valuing the deferred tax liability using a model of corporate investment in which the deferred tax liability never reverses i show that deferred taxes are a real economic burden whose value is the amount recognized multiplied by a fraction the numerator of the fraction is the tax depreciation rate and the denominator of the fraction is the sum of the tax depreciation rate and the cost of capital despite the requirement in statement of financial accounting standards no 109 accounting for income taxes fasb 1992 that a deferred tax liability or asset be recognized to reflect temporary differences between the book value and tax basis of assets the valuation relevance of deferred taxes is an open question davidson 1958 shows that the deferred tax liability will grow indefinitely as long as investments generate new temporary differences at least as large as the temporary differences that reverse because deferred taxes are paid in the future but not discounted their recognized values on financial statements are generally regarded to be overstated some have suggested their value is zero if the deferred tax liability never reverses these arguments are cited in stickney 1993

do better schools matter parental valuation of elementary education the evaluation of numerous school reforms requires an understanding of the value of better schools given the difficulty of calculating the relationship between school quality and student outcomes i turn to another method and use house prices to infer the value parents place on school quality i look within school districts at houses located on attendance district boundaries houses then differ only by the elementary school the child attends i thereby effectively remove the variation in neighborhoods taxes and school spending i find that parents are willing to pay 2 5 percent more for a 5 percent increase in test scores this finding is robust to a number of sensitivity checks

trade policy making in a small island economy the wto review of the maldives the purpose of this paper is to examine trade policy regime and trade related development issues in the maldives on the basis of the trade policy review maldives 2003 of the wto the key theme of the paper is that given the narrow resource base and small domestic market openness to foreign trade and investment remains the natural policy choice for a small developing economy like the maldives since the late 1980s the maldivian government has made considerable progress in implementing policy reforms driven by this conviction however the reform process is far from complete high import tariffs maintained predominantly on revenue considerations a large direct role played by the public sector in foreign trade and some key sectors of the economy lack of transparency in duty concessions and other investment incentives failure to incorporate environmental concerns as part of the national development policy and delays in meeting reform commitments under the wto are among the key items of the unfinished reform agenda

using maimonides rule to estimate the effect of class size on scholastic achievement the twelfth century rabbinic scholar maimonides proposed a maximum class size of 40 this same maximum induces a nonlinear and nonmonotonic relationship between grade enrollment and class size in israeli public schools today maimonides rule of 40 is used here to construct instrumental variables estimates of effects of class size on test scores the resulting identiecation strategy can be viewed as an application of donald campbell s regression discontinuity design to the class size question the estimates show that reducing class size induces a signiecant and substantial increase in test scores for fourth and efth graders although not for third graders when asked about their views on class size in surveys parents and teachers generally report that they prefer smaller classes this may be because those involved with teaching believe that smaller classes promote student learning or simply because smaller classes offer a more pleasant environment for the pupils and teachers who are in them mueller chase and walden 1988 social scientists and school administrators also have a longstanding interest in the class size question class size is often thought to be easier to manipulate than other school inputs and it is a variable at the heart of policy debates on school quality and the allocation of school resources in many countries see e g robinson 1990 for the united states ofsted 1995 for the united kingdom and moshel ravid 1995 for israel this broad interest in the consequences of changing class size

taking versus taxing an analysis of conscription in a private information economy most countries currently man their militaries through conscription i e a draft conventional wisdom suggests that by lowering the budgetary cost of the military a draft reduces distortionary taxation especially when military needs are large we find that this intuition is misguided when income taxes are set optimally voluntary enlistments lead to less distortionary taxation than a draft because the tax base left behind by a volunteer army tends to be more productive than that after a draft for reasonable parameter values drafts are more distortionary and less socially desirable when military needs are large

