assessing the equalizing force of mobility using short panels france 1990 2000 in this paper we document whether and how much the equalizing force of earnings mobility has changed in france in the 1990 s for this purpose we use a representative three year panel the french labour force survey we develop a model of earnings dynamics that combines a flexible specification of marginal earnings distributions to fit the large cross sectional dimension of the data with a tight parametric representation of the dynamics adapted to the short time series dimension log earnings are modelled as the sum of a deterministic component an individual fixed effect and a transitory component which is assumed first order markov the transition probability of the transitory component is modelled as a one parameter plackett copula we estimate this model using a sequential expectation maximization algorithm we exploit the estimated model to study employment earnings inequality in france over the 1990 2002 period we show that in phase with business cycle fluctuations a recession in 1993 and two peaks in 1990 and 2000 earnings mobility decreases when cross section inequality and unemployment risk increase we simulate individual earnings trajectories and compute present values of lifetime earnings for various horizons inequality presents a hump shaped evolution over the period with a 9 increase between 1990 and 1995 and a decrease afterwards accounting for unemployment yields an increase of 11 moreover this increase is persistent as it translates into a 12 increase in the variance of log present values the ratio of inequality in present values to inequality in one year earnings a natural measure of immobility or of the persistence of inequality remains remarkably constant over the business cycle

income dynamics and life cycle inequality mechanisms and controversies this study focuses on the transmission of inequality over the working life a model of constrained intertemporal choice is used to provide structure to the distributional dynamics of wages earnings income and consumption the mechanisms used to insure labour market shocks are examined in a partial insurance setting where the manner and scope for insurance depends on the access to credit the information available to consumers and the durability of income shocks drawing on recent research family labour supply the credit market and the tax system are all shown to play a key role these mechanisms vary in importance across different points of the life cycle and the business cycle 2014 the author s the economic journal published by john wiley sons ltd on behalf of royal economic society

game theoretic modelling of transboundary pollution transboundary pollution is pollution which is emitted in one country and deposited or causing harm in another country due to the absence of a supranational institution that could enforce international legislation transboundary externalities cannot be approached in the same way as domestic pollution problems in an attempt to find non traditional solutions to such crossborder problems recent environmental economics literature incorporates behavioural assumptions with the help of game theory this paper discusses how different types of transboundary pollution have been approached and which static and dynamic game theoretic solution concepts have been evaluated while full cooperation among countries yields the economically optimal outcome it is difficult to reach because countries are faced with an inequitable sharing of the burden of pollution abatement and with the incentive to free ride side payment schemes to aid burden sharing and strategies to circumvent free riding are reviewed issues such as transaction costs information and motivation are briefly discussed

earnings instability and earnings inequality of males in the united states 1967 1991 although much research has focused on recent increases in annual earnings inequality in the united states the increases could have come from either of two sources the distribution of lifetime earnings could have become more unequal or the receipt of lifetime earnings could have become more unstable based on an analysis of the 1968 92 panel study of income dynamics we find that lifetime earnings inequality increased during the early 1980s and that earnings instability increased during the 1970s we also examine how these trends are related to changes in the distribution of wages and hours and the returns to education

why are households that report the lowest incomes so well off we document that households in the uk with extremely low measured income tend to spend much more than those with merely moderately low income this phenomenon is evident throughout three decades worth of microdata and across different employment states levels of education and marital statuses of the likely explanations we provide several arguments that discount over reporting of expenditure and argue that under reporting of income plays the major role in particular by using a dynamic model of consumption and saving and paying special attention to poverty dynamics we show that consumption smoothing cannot explain all the apparent dissaving

two decades of income inequality in britain the role of wages household earnings and redistribution we study earnings and income inequality in britain over the past two decades including the period of relatively inclusive growth from 1997 to 2004 and the great recession we focus on the middle 90 where trends have contrasted strongly with the new inequality at the very top household earnings inequality has risen driven by male earnings although a catch up of female earnings did hold down individual earnings inequality and reduce within household inequality nevertheless net household income inequality fell due to deliberate increases in redistribution the tax and transfer system s insurance role during the great recession falling household worklessness and rising pensioner incomes

has consumption inequality mirrored income inequality we revisit to what extent the increase in income inequality since 1980 was mirrored by consumption inequality we do so by constructing an alternative measure of consumption expenditure using a demand system to correct for systematic measurement error in the consumer expenditure survey our estimation exploits the relative expenditure of high and low income households on luxuries versus necessities this double differencing corrects for measurement error that can vary over time by good and income we find consumption inequality tracked income inequality much more closely than estimated by direct responses on expenditures jel d31 d63 e21

