aging and inequality in income and health in our earlier work we used data from the national health interview survey nhis to examine life cycle patterns in health status and in the joint distribution of health status and income deaton and paxson 1998 in this paper we summarize and extend those results and provide new evidence from the panel study of income dynamics psid both surveys contain a measure of household income and collect information on an ordinal measures of self reported health status srhs that ranges from 1 excellent to 5 poor section i concerns problems related to the measurement of inequality in health section ii presents evidence from the two surveys on health and income inequality this abstract was borrowed from another version of this item

the well being of the elderly and wage arrears in russia about one third of households with elderly were not paid their wages during the mid 1990s in russia applying matching estimations to a nationally representative survey the study shows that wage arrears had detrimental effects on the well being of the elderly in these families salaries in households with wage arrears dropped by almost two thirds income fell by more than one third and poverty doubled behavioral responses were only partly effective the net revenue loss amounted to five sixths of the wage shock for men and nine tenths of the wage shock for women the elderly cut back on food expenses by reducing food purchases and adjusting their diet towards cheaper calories economising on expenses equal to around one quarter of the wage reduction caloric and protein intakes dropped although less than income and the nutritional content of food consumption with regard to vitamins and minerals deteriorated wage arrears worsened male health more than female health even though the decline in income was comparable functional limitations rose by 8 for men and 3 for women and self rated health declined by 2 5 for men and 0 5 for women old age men with arrears were almost twice as likely to die before the next survey round and functional limitations of surviving men rose by more than 10 by contrast there was no impact on the next round s health status of old age women a rich data set is used to discount alternative explanations including feedback from health to income other economic factors health service access health behavior and environmental conditions jel i12 i30 j14 j30

a soft pillow for hard times economic insecurity food intake and body weight in russia this study investigates causal effects of economic insecurity on subjective anxiety food intake and weight outcomes a review of psychological and nutrition studies highlights the complexity of processes at work on each stage of this causal chain econometric analyses trace the effects along the hypothesized pathway using detailed household panel data from the russia longitudinal monitoring survey from 1994 to 2005 economic insecurity measures serve as key explanatory variables in regressions and are instrumented by exogenous regional indicators results support a causal chain from economic insecurity to weight outcomes for some population subgroups in contrast to the leading hypothesis that economic insecurity increases body weight i find strong evidence of a decreasing effect among women results suggest further that consumption of foods rich in sugar responds strongly to higher levels of economic insecurity heterogeneous impacts of economic insecurity on body weight call for individual level interventions rather than large scale action

power illusion in coalitional bargaining an experimental analysis abstract one feature of legislative bargaining in naturally occurring settings is that the distribution of seats or voting weights often does not accurately reflect bargaining power game theoretic predictions about payoffs and coalition formation are insensitive to nominal differences in vote distributions and instead only depend on pivotality we conduct an experimental test of the classical baron ferejohn model with five player groups holding real power constant we compare treatments with differences in nominal power we find that initial effects of nominal differences become small or disappear with experience our results also point to the complexity of the environment as having a negative impact on the speed at which this transition takes place finally and of particular importance as a methodological observation giving subjects a pause accelerates learning

credit market constraints consumption smoothing and the accumulation of durable production assets in low income countries investments in bullocks in india in this paper we formulate and estimate a finite horizon structural dynamic model of agricultural investment behavior that incorporates the major features of low income agricultural environments income uncertainty constraints on borrowing and rental markets and the use of investment assets to generate income and smooth consumption the model is fit to longitudinal indian household data on farm profits bullock stocks and pump sets the estimated structural parameters are used to assess the effects on the life cycle accumulation of bullocks agricultural profits and welfare associated with complete markets and bullock liquidity and with second best policies that provide assured sources of income to farmers and weather insurance

how late to pay understanding wage arrears in russia we organize an empirical analysis of russian wage arrears around hypotheses concerning incentives for firms to pay late and for workers to tolerate late payment nationally representative household panel data matched with employer data show that arrears are positively related to firm age size state ownership and declining performance constrained multinomial logit estimates reveal intrafirm variation related to job tenure and small shareholdings in the firm wage arrears unlike wage cuts have a theoretically ambiguous effect on workers quit behavior and we show empirically that the effect varies negatively with the extent of the practice in the local labor market