optimal tax depreciation with loss carry forward and backward options the choice of depreciation method from among straight line and accelerated methods can have a significant impact on the present value of expected tax payments this is a problem that has been studied for decades with most results indicating the optimality of accelerated methods recent research questions this claim by relaxing the assumption of positive taxable income the situation where net operating losses may be carried forward and backward in time is the subject of this paper we model this situation and establish conditions that allow straight line depreciation to be preferred over accelerated methods the results are focused around a threshold number of periods of consecutive losses which are determined by the allowable periods to carry a loss forward for consecutive losses beyond this threshold straight line will always be optimal when the cumulative depreciation charges up to and including the window are guaranteed to be applied on or before the threshold period then straight line will never be optimal

competition between private and public schools vouchers and peer group effects a theoretical and computational model with tax financed tuition free public schools and competitive tuition financed private schools is developed students differ by ability and income achievement depends on own ability and on peers abilities equilibrium has a strict hierarchy of school qualities and two dimensional student sorting with stratification by ability and income in private schools high ability low income students receive tuition discounts while low ability high income students pay tuition premia tuition vouchers increase the relative size of the private sector and the extent of student sorting and benefit high ability students relative to low ability students

urban poverty and juvenile crime evidence from a randomized housing mobility experiment this paper uses data from a randomized housing mobility experiment to study the effects of relocating families from high to low poverty neighborhoods on juvenile crime outcome measures come from juvenile arrest records taken from government administrative data our e ndings seem to suggest that providing families with the opportunity to move to lower poverty neighborhoods reduces violent criminal behavior by teens

small states small problems income growth and volatility in small states abstract small states have attracted a large amount of research in this paper we test whether small states are any different from other states in terms of their income growth and volatility outcomes we find that controlling for location small states have higher per capita gdp than other states this income advantage is largely due to a productivity advantage constituting evidence against the idea that small states suffer from an inability to exploit increasing returns to scale small states also do not have different per capita growth rates than other states small states do have greater volatility of annual growth rates which is in part due to their greater volatility of terms of trade shocks this terms of trade based volatility is in turn due to small states greater openness their greater openness on balance has however a positive net payoff for growth the one differential policy measure that might be relevant for small states is to further open up to international capital markets in order to better diversify risk but the benefits of even that are still unresolved in the literature we conclude that small states are no different from large states and so should receive the same policy advice that large states do

going to college to avoid the draft the unintended legacy of the vietnam war between 1965 and 1975 the enrollment rate of college age men in the united states rose and then fell abruptly many contemporary observers e g james davis and kenneth dolbeare 1968 attributed the surge in college attendance to draft avoidance behavior under a policy first introduced in the korean war the selective service issued college deferments to enrolled men that delayed their eligibility for conscription these deferments provided a strong incentive to remain in school for men who wanted to avoid the draft for example the college entry rate of young men rose from 54 percent in 1963 to 62 percent in 1968 the peak year of the draft moreover both the college entry rate and the number of inductions dropped sharply between 1968 and 1973 as the draft was being phased out although these parallel trends are suggestive they do not necessarily prove that draft avoidance raised the education of men who were at risk of service during the vietnam war such an inference requires an explicit specification of the counterfactual what would have happened to schooling outcomes in the absence of the draft in this paper we use trends in enrollment and completed schooling of men relative to those of women to measure the effects of draftavoidance behavior during the vietnam war our maintained hypothesis is that in the absence of gender specific factors such as the draft the relative schooling outcomes of men and women from the same cohort would follow a smooth trend in light of the sharp discontinuity in military induction rates between 1965 and 1970 we look for similar patterns in the relative enrollment rate of men and in the relative college graduation rate of men from cohorts that were at risk of induction during this period

demand for education and labor market outcomes lessons from the abolition of compulsory conscription in france before 1997 education was a way for young french men to avoid military service in the army after the abolition of compulsory conscription in 1997 this incentive to stay on in education disappeared we show that the decrease in the benefit of pursuing education for men was followed by a fall in their educational achievement relative to women and by a decrease in their relative entry wages these results suggest that high school dropout rates could be reduced by policies increasing the immediate benefits of pursuing education and that it would yield a substantial improvement in early labor market outcomes