use of damage schedules in environmental valuation the case of urban singapore increasing concerns over environmental degradation have amplified the role of environmental economics and the valuation of non pecuniary environmental resources as tools of analysis to facilitate the design of policies to date however environmental valuation methods have continued to be unreliable misleading and contentious as a guide to resource allocations and damage compensations in this paper a damage schedule is developed based on the scales of relative importance translated from people s judgments about values of various environmental damages or losses the variance stable rank method is applied to the paired comparison responses to obtain the scale values as well as the importance of rankings statistical tests of significance are used to determine the level of the agreement among the survey respondents and the degree of correspondence between different respondent groups this will determine the number of relative importance scales required to adequately represent the responses from all respo

on measuring child costs with applications to poor countries the theoretical basis for measuring child costs is discussed and detailed consideration is given to two straightforward procedures for calculation engel s food share method and rothbarth s adult good method each of these methods embodies different definitions of child costs so that the same empirical evidence can generate quite different estimates depending on the method used it is shown that true costs are generally overstated by engel s method and understated by rothbarth s procedure although the latter unlike the former can provide a sensible starting point for cost measurement our estimates from sri lankan and indonesian data suggest that children cost their parents about 30 40 percent of what they spend on themselves

confronting the environmental kuznets curve t he environmental kuznets curve posits an inverted u relationship between pollution and economic development kuznets s name was apparently attached to the curve by grossman and krueger 1993 who noted its resemblance to kuznets s inverted u relationship between income inequality and development in the first stage of industrialization pollution in the environmental kuznets curve world grows rapidly because people are more interested in jobs and income than clean air and water communities are too poor to pay for abatement and environmental regulation is correspondingly weak the balance shifts as income rises leading industrial sectors become cleaner people value the environment more highly and regulatory institutions become more effective along the curve pollution levels off in the middle income range and then falls toward pre industrial levels in wealthy societies the environmental kuznets curve model has elicited conflicting reactions from researchers and policymakers applied econometricians have generally accepted the basic tenets of the model and focused on measuring its parameters their regressions typically fitted to cross sectional observations across countries or regions suggest that air and water pollution increase with development until per capita income reaches a range of 5000 to 8000 when income rises beyond that level pollution starts to decline as shown in the conventional ekc line in figure 1 in developing countries some policymakers have interpreted such results as conveying a message about priorities grow first then clean up numerous critics have challenged the conventional environmental kuznets curve both as a representation of what actually happens in the development process and as a policy prescription some pessimistic critics argue that crosssectional evidence for the environmental kuznets curve is nothing more than a

consumption inequality and intra household allocations the current literature on consumption inequality treats all adults within the household equally making the implicit assumption that all consumption inequality is between not within households however increased marital sorting on earnings and the subsequent rise in the share of women s income in the household may have important implications for consumption inequality measured at the individual level we use an extension of the collective framework of chiappori to estimate a rule for assigning resources to individual household members we then construct a measure of individual level inequality by looking at implied changes in intra household allocations and explore the implications of our framework for the measurement of individual level versus household level consumption inequality our analysis which is based on households comprising one or two adults suggests that the conventional approach of ignoring intra household allocations underestimates the level of cross sectional consumption inequality by 30 and overstates the trend by two thirds our findings also indicate that increases in marital sorting on wages and hours worked can simultaneously explain virtually all of the decline in within household inequality and a substantial fraction of the rise in between household inequality in the uk since the 1970s

income volatility and household consumption the impact of food assistance programs the impact offood assistance programs food stamps in a period of rising income inequality in the united states is analyzed using 1978 92 psid data we assess to what extent food assistance can be viewed as an effective insurance to permanent shocks to income the results show that the program has a substantial consumption smoothing effect in the lowincome population the response of food consumption to a permanent income shock is a third lower after accounting for the monetary value of food stamps

