued in the farms that are integrated in global food chains e endogenous institutional contracting innovations in food chains may lock existing farm structures in a long run institutional framework and f indicators based on farm structures are not a good measure of welfare effects of the globalization of food chains

social insurance and consumption an empirical inquiry the main stated purposes of social insurance programs have been the maintenance of consumption by people suffering from misfortunes and the stabilization of employment despite this most recent research on unemployment insurance ui and old age insurance has focused on secondary labor market effects with only a few studies looking at stabilization and none considering effects on consumption in this study we examine how ui will affect the consumption of recipients for some individuals ui will help remove the constraints on consumption during periods of reduced income that arise from insufficient savings and imperfect capital markets while for others the ui benefits merely augment the entire lifetime consumption stream the model enables us to estimate what fractions of the population fall into these two categories if individuals are also constrained in the allocation of their reduction consumption consumption propensities out of ui will differ from those out of nonrecipients income the model is tested on aggregate time series data covering 41 consumption categories for 1959 1978 ii and on over 14 000 individuals from the 1972 73 consumer expenditure survey in both data sets we find no more than half of ui benefits are consumed as if the recipients consumption were constrained during times of unemployment in both samples spending out of ui benefits is disproportionately on luxuries though ui recipients spend greater shares of their income on necessities the results imply that a large part of social insurance payments does not go to prevent serious imbalances in individuals lifetime consumption profiles this abstract was borrowed from another version of this item

the causes and consequences of wal mart s growth wal mart is the largest company in the world yet little is known about its economic impact this essay discusses what is known about wal mart s competitive advantage and its economic impact on local communities as well as the national and global economy and highlights the open questions to be addressed by future research

supersizing supercenters the impact of walmart supercenters on body mass index and obesity abstract researchers have linked the rise in obesity to technological progress reducing the opportunity cost of food consumption and increasing the opportunity cost of physical activity we examine this hypothesis in the context of walmart supercenters whose advancements in retail logistics have translated to substantial reductions in the prices of food and other consumer goods using data from the behavioral risk factor surveillance system matched with walmart supercenter entry dates and locations we examine the effects of supercenters on body mass index bmi and obesity we account for the endogeneity of walmart supercenter locations with an instrumental variables approach that exploits the unique geographical pattern of supercenter expansion around walmart s headquarters in bentonville arkansas an additional supercenter per 100 000 residents increases average bmi by 0 24 units and the obesity rate by 2 3 points these results imply that the proliferation of walmart supercenters explains 10 5 of the rise in obesity since the late 1980s but the resulting increase in medical expenditures offsets only a small portion of consumers savings from shopping at supercenters

shocks stocks and socks smoothing consumption over a temporary income loss we investigate how households in temporarily straitened circumstances due to an unemploy ment spell cut back on expenditures and how they spend marginal dollars of unemployment insurance ui benefit our theoretical and empirical analyses emphasize the importance of allowing for the fact that households buy durable as well as non durable goods the theoretical analysis shows that in the short run households can cut back significantly on total expenditures without a significant fall in welfare if they concentrate their budget reductions on durables we then present an empirical analysis based on a canadian survey of workers who experienced a job separation exploiting changes in the unemployment insurance system over our sample period we show that cuts in ui benefits lead to reductions in total expenditure with a stronger impact on clothing than on food expenditures our empirical strategy allows that these expenditures may be non separable from employment status the effects we find are particularly strong for households with no liquid assets before the spell started these qualitative findings are in precise agreement with the theoretical predictions jel d11 d12 d91 j65 2009 by the european economic association

land rental markets in transition theory and evidence from hungary summary this paper analyzes the determinants of household farms participation in land rental markets in transition countries we derive several hypotheses on the impact of households human capital land endowment land quality and prices transaction costs rural credit and labor market constraints our empirical analysis uses data from a representative survey of more than 1 400 hungarian household farms and hungarian official statistics land rental markets reallocate land to households with better farm management capacities households combine buying and renting of land to extend their farms land ownership is fragmented and land consolidation occurs through renting the domination of corporate farms in some regions restricts households access to land

consumption over the life cycle and over the business cycle the main aim of this paper is to assess the validity of the life cycle model of consumption in particular we address an issue that has recently received much attention especially in the macroeconomic literature that of excess sensitivity of consumption growth to income growth we do this using a time series of cross sections and a novel and flexible parameterization of preferences the former allows us to address aggregation issues directly while with the latter we can allow both the discount factor and the elasticity of intertemporal substitution eis to be affected by various observable variables and lifetime wealth the main findings can be summarized as follows i the excess sensitivity of consumption growth to labor income disappears when we control for demographic variables this is true both at life cycle and business cycle frequencies ii estimation of a flexible specification of preferences indicates that the elasticity of intertemporal substitution is a function of several variables including the level of consumption the eis increases with the level of consumption as expected iii the variables that change the eis are also important in explaining why we observe excess sensitivity over the business cycle iv we are able to reconcile our results with those reported both in the macro and micro literature v in our specification the elasticity of intertemporal substitution is not very well determined this result however should be taken with care as we have not made an effort to construct a preferred specification which would probably include additional controls for labor supply behavior the evidence presented shows that the life cycle model cannot be easily dismissed indeed we believe that the model does a good job at representing consumption behavior both over the life cycle and over the business cycle