research in accounting for income taxes abstract this paper comprehensively reviews the accounting for income taxes afit literature we begin by identifying four distinctive aspects of afit and briefly covering the rules surrounding afit we then review the existing studies in detail and offer suggestions for future research we emphasize the research questions that have been addressed most of which relate to whether the tax accounts are used to manage earnings and whether the tax accounts are priced by equity market participants we also highlight areas that have not received much research attention and that warrant future analysis

comparison of depreciation and corporate tax policies between the countries of the north american free trade area nafta and the european community ec abstract this paper compares the depreciation rules corporate income tax rates and investment tax credits of canada mexico and the united states north american free trade area with the twelve countries of the european community belgium denmark france germany greece ireland italy luxembourg the netherlands portugal spain and the united kingdom for illustrative purposes a comparative example of computer systems is included

on the optimal timing of capital taxes for many kinds of capital depreciation rates change systematically with the age of the capital consider an example that captures essential aspects of human capital both regarding its accumulation and its depreciation a worker obtains knowledge in period 0 then uses this knowledge in production in periods 1 and 2 and thereafter retires here depreciation accelerates it occurs at a 100 rate after period 2 and at a lower perhaps zero rate before that the present paper analyzes the implications of non constant depreciation rates for the optimal timing of taxes on capital income the main finding is that under natural assumptions the path of tax rates over time must be oscillatory oscillatory tax rates are optimal when depreciation rates accelerate with the age of the capital as in the above example and provided that the government can commit to the path of future tax rates but cannot apply different tax rates in a given year to different vintages of capital

replacement decisions with multiple stochastic values and depreciation abstract we develop an analytical real option solution to the after tax optimal timing boundary for a replaceable asset whose operating cost and salvage value deteriorate stochastically we construct a general replacement model from which seven other particular models can be derived along with deterministic versions we show that the presence of salvage value and tax depreciation significantly lowers the operating cost threshold that justifies and thus hastens replacement although operating cost volatility increases defer replacement increases in the salvage value volatility hasten replacement albeit modestly while increases in the correlation between costs and salvage value defer replacement reducing the tax rate or depreciation lifetime or allowing an investment tax credit yield mixed results these results are also compared with those of less complete models and deterministic versions showing that failure to consider several stochastic variables and taxation in the replacement process may lead to sub optimal decisions

moving to opportunity in boston early results of a randomized mobility experiment this paper examines the short run impacts of a change in residential neighborhood on the well being of low income families using evidence from a program in which eligibility for a housing voucher was determined by random lottery we examine the experiences of households at the boston site of moving to opportunity mto a demonstration program in five cities families in high poverty public housing projects applied to mto and were assigned by lottery to one of three groups experimental offered mobility counseling and a section 8 subsidy valid only in a census tract with a poverty rate of less than 10 percent section 8 comparison offered a geographically unrestricted section 8 subsidy or control offered no new assistance but continued to be eligible for public housing our quantitative analyses of program impacts uses data on 540 families from a baseline survey at program enrollment a follow up survey administered l to 3 5 years after random assignment and state administrative data on earnings and welfare receipt 48 percent of the experimental group and 62 percent of the section 8 comparison group moved through the mto program one to three years after program entry families in both treatment groups were more likely to be residing in neighborhoods with low poverty rates and high education levels than were families in the control group however while members of the experimental group were much more likely to be residing in suburban communities than were those in the section 8 group the lower program take up rate among the experimental group resulted in more families remaining in the most distressed communities households in both treatment groups experienced improvements in multiple measures of well being relative to the control group including increased safety improved health among household heads and fewer behavior problems among boys experimental group children were also less likely to be a victim of a personal crime to be injured or to experience an asthma attack there are no significant impacts of either mto treatment on the employment earnings or welfare receipt of household heads in the first three years after random assignment