earnings uncertainty and aggregate wealth accumulation comment there are many motives for saving until recently little attention had been paid to the role which earnings uncertainty might play in determining aggregate savings and the associated stock of wealth in a steady state economy of identical individuals jonathan skinner 1988 stephen zeldes 1989 and more recently in this review ricardo caballero 1991 have developed models which seek to address this in each case the authors have argued that income uncertainty is capable of explaining a substanitial proportion of aggregate wealth perhaps as much as half of the actual stock zeldes obtained his results by using numerical methods skinner by approximating the euler equation resulting from a constant relative risk aversion crra utility function and caballero by choosing a specific utility function and income generation process which result in closed form solutions the present paper reexamines and generalizes caballero s 1991 findings it also corrects some presentational errors in his paper generalizing a model that focuses upon a single motive for wealth accumulation is important in particular we show that by introducing an intertemporal substitution motive for savings aggregate wealth stocks emerge which can be considerably different from those presented by caballero 1991 and skinner 1988 this relatively simple result is important because many authors have proposed models which focus upon a single savings motive and claim that their model is able to explain a large component of the wealth stock franco modigliani s life cycle work e g modigliani 1988 or the work of lawrence kotlikoff and lawrence summers 1981 on intergenerational transfers are examples if we were to sum the explanatory power of all such models we could explain the wealth stock several times over therefore building richer behavioral models is necessary this paper enriches the uncertainty model the second purpose of our paper is to argue that any model of wealth accumulation should be validated not simply by referring to the aggregate stock of wealth it can generate but also by examining its associated wealth distribution

workers compensation and consumption smoothing abstract this paper investigates the consumption smoothing benefits of state workers compensation wc programs these programs are among the largest and most controversial forms of social insurance with the putative purpose of supporting families affected by unexpected income shocks due to workplace injuries and illnesses using health and retirement study hrs data for a sample of workers who have experienced a work related work limiting disability i find that a 10 increase in wc benefit generosity offsets the drop in household consumption upon injury by 3 to 5 moreover my estimates imply that if benefits were very low the drop in consumption upon injury would be in the range of 30 a model adapted from the literature on optimal social insurance yields a formula for the optimal level of wc benefits which depends on empirical estimates of the consumption smoothing parameter my calculations suggest that current wc benefit levels are somewhat higher than optimal

are two cheap noisy measures better than one expensive accurate one 1 survey responses are always subject to measurement error in general surveys and especially longitudinal surveys there are severe constraints on the time that can be spent eliciting a less noisy response for any target variable in this paper we consider when it may be better to consider multiple noisy measures of the target measure rather than improving the reliability of a single measure 2 the kotlarski result states that if the measurement errors in two measures of the same target variable are mutually independent and independent of the true value then we can recover the entire distribution of the quantity of interest up to location 3 we consider designing surveys to deliver measurement error with desirable properties this shifts the emphasis from reliability the signal to noise ratio for any given measure to the joint properties of the multiple measures 4 to illustrate our ideas we consider a concrete example the measurement of consumption inequality a small simulation study suggests that the approach we propose has promise the next step in this research agenda is experiments in survey data collection

house prices and consumption inequality i characterize how house price shocks affect consumption inequality using a life cycle model of housing and nonhousing consumption with incomplete markets i derive analytical expressions for the dynamics of inequalities and use these to analyze large house prices swings seen in the uk i show that movements in consumption inequality were large that they correspond with the theoretical predictions qualitatively and that the model explains a large fraction of the movements quantitatively i demonstrate the accuracy of this analysis using an extended model s full non linear solution finally accounting for house price shocks alters estimates of labour income risks using cross sectional data

revealed community equivalence scales abstract this paper estimates the equivalence scale revealed by discretionary community allocations of welfare benefits to poor households i apply the proposed approach to a subsidized rice program in indonesia in which villages designated program beneficiaries and estimate the equivalence scale implicit in the beneficiaries they selected i find that the revealed community equivalence scale for this program lies much closer to per capita expenditure than traditional demand based equivalence scales particularly in the poorest communities this suggests that per capita expenditure may be closer to how poor communities actually compare households when allocating aid than previously thought

differential fecundity and child custody abstract despite u s child custody laws favoring joint custody since the mid 1970s mother sole custody is still the main custody arrangement this paper proposes that differences in fecundity between men and women play a role in accounting for this fact men are more likely to have more children after a divorce because they are fertile for more years than women this acts as an incentive for couples to agree on mothers sole custody i build a general equilibrium model of endogenous marriage divorce and remarriage with differential fecundity between women and men where couples choose custody allocation custody depends on the fecundity differential and father s time spent with children i calibrate my model to be consistent with observed u s child custody arrangements and marriage statistics and using changes over time in assisted reproductive technology art and father s time spent with children i quantify the effect of the fecundity differential on child custody results show that if assisted reproductive technology was not available the current share of couples with joint custody would be 15 67 lower considering that fathers time with children has also changed over time i find that a reduction in the fecundity differential accounts for an increase in the share of couples with joint custody of 4