bargaining in bicameral legislatures when and why does malapportionment matter malapportionment of seats in bicameral legislatures it is widely argued confers disproportionate benefits to overrepresented jurisdictions ample empirical research has documented that unequal representation produces unequal distribution of government expenditures in bicameral legislatures the theoretical foundations for this empirical pattern are weak it is commonly asserted that this stems from unequal voting power per se using a noncooperative bargaining game based on the closed rule infinite horizon model of baron and ferejohn 1989 we assess the conditions under which unequal representation in a bicameral legislature may lead to unequal division of public expenditures two sets of results are derived first when bills originate in the house and the senate considers the bill under a closed rule the equilibrium expected payoffs of all house members are surprisingly equal second we show that small state biases can emerge when 1 there are supermajority rules in the malapportioned chamber 2 the senate initiates bills which produces maldistributed proposal probabilities and 3 the distributive goods are lumpy we thank seminar participants at new york university the university of pennsylvania and the 2002 annual meeting of the american political science association for helpful comments james snyder and michael ting gratefully acknowledge the financial support of national science foundation grant ses 0079035 stephen ansolabehere gratefully acknowledges the support of the carnegie corporation under the carnegie scholars program this paper was written while michael ting was at the university of north carolina at chapel hill and he thanks the department of political science there for their support

estimating the effect of income on health and mortality using lottery prizes as an exogenous source of variation in income a vast literature has established a strong positive relation between income and health status and a negative relation with mortality this paper studies the effects of income on health and mortality using only the part of income variation due to a truly exogenous factor monetary lottery prizes of individuals the findings are that higher income causally generates good health and that this effect is of a similar magnitude as when traditional estimation techniques are used a 10 percent income increase improves health by about 4 5 percent of a standard deviation

bargaining in legislatures bargaining in legislatures is conducted according to formal rules specifying who may make proposals and how they will be decided legislative outcomes depend on those rules and on the structure of the legislature although the social choice literature provides theories about voting equilibria it does not endogenize the formation of the agenda on which the voting is based and rarely takes into account the institutional structure found in legislatures in our theory members of the legislature act noncooperatively in choosing strategies to serve their own districts explicitly taking into account the strategies members adopt in response to the sequential nature of proposal making and voting the model permits the characterization of a legislative equilibrium reflecting the structure of the legislature and also allows consideration of the choice of elements of that structure in a context in which the standard institution free model of social choice theory yields no equilibrium

senate representation and coalition building in distributive politics p7 vhe senate s equal representation of states shapes coalition building in distributive politics the great variation in state population means that some states have far greater need for federal fttnds than others but all senators have equal voting weight as a result even though all senators votes are of equal value to the coalition builder they are not of equal prwice coalition builders can include benefits for small states at considerably less expense to program budgets than comparable benefits for more populous states building on formal models of coalition building two hypotheses are developed and tested first coalition builders will seek out less costly members to build supportive coalitions efficiently second the final outcomes of distributive policy will more closely reflect the preferences of small state senators than large state senators the hypotheses are tested by examining the 1991 and 1997 98 reauthorizations of federal surface transportation programs the findings support both hypotheses

precautionary behavior migrant networks and household consumption decisions an empirical analysis using household panel data from rural china abstract we develop a test of precautionary behavior in the consumption decisions of rural agricultural households among surveyed households facing a median level of consumption risk 10 of savings can be attributed to a precautionary motive and this increases to 15 for households with consumption per capita below the poverty line we next use distant lags of local rainfall shocks uncorrelated with current consumption growth to identify the size of migrant networks outside the village and then present evidence that both poor and nonpoor households engage in less precautionary saving as the size of the village migrant network increases

consequences of debt capitalization property ownership and debt versus tax choice public debts capitalize into property prices thus they are a burden to the present generation who owns the devalued property this largely neglected fact has important consequences for the tax versus debt choice property owners suffer more from the debt burden and thus have a stronger preference for tax financing of government spending than tenants as a consequence of the resulting democratic struggle between property owners and tenants higher property ownership rates in a jurisdiction lead to less debt financing we provide empirical support for this hypothesis by analyzing a cross section of the 171 communities in the swiss canton of zurich in the year 2000

market reform and mortality in transition economies abstract the striking increase in mortality rates in russia in the early 1990s occurred simultaneously with the government s erratic attempts to introduce market reforms other transition economies such as poland and the czech republic avoided increases in death rates while they implemented rapid and deep reforms is there a link between mortality and the speed or depths of reforms as suggested by other researchers e g sachs 1996 american economic review 86 2 128 233 this paper uses aggregate data on 22 transition economies for 1989 1994 to investigate this question while the relationship between an index of reform progress and death rates is ambiguous death rates in these countries are correlated with measures of reform success such as gdp growth and the inflation rate higher crime rates and higher unemployment rates are also related to larger increases in death rates