lifetime earnings and the vietnam era draft lottery evidence from social security administrative records errata the randomly assigned risk of induction generated by the draft lottery is used to construct estimates of the effect of veteran status on civilian earnings these estimates are not biased by the fact that certain types of men are more likely than others to service in the military social security administrative records indicate that in the early 1980s long after their service in vietnam had ended the earnings of white veterans were approximately 15 percent less than the earnings of comparable nonveterans copyright 1990 by american economic association

trade policymaking in a resource rich landlocked country the wto review of mongolia the aim of this paper is to provide a comprehensive assessment of the trade policy review of mongolia tprm 2014 the tprm 2014 demonstrates that the mongolian economy is relatively open and it has very low formal trade barriers although there remain significant behind the borders barriers including poor governance and infrastructure being a landlocked country any major cross border price differences quickly results in informal trade with neighbouring china limiting mongolia s ability to pursue independent commercial policy mongolia s growth is not broad based and largely driven by the mining boom making its economy highly vulnerable to external shocks while this is not unique to mongolia and has been seen in many natural resource abundant countries experience suggests that countries with sound institutions and macroeconomic policies have overcome the so called resource curse

renewing assets with uncertain revenues and operating costs we study optimal replacement and abandonment decisions for real assets when both revenues and costs are uncertain and deteriorate with age we develop an implicit representation of the renewal boundary as the solution to a set of simultaneous equations this quasi analytical method has the merit of computational ease and transparency we show that the correlation between revenues and operating costs has a significant influence on the renewal boundary and that the increase in revenue immediately following a renewal has a greater relative influence on the boundary than either operating cost or renewal cost the quasi analytical method is sufficiently flexible to deal with other real option models involving 2 variables

mother s education and the intergenerational transmission of human capital evidence from college openings we examine the effect of maternal education on birth outcomes using vital statistics natality data from 1970 to 1999 we also assess the importance of four channels through which maternal education may improve birth outcomes use of prenatal care smoking marriage and fertility in an effort to account for the endogeneity of education attainment we use data about the availability of colleges in the womans country in her 17th year as an instrument for maternal education we find that higher maternal education improves infant health as measured by birth weight and gestational age it also increases the probability that a new mother is married reduces parity increases use of prenatal care and reduces smoking suggesting that may be important pathways for the ultimate effect on health our results add to the growing body of literature which suggests that estimates of the returns to education which focus only on increases in wages understate the total return

conscription and the returns to education evidence from a regression discontinuity in 1997 the french government put into effect a law that permanently exempted young french male citizens born after jan 1 1979 from mandatory military service while still requiring those born before that cutoff date to serve this paper uses a regression discontinuity design to identify the effect of peacetime conscription on education and labor market outcomes results indicate that conscription eligibility induces a significant increase in years of education which is consistent with conscription avoidance behavior however this increased education does not result in either an increase in graduation rates or in employment and wages additional evidence shows conscription has no direct effect on earnings suggesting that the returns to education induced by this policy was zero

economic impacts of new unionization on private sector employers 1984 2001 economic impacts of unionization on employers are difficult to estimate in the absence of large representative data on establishments with union status information estimates are also confounded by selection bias because unions could organize at highly profitable enterprises that are more likely to grow and pay higher wages using multiple establishment level data sets that represent establishments that faced organizing drives in the united states during 1984 1999 this paper uses a regression discontinuity design to estimate the impact of unionization on business survival employment output productivity and wages essentially outcomes for employers where unions barely won the election e g by one vote are compared with those where the unions barely lost the analysis finds small impacts on all outcomes that we examine estimates for wages are close to zero the evidence suggests that at least in recent decades the legal mandate that requires the employer to bargain with a certified union has had little economic impact on employers because unions have been somewhat unsuccessful at securing significant wage gains