more on marriage fertility and the distribution of income according to pareto 1896 the distribution of income depends on the nature of the people comprising a society on the organization of the latter and also in part on chance in the model developed here the nature of the people is captured by attitudes toward marriage divorce fertility and children singles search for mates in a marriage market married agents bargain about work and the quantity and quality of children they can divorce social policies such as child support requirements reflect the organization of the society finally chance is modeled by randomness in income marriage opportunities and marital bliss

has poverty gotten worse iven the major changes now being implemented in programs aimed atalleviating poverty in the united states it is important to have a goodunderstanding of how the extent of poverty has evolved over the lastcouple of decades has poverty gotten worse or have we been gradually winningthe war on poverty there is unanimous agreement that there was a steady and dramatic decreasein the percentage of the u s population in poverty during the 1960s the of cialu s census bureau gures show the poverty rate dropping from 22 4 percent ofthe population in 1959 to 12 6 percent in 1970 with a further decrease to11 1 percent in 1973 the trend since 1973 is not as clear the of cial poverty raterose somewhat during the latter part of the 1970s and then sharply increased dur ing the recession of the early 1980s reaching 15 2 percent in 1983 it then graduallydeclined hitting 12 8 percent in 1989 increased to 15 1 percent in 1993 and thendropped to 13 8 percent in 1995 according to the of cial rate even at the peakof the economic expansion of the late 1980s there was a higher percentage of thepopulation with income below the poverty line than there was 20 years earlier poverty does seem to have gotten worse this conclusion is controversial however because the way in which poverty isbest measured is controversial the of cial poverty scale has been criticized alonga number of dimensions one point of contention is whether people should bede ned as being poor when they are part of a family with

rising inequality changes in the distribution of income and consumption in the 1980s this paper examines changes in the distribution of income and consumption in the united states during the 1980s using data from the current population survey income and consumer expenditure survey consumption we reach three primary conclusions first changes in the distribution of consumption parallel changes in the distribution of income the lowest quintile of the consumption distribution received 0 9 percentage points less of total consumption in 1988 than in 1980 the corresponding decline for income was 0 6 percentage points second broad conclusions concerning recent changes in the consumption distribution are not very sensitive to the exact choice of a measure of family needs under a wide variety of alternative household equivalence scales there is a widening in the consumption distribution in the 1980s third the usc of consumption measures of well being in place of measures based on current money income docs change conclusions concerning the extent of poverty in the united stales using the official federal poverty thresholds we find that the overall consumption poverty rate was three percentage points below the income poverty rate in 1988 comparisons of the poverty rates of the elderly and the non elderly are substantially affected by the choice of poverty measure the consumption poverty rare for the elderly was only 60 percent of the rate for adults and one third of the rate for children in 1988 this abstract was borrowed from another version of this item

revisiting the effect of household size on consumption over the life cycle abstract although the link between household size and consumption has strong empirical support there is no consistent way in which demographics are dealt with in standard life cycle models we study the relationship between the predictions of the single agent model the standard in the literature versus a simple model extension the demographics model where deterministic changes in household size and composition affect optimal consumption decisions we show theoretically that the demographics model is conceptually preferable to the single agent model as it captures economic mechanisms ignored by the latter however our quantitative analysis demonstrates that differences in predictions for consumption are negligible across models when using standard calibration strategies this suggests that it is largely irrelevant which model specification is used

taking prices seriously in the measurement of inequality abstract in the measurement of inequality adjustments for differences across households in their demographic composition and in the price regimes they face are usually very simple often nominal expenditure or income is adjusted with an expenditure independent price deflator and a price independent equivalence scale i show that using more flexible expenditure dependent price deflators and price dependent equivalence scales affects the level of and trend in measured family expenditure inequality in canada over 1969 1997 for example standard methods show a significant decrease in inequality between 1969 and 1978 but more flexible methods show a significant increase in inequality over this period

intergenerational mobility new evidence from consumption data the intergenerational persistence of consumption describes the extent to which children inherit the living standards of their parents evidence on this parameter is scarce due to limited data on the joint consumption of parents and children this paper identifies parents who participated in the danish expenditure survey links them to their children through population wide danish registries and estimates the intergenerational elasticity of consumption in denmark the results suggest that consistent with intergenerational consumption smoothing the persistence of consumption across generations is higher than the persistence of earnings and income