do migrants really save more understanding the impact of remittances on savings in rural china abstract this article studies the impact of remittances on the savings behaviour of rural households in china using a primary survey undertaken by the authors in 2006 allowing for endogeneity and left censoring of remittances we find that the marginal propensity to save out of remittances is well below half of that out of other sources of incomes moreover we find no evidence of any direct effect of remittances on either capital input or gross output of farm production these findings are robust with respect to alternative definition of savings and are in line with recent studies which conclude that remittances are largely used for consumption purposes by rural chinese households

permanent household income and consumption in urban south america milton friedman s permanent income hypothesis pih is considerably more complex and difficult to test than it appears at first sight which is why certain of its postulates still cannot be accepted or rejected with certainty one of the chief difficulties is that of separating the effects on consumption of permanent income which is unobservable and of various observable household characteristics which may be highly correlated with permanent income but may also be presumed to affect consumption directly this difficulty can be overcome provided a variable can be found which is associated with permanent income but has no independent direct effect on the propensity to consume if households are grouped by classes of that variable the permanent consumption propensity or elasticity can be estimated from mean income and consumption in the groups this technique requires the assumption of zero mean transitory income in each group but does not depend on the postulate that transitory income is uncorrelated with consumption for these reasons it cannot be applied to individual households this paper presents and estimates a model which separates the direct and indirect effects on consumption of a series of observable characteristics using regression techniques on individual household observations this makes it possible to estimate all the parameters of the model both the consumption propensity or elasticity and the contribution to permanent income of each observable explanatory variable the technique still requires that at least one of the explanatory variables affect consumption only through permanent income but for all other variables both direct and indirect influences can be estimated and the propensity to consume a given income can vary among households with different characteristics another principal problem with the pih is the assumption that transitory income and consumption are uncorrelated efforts to test this postulate can lead to very different results ranging from agreement with the hypothesis to findings of high propensities to consume transitory income see robert ferber pp 1306 09 this inconsistency and continued controversy over the hypothesis is due to the fact that permanent income cannot be estimated exactly but can be known only with an error which is conceptually distinct from transitory income empirical work on the pih has uniformly overlooked this fact treating estimates of permanent income as exact and regarding the whole of the unexplained residual as transitory income the present model explicitly distinguishes the estimation error from the error of transitory income or consumption the two transitory components can then be assumed to be uncorrelated while the part of permanent income which is not explained is consumed exactly like the explained part whether residual income and consumption appear to be correlated or not then depends on the relative sizes of these two components the unexplained permanent part and the true transitory part this technique has the further advantage that estimating the variance of the error of estimation makes it possible to tell how well a set of observable variables explain permanentincome this explanation may be better than the brookings institution robert solow richard eckaus and robert hall supervised the dissertation 1974 on which this article is based i am particularly grateful to ross williams and robert hall for help in specifying and estimating the model and to denisard alves for a crucial suggestion william cline irwin friend ricardo ffrench davis and robert ferber provided helpful comments on earlier versions subsequent discussions with surjit bhalla and robert lawrence have been most useful i am also much indebted to the managing editor and to a referee for improvements in the final version

legislative bargaining under weighted voting organizations often distribute resources through weighted voting we analyze this setting using a non cooperative bargaining game based on the baron ferejohn 1989 model unlike analyses derived from cooperative game theory we find that each voter s expected payoff is proportional to her voting weight an exception occurs when many high weight voters exist as low weight voters may expect disproportionately high payoffs due to proposal power the model also predicts that ex post the coalition formateur the party chosen to form a coalition will receive a disproportionately high payoff using data from coalition governments from 1946 to 2001 we find strong evidence ofsuch formateur effects

child health and household resources in south africa evidence from the old age pension program this paper presents nonparametric evidence on the effects of the expansion of the old age pension program in south africa on child health did this increase in household resources improve child health and nutrition does the gender of the recipient of the pension affect its impact the answers to these questions have very important policy implications there is evidence that inadequate nutrition during childhood and even in utero affects long term physical development as well as the development of cognitive skills this in turn affects productivity later in life see partha dasgupta 1993 john strauss and duncan thomas 1998 t paul schultz 1999 in the united states the evidence suggests that monetary transfers to the poor have very little impact on child welfare janet currie 1995 susan mayer 1997 however the effects of parental income and monetary transfers on child outcomes