effectiveness of one euro jobs do programme characteristics matter recent german labour market reforms introduced a large scale workfare programme called one euro jobs to activate welfare recipients and improve their employment prospects in programme design leeway is left to regional actors using administrative data and propensity score ps matching this article investigates the association between programme design and effectiveness so as to provide insight on how to increase programme effectiveness first effects of different types of one euro jobs according to planned duration and weekly working hours compared to waiting are estimated second programme types are compared directly to disentangle selection and programme effects as expected lock in effects are larger for participations with a longer planned duration but not for those with longer weekly working hours one euro jobs do not generally increase the employment prospects for east german men beyond 2 years after programme start and longer and more intensive participations even decrease employment prosp

the long run educational cost of world war ii an important component of the long run cost of a war is the loss of human capital suffered by school age children who receive less education austrian and german individuals who were 10 years old during the conflict or were more directly involved through their parents received less education than comparable individuals from nonwar countries such as switzerland and sweden we also show that these individuals experienced a sizable earnings loss some 40 years after the war which can be attributed to the educational loss caused by the conflict the implied consequences in terms of gross domestic product loss are calculated

lower and upper bounds of returns to schooling an exercise in iv estimation with different instruments abstract several recent studies based on exogenous sources of variation in educational outcomes show iv estimates of returns to schooling that are substantially higher than the corresponding ols estimates card 1995a earnings schooling and ability revisited research in labor economics 14 23 48 suggests that these results are explained by the existence of heterogenity in individual returns and by the fact that these studies are based on instruments that influence only the educational decision of individuals with high marginal returns due to either liquidity constraints or to high ability this conclusion is consistent with the local average treatment effect late interpretation of iv imbens and angrist 1994 identification and estimation of local average treatment effects econometrica 62 467 475 according to which iv identifies only the average returns of those who comply with the assignment to treatment mechanism implied by the instrument we show evidence for germany suggesting that returns to schooling are heterogeneous instruments matter and the late interpretation of iv makes sense with an appropriate choice of instruments we also show how iv can be used to approximate the range of variations of returns to schooling in germany

clean evidence on peer effects we study subjects who were asked to fill letters into envelopes with a remuneration independent of output in the pair treatment two subjects worked at the same time in the same room and peer effects were possible in the single treatment subjects worked alone and peer effects were ruled out we find evidence of peer effects in the pair treatment because the standard deviations of output are smaller within pairs than between pairs moreover average output is higher in the pair treatment thus peer effects raise productivity finally low productivity workers are the most sensitive to the behavior of peers

evaluating the labor market effects of compulsory military service we identify the causal effect of compulsory military service on conscripts subsequent labormarket outcomes by exploiting the regression discontinuity design of the military draft in germany during the 1950s unbiased estimates of the effect of military service on lifetime earnings wages and employment are obtained by comparing men born before july 1 1937 the white cohort who were exempted from compulsory military service to men who were born on or shortly after this threshold date and hence faced a positive probability of being drafted we find that the putative earnings advantage and wage premium of those who served in the armed forces vanish when selection effects are taken into account

empirical tax research in accounting this paper traces the development of archival microeconomic based empirical income tax research in accounting over the last 15 years the paper details three major areas of research i the coordination of tax and non tax factors ii the effects of taxes on asset prices and iii the taxation of multijurisdictional international and interstate commerce methodological concerns of particular interest to this field also are discussed the paper concludes with a discussion of possible directions for future research r 2001 elsevier science b v all rights reserved jel classification m41 h25 k34 g32 f23

optimal tax depreciation under a progressive tax system the focus of this paper is on the effect of a progressive tax system on optimal tax depreciation by using dynamic optimization we show that an optimal strategy exists and we provide an analytical expression for the optimal depreciation charges depreciation charges initially decrease over time and after a number of periods the firm enters a steady state where depreciation is constant and equal to replacement investments this way the optimal solution trades off the benefits of accelerated depreciation because of discounting and of constant depreciation because of the progressive tax system we show that the steady state will be reached sooner when the initial tax base is lower or when the discounting effect is stronger