a model of monetary policy shocks for financial crises and normal conditions in their classic 1999 paper monetary policy shocks what have we learned and to what end christiano eichenbaum and evans cee investigate one of the most widely used methods for identifying monetary policy shocks of its time unfortunately their approach is no longer viable at least not in its original form a major problem stems from the recent behavior of two key variables in their model the fed funds rate and non borrowed reserves we develop a new identification scheme that remedies these diculties but maintains the basic cee framework our empirical specification is motivated by a standard new keynesian dsge model augmented by a simple financial structure the model provides theoretical support for variables we use in place of certain variables that were used in the classic var approach outlined in cee one significant innovation is our use of divisia m4 the broadest monetary aggregate currently available for the united states as the policy indicator variable we obtain four major empirical results that support the use of a properly measured broad monetary aggregate as the policy variable first policy shocks have significant eects on output and on the price level even when an interest rate is included in our model contradicting the new keynesian argument that monetary aggregates are redundant second we develop a model that is not subject to the output price or liquidity puzzles common to this literature contradicting the view that using the interest rate as the policy indicator generally yields more reasonable responses than a monetary aggregate third during normal conditions policy shocks from our divisia based model have similar eects on variables to those found in the fed funds model of monetary policy and where there are dierences our model with divisia m4 obtains results that are more consistent with standard economic theory fourth our preferred specification produces plausible responses to a monetary policy shock in samples that include or exclude the recent financial crisis

when more poor means less poverty on income inequality and purchasing power we show theoretically that the poor can benefit from price changes induced by higher income inequality as the number of poor increases the market for products aimed toward the poor grows and such products become more profitable as a result there are circumstances where an increase in income inequality associates with higher purchasing power of the poor using cross country data on the price of one kilogram of rice and the price of a big mac hamburger we confirm a negative association between income inequality and the price of inferior goods robust to the inclusion of a large set of control variables results are also robust to a first difference specification and to a two stage instrumental variables approach examining economic well being it is thus important to analyze not only the incomes of households but also the prices of the products and services that they buy

trickle down consumption abstract we document that nonrich households consume a larger share of their current income when exposed to higher top income and consumption levels permanent income wealth effects and upward local price pressures cannot provide the sole explanation for this finding instead we show that the budget shares that nonrich households allocate to more visible goods and services rise with top income levels consistent with status maintaining explanations for our primary finding nonrich households might have saved up to 3 more annually by the mid 2000s had incomes at the top grown at the same rate as median income since the early 1980s

efficiency and equity in two part tariffs the case of residential water rates as first noticed by coase 1946 a standard result in utility regulation is that efficiency requires two part tariffs with marginal prices set to marginal costs and fixed fees equal to each customer s share of fixed costs residential water customers in france face marginal prices for water that average about 8 more than marginal costs under price elasticity estimates that are consistent with previous results in the literature efficiency costs represent around 8 million euros of welfare losses for 2008 even though the impact is fairly small current price schedules are an important pre existing distortion which should be considered when evaluating current taxes aimed at addressing external costs moreover efficiency gains from reformed tariffs could be used to fund water assistance programs focused on financially stressed households

an assessment of four popular auction mechanisms in the siting of nimby facilities some experimental evidence the issue of locating locally unfriendly but socially beneficial facilities such as landfills and power stations is an important public policy concern in many countries local residents in the area where such facilities are to be located tend to exhibit strong opposition no doubt due to the asymmetric distribution of the costs and benefits of such not in my backyard nimby facilities a potentially useful mechanism for the siting of such facilities is by compensation auctions which attempt to incorporate the market mechanism into the decision making process in such auctions communities name the compensation they require to host such facilities and the community demanding the least amount of compensation gets to host the facility this research attempts to evaluate the performance of such compensation auctions using laboratory exepriments four popular auction formats are evaluated first and second price and all pay first and second price sealed bid auctions the latter two formats correspond to th

the retirement consumption conundrum evidence from a consumption survey abstract recent studies have shown that food consumption declines at retirement we use broader definitions of consumption from the consumer expenditure survey and find that the so called retirement consumption puzzle is solved by using comprehensive consumption data

twenty years of rising inequality in u s lifetime labour income values in this paper we study the evolution of lifetime labour income inequality by constructing present value life cycle measures that incorporate both earnings and employment risk we find that even though lifetime income inequality is 40 less than earnings inequality the total increase in lifetime income inequality over the past 20 years is the same as earnings inequality while the total increase is the same the pathways there differ with earnings inequality experiencing a steady increase and lifetime income inequality increasing in spurts particularly in the latter half of the 1990s finally we find the changes in lifetime income inequality are primarily driven by changes in earnings mobility and changes in the earnings distribution itself changes in employment risk and the composition of the sample such as the shift toward attaining more education and the ageing population do not play a large role 2004 the review of economics studies limited

consumption inequality and income uncertainty this paper places the debate over using consumption or income in studies of inequality growth in a formal intertemporal setting it highlights the importance of permanent and transitory income uncertainty in the evaluation of growth in consumption inequality we derive conditions under which the growth of variances and covariances of income and consumption can be used to separately identify the growth in the variance of permanent and transitory income shocks household data from britain for the period 1968 1992 are used to show a strong growth in transitory inequality toward the end of this period while younger cohorts are shown to face significantly higher levels of permanent inequality

consumption inequality between farm and nonfarm households in taiwan a decomposition analysis of differences in distribution consumption has been recognized as a more reliable indicator of household well being than income although a considerable body of literature has examined income inequality between farm and nonfarm households little is known about inequality in consumption this research aims to fill this knowledge gap by investigating consumption disparity between farm and nonfarm households using a nationally representative household survey from taiwan we apply an unconditional quantile regression based decomposition method to decompose the differences in the distribution of household expenditure between these farm and nonfarm households the results indicate that differences in the observed characteristics between these two types of households explain most of the consumption inequality moreover the difference in the education level of the farm operator household income and the degree of urbanization are particularly important jel classifications q10 q12

food insecurity in vulnerable populations coping with food price shocks in afghanistan we use the case of afghanistan during the 2007 08 food price crisis to illustrate the impact of staple food price increases on household food security using the unconditional quantile regression estimator to identify separate effects for households across the distribution we find evidence of divergent behavior the most vulnerable households with low calorie diets cannot afford to make substantial cuts to caloric intake since they are close to or below the minimum daily energy requirements accordingly we find no decline in per capita daily caloric intake as a result of the price increases such households may be sacrificing diet quality to maintain calories with a potential for serious and long term health consequences households with high calorie diets who can afford to cut back on calories experience the largest declines we find evidence of declines in dietary diversity across the entire distribution of households with slightly larger declines observed for those with the least diversity moving beyond the price responses for the average household can inform policy makers of how the most vulnerable groups are affected such information is particularly salient in a country like afghanistan where decades of war political instability and recurring droughts have led to a precarious state of food insecurity and poverty

consumption over the life cycle facts from consumer expenditure survey data this paper uses consumer expenditure survey data and a seminonparametric statistical model to estimate life cycle profiles of consumption controlling for demographics cohort and time effects we construct age profiles for total and nondurable consumption as well as expenditure patterns for consumer durables special emphasis is placed on the comparison of different approaches to control for changes in demo graphics over the life cycle we find significant humps over the life cycle for total nondurable and durable expenditures changes in household size account for roughly half of these humps bootstrap simulations suggest that our empirical estimates are tight in that standard errors are small

the equity and efficiency of two part tariffs in u s natural gas markets abstractresidential natural gas customers in the united states face volumetric charges that average about 30 percent more than the marginal cost of gas this inefficient departure from marginal cost pricing allows gas utilities to cover their fixed infrastructure and operating costs proposals for recovering these costs instead through fixed monthly fees are often opposed because of a widespread belief that current rate schedules have desirable distributional consequences using nationally representative household level data we show that the correlation between household income and natural gas consumption is indeed positive but surprisingly weak so current rate schedules are only mildly progressive in part we argue that this is because poor households tend to have larger families and less energy efficient homes we calculate bill impacts under a variety of scenarios and show that even a modest energy assistance program would more than offset the distributional impact of tariff rebalancing for most low

consumption and labor supply with partial insurance an analytical framework we develop a model with partial insurance against idiosyncratic wage shocks to quantify risk sharing closed form solutions are obtained for equilibrium allocations and for moments of the joint distribution of consumption hours and wages we prove identification and demonstrate how labor supply data are informative about risk sharing the model estimated with us data over the period 1967 2006 implies that i 39 percent of permanent wage shocks pass through to consumption ii the share of wage risk insured increased until the early 1980s and iii preference heterogeneity is important in accounting for observed dispersion in consumption and hours jel e21 e23 e31 e52

policy announcements and welfare in the presence of idiosyncratic risk the public revelation of information about uncertain aggregate outcomes such as policy choices can be detrimental to social welfare by announcing informative signals on non insurable aggregate risk the policy maker distorts agents insurance incentives and increases the riskiness of the optimal allocation that is feasible in self enforceable arrangements as an application we consider a monetary authority that may reveal changes in the inflation target and document that the negative effect of distorted insurance incentives can very well dominate conventional effects in favor for the release of better information

theoretical foundations of negotiations and cost sharing in transfrontier pollution problems the negotiations model is described by a dynamic process bearing on a multilateral externality that converges to an individually rational pareto optimum the process embodies a cost sharing rule for pollutant abatement in the countries involved derived from a sharing rule of the surplus that is also shown to have strategic stability in the game theoretic sense of an imputation in the core of some cooperative game associated with the negotiation process the connections are explored between this cost sharing rule and the free rider problem in public goods theory

income and consumption inequality in urban china 1992 2003 abstract using the nationally representative urban household income and expenditure survey uhies conducted by the national bureau of statistics nbs of china we document a steadily rising trend in income and consumption inequality during the period from 1992 to 2003 in urban china despite the rising urban inequality over time the social welfare of urban residents unambiguously improved because every income group saw their income and consumption increase over this period higher income groups experienced faster increases moreover consumption inequality follows income inequality very closely labor income inequality accounts for about two thirds of total income inequality quite consistently over time we find that only about one third of urban inequality can be attributed to observable individual choices and characteristics of which education has increasing explanatory power while regional differences become less important over time we also find that restructuring of the soe sector urbanization

fiscal policy with heterogeneous agents and incomplete markets i undertake a quantitative investigation into the short run effects of changes in the timing of proportional income taxes for model economies in which heterogeneous households face a borrowing constraint temporary tax changes are found to have large real effects in the benchmark model a temporary tax cut increases aggregate consumption on impact by around 29 cents for every dollar of tax revenue lost comparing the benchmark incomplete markets model to a complete markets economy income tax cuts provide a larger boost to consumption and a smaller investment stimulus when asset markets are incomplete copyright 2005 wiley blackwell

money s role in the monetary business cycle a small structural model of the monetary business cycle implies that real money balances enter into a correctly specified forward looking is curve if and only if they enter into a correctly specified forward looking phillips curve the model also implies that empirical measures of real balances must be adjusted for shifts in money demand to accurately isolate and quantify the dynamic effects of money on output and inflation maximum likelihood estimates of the modelos parameters take both these considerations into account but still suggest that money plays a minimal role in the monetary business cycle

on the determination of the us aggregate health care expenditure per capita real health care expenditure is examined against three major groups of explanatory variables economic demographic and health stock and it is found that the three groups of variables have an impact on real health care spending other subcategories such as real private and government health care pharmaceutical dental home nursing ambulatory personal medical consumption and in patient expenditures have also been examined and have been found to be affected by the explanatory variables for several subcomponents there is evidence of supplier inducement of the demographic group of variables the ageing population had an impact only on the per capita real overall and private health care outlay and pharmaceutical spending also cointegrating relationships were found and consistent estimators of the elasticities found

measurement of inequality by components of farm household consumption expenditures inequality in consumption levels of families both nationally and internationally has been studied by theil however empirical studies that measure inequality in farm household consumption to our knowledge have not been performed this study measures inequality in farm household consumption in addition the study also measures inequality in consumption based on farm typology and farming region results from this analysis show consumption inequality among farm households is lower than consumption inequality among all other households results indicate that other expenditures component has the highest inequality and food and household supplies component has the lowest inequality further farm typology has information about difference in consumption expenditures the typology is informative when it comes to the components of consumption while the regional decomposition is not

population ageing and inequality evidence from china population ageing has significant economic and social costs and this paper studies its impacts on inequality both theoretically and empirically first we build a two period overlapping generation model with uncertain lifetime and find that population ageing has the overall effect of increasing income and consumption inequality within the society for empirical analysis we use household data from china health and nutrition survey to assess the age effect on income and consumption inequality in china and confirm the results predicted by the theoretical model

intertemporal choice and consumption mobility the theory of intertemporal consumption choice makes sharp predictions about the evolution of the entire distribution of household consumption not just about its conditional mean in the paper we study the empirical transition matrix of consumption using a panel drawn from the bank of italy survey of household income and wealth we estimate the parameters that minimize the distance between the empirical and the theoretical transition matrix of the consumption distribution the transition matrix generated by our estimates matches remarkably well the empirical matrix both in the aggregate and in samples stratified by education our estimates strongly reject the consumption insurance model and suggest that households smooth income shocks to a lesser extent than implied by the permanent income hypothesis jel d52 d91 i30

food stamp benefits and child poverty in 2000 8 8 million children lived in households participating in the food stamp program making this assistance program a crucial component of the social safety net despite its importance little research has examined food stamps effect on children s overall well being using the current population survey from 1989 to 2001 we consider the impact of food stamps on three measures of poverty the headcount the poverty gap and the squared poverty gap we find that in comparison to the headcount measure food stamp benefits lead to large reductions in the poverty gap and squared poverty gap measures

why is the rate of single parenthood lower in canada than in the u s a dynamic equilibrium analysis of welfare policies a critical question in the design of welfare policies is whether to target aid according to household composition as was done in the u s under the aid to families with dependent children afdc program or to rely exclusively on means testing as in canada restricting aid to single mothers for instance has the potential to distort behavior along three demographic margins marriage fertility and divorce we contrast the canadian and the u s policies within an equilibrium model of household formation and human capital investment on children policy differences we consider are eligibility dependence of transfers on the number of children and generosity of transfers our simulations indicate that the policy differences can account for the higher rate of single parenthood in the u s they also show that canadian welfare policy is more effective for fostering human capital accumulation among children from poor families interestingly a majority of agents in our benchmark economy prefers a welfare system that targets single mothers as the u s system does yet does not unlike the u s system make transfers dependent on the number of children

an international comparison of lifetime inequality how continental europe resembles north america we compare earnings inequality and mobility across the united states canada france germany and the united kingdom during the late 1990s a flexible model of earnings dynamics that isolates positional mobility within a stable earnings distribution is estimated earnings trajectories are then simulated and lifetime annuity value distributions are constructed earnings mobility and employment risk are found to be positively correlated with base year inequality taken together they produce more equalization in countries with high cross section inequality such that the countries in our sample have more similar lifetime inequality levels than cross section measures suggest

earnings dynamics and inequality among canadian men 1976 1992 evidence from longitudinal income tax records using an extraordinary database drawn from longitudinal income tax records we decompose canada s growth in earnings inequality into its persistent and transitory components we find that the growth in earnings inequality reflects both an increase in long run inequality and an increase in earnings instability the canadian data strongly reject several restrictions commonly imposed in the u s literature and they also suggest that imposing these evidently false restrictions may lead to distorted inferences about earnings dynamics and inequality trends

a benchmark measure of income for assessing the distributional effects of tax reform abstract a basic difficulty inherent in analyzing tax induced changes in the distribution of income is to identify a concept of income that is economically meaningful and unaltered by changes in tax laws the present paper introduces a concept of income that is as much as possible invariant to changes in the tax code comparisons of the distribution of total cash income with those of other measures of income that are directly affected by tax reforms can shed light on the distributional effects of changes in tax laws

consumption and risk sharing over the life cycle a striking feature of u s data on income and consumption is that inequality increases with age this paper asks if individual specific earnings risk can provide a coherent explanation we find that it can we construct an overlapping generations general equilibrium model in which households face uninsurable earnings shocks over the course of their lifetimes earnings inequality is exogenous and is calibrated to match data from the u s panel study on income dynamics consumption inequality is endogenous and matches well data from the u s consumer expenditure survey the total risk households face is decomposed into that realized before entering the labor market and that realized throughout the working years in welfare terms the latter is found to be more important than the former

the long run consumption effects of earnings shocks although prior studies of job displacement and disability have measured the impact of these shocks in terms of lost earnings no previous research has linked these permanent earnings shocks to the

the implications of demographic specific inflation rates for trends in real educational wage differentials we use data from consumer expenditure surveys to investigate the impact on trends in real wage differentials of using group specific price indexes we find that inflation rates decrease monoton ically with the education of the household head throughout the 1970s and early 1980s and real educational wage differentials calculated using education specific price indexes widened somewhat more than nominal differentials we also find that differences by education level in fuel and energy consumption whose relative prices increased during the 1970s account for the majority of the educational index differences

a simple approach to investigate intrahousehold allocation of private and public goods abstract we adopt the collective approach to consumer behavior with egoistic agents and assume that household consumption is either private or public we then show that 1 household demand functions have to satisfy testable constraints and 2 some elements of the decision process can be retrieved from observed behavior these results are based on a conditional demand m demand framework in which household demand functions are directly derived from the individual marginal rates of substitution finally we present an empirical illustration of these theoretical results using the u s consumer expenditure survey

pursuing economic growth in asia the environmental challenge this paper identifies and discusses the five main areas of environmental management public policy that pose serious challenges to asian governments the first is the emerging issue of siting environmentally unfriendly facilities that may be necessary for growth but with the social and environmental costs borne primarily by local host residents and neighbourhood municipalities more commonly known as the not in my backyard syndrome the second issue is the critical need for pricing of non market environmental goods third is the issue of waste generation the fourth challenge is that of transboundary pollution which has become increasingly important with regard to its effects on health and foreign relations lastly the paper discusses global warming and climate change discussions on cost benefit analysis and the more novel method of establishing damage schedules are also presented this is particularly relevant to fundamental differences between developed and less developed countries