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

zero returns to compulsory schooling in germany evidence and interpretation abstract we estimate the impact of compulsory schooling on earnings using changes in compulsory schooling laws in west germany after world war ii most estimates in the literature indicate returns in the range of 10 to 15 while our research design is very similar to studies for various other countries we find a zero return we find no evidence that this is due to labor market institutions or the apprenticeship training system in germany the result might be due to the fact that the basic skills most relevant for the labor market are learned earlier in germany than in other countries

operational asset replacement strategy a real options approach abstract this paper analyses the problem of replacement by investigating the optimal moment of investment replacement in a given tax environment with a given depreciation policy an operation and maintenance cost minimization model based on the definition of equivalent annual cost is applied to a real options paradigm the developed methodology allows for an innovative evaluation of the flexibility of replacement process analysis a new two factor evaluation function is introduced to quantify decisions on asset replacement under a unique cycle environment this study improves upon previous findings in the literature as it accounts for autonomous salvage value processes based on partial differential equations this model achieves a general analytical solution and particular numerical solution the results differ significantly from those observed in one factor models by showing evidence of over evaluation in optimal levels of replacement and by confirming suspicions that different types of uncertainties produce non monotonous effects on the optimal replacement level the scientific contribution of this study lies in new and stronger approaches to equivalent annual cost literature supplying an algorithm for operation and maintenance cost minimization that is conditioned by autonomous salvage value this study also contributes to the real options literature by developing a two factor model with brownian processes applied to asset replacement

investment under uncertainty the case of replacement investment decisions we analyze the determinants of replacement investment decisions in a contingent claims model with maintenance and operation cost uncertainty we find that the optimal time between replacements is increasing in the volatility of cost the purchase price of a new asset and the corporate tax rate and is decreasing in the systematic risk of cost the salvage value of the asset and the investment tax credit the optimal time between replacements can either increase or decrease with an increase in the depreciation rate extensions of the model to examine the effects of technological and tax policy uncertainty on replacement investment decisions give intuitive but striking results uncertainty about the arrival of a technological innovation that would decrease maintenance and operation cost results in a significant decrease in replacement investment uncertainty in a tax law change that would encourage investment decreases current investment and uncertainty in a tax law change that would discourage investment increases current investment

estimating the effect of financial aid offers on college enrollment a regression discontinuity approach an important problem faced by colleges and universities that of evaluating the effect of their financial aid offers on student enrollment decisions is complicated by the likely endogeneity of the aid offer variable in a student enrollment equation this article shows how discontinuities in an east coast college s aid assignment rule can be exploited to obtain credible estimates of the aid effect without having to rely on arbitrary exclusion restrictions and functional form assumptions semiparametric estimates based on a regression discontinuity rd approach affirm the importance of financial aid as an effective instrument in competing with other colleges for students

the effect of tax depreciation on the stochastic replacement policy abstract the optimal replacement policy for an asset subject to a stochastic deteriorating operating cost is determined for three different tax depreciation schedules and a known re investment cost as the solution to a two factor model using a quasi analytical method we find that tax depreciation exerts a critical influence over the replacement policy by lowering the operating cost thresholds although typically a decline in the corporate tax rate increase in any initial capital allowance or decrease in the depreciation lifetime increase in depreciation rate results in a lower operating cost threshold which justifies replacing older equipment these results are not universal and indeed for younger age assets the result may be the opposite an accelerating depreciation schedule may incentivize early replacement in a deterministic context but not necessarily for an environment of uncertainty

tariff rates tariff revenue and tariff reform some new facts this article compares the statutory and valorem tariff rates official rates with the ratio of tariff revenues to import values collected rates for jamaica kenya and pakistan it identifies four general features of the tariff codes considers whether these features apply to all developing countries and discusses four implications of these features for tariff reform first the collected rate for any given item in the tariff code is only weakly related to the official rate for the item second the variation of collected rates on average increase much less than the official rates fourth the relation between official rates and collected rates is nonlinear because the slope is lower at higher levels of the official rate

investments of uncertain cost abstract this paper examines irreversible investment decisions when projects take time to complete and are subject to two types of cost uncertainty the first is technical uncertainty i e uncertainty over the physical difficulty of completing a project which is only resolved as the investment proceeds the second is input cost uncertainty i e uncertainty over the prices of construction inputs or over government regulations affecting construction costs which is external to the firm these two types of uncertainty have very different effects on the investment decision a simple investment rule is derived that maximizes firm value and is used to analyze the decision to start or continue building a nuclear power plant during the 1980s

decision model and analysis for investment interest expense deduction and allocation abstract investment income tax planning requires informed strategic choices one must determine the amount of qualified dividends and net long term capital gain to be included in investment income against which investment interest expense can be deducted this choice also determines the residual qualified dividends and net long term capital gain which enjoy a reduced tax rate another important decision is whether all or some of this interest expense should be deducted in the current year or carried forward this paper puts forward a new approach to formulate these questions as a generalized resource allocation problem which permits analysis of the interdependence between and the tax consequences of the above decisions the commonly used approach deducting investment interest expense sooner rather than later we consider myopic since the benefit of deferring some of the deduction is not leveraged presented here is a tax planning guideline a necessary and sufficient condition for optimality to realize a more forward looking strategy we also show that for certain income structures the tax savings by deducting a one dollar investment interest expense may be more than the tax rate on the dollar of investment income that is offset

optimal tax depreciation with uncertain future cash flows abstract since taxable income consists of cash flows reduced with depreciation charges the choice of the depreciation method affects taxable income in future periods a manager can therefore try to minimize the present value of future tax payments by choosing a particular depreciation method among those that are accepted by the tax authorities we focus here on the choice between the two most commonly used methods in practice i e the straight line depreciation method sdm and an accelerated depreciation method adm such as the double declining balance ddb method and the sum of the years digits syd method we show how the optimal choice depends on the discount factor the degree of uncertainty in future cash flows and the structure of the tax system

social interactions and schooling decisions abstract the aim of this paper is to study whether a child s schooling choices are affected by the schooling choices of other children identification is based on a randomized targeted intervention that grants a cash subsidy conditional on school attendance to a subgroup of eligible children within small rural villages in mexico progresa this policy change spills over to ineligible children if social interactions are relevant results indicate that the eligible children tend to attend school more frequently and the ineligible children acquire more schooling when the subsidy is introduced in their local village moreover the overall effect of progresa on eligible children is the sum of a direct effect due to cash transfers and an indirect effect due to changes in peer group schooling interestingly the social interactions effect is almost as important as the direct effect

the effects of generalized school choice on achievement and stratification evidence from chile s voucher program in 1981 chile introduced nationwide school choice by providing vouchers to any student wishing to attend private school as a result more than 1000 private schools entered the market and the private enrollment rate increased by 20 percentage points with greater impacts in larger more urban and wealthier communities we use this differential impact to measure the effects of unrestricted choice on educational outcomes using panel data for about 150 municipalities we find no evidence that choice improved average educational outcomes as measured by test scores repetition rates and years of schooling however we find evidence that the voucher program led to increased sorting as the bbestq public school students left for the private sector d 2005 elsevier b v all rights reserved

social interactions in high school lessons from an earthquake after an earthquake hit southern italy in 1980 young men from certain towns were exempted from compulsory military service we show that the exemption raised high school graduation rates of boys by more than 2 percentage points we do this by comparing high school graduation rates of young exempt men and older nonexempt men from the least damaged areas and men of the same age groups from nearby towns that were not hit by the quake similar comparisons show that graduation rates of young women in the affected areas also increased since in italy women are not subject to the draft the findings suggest the presence of spillover effects jel i21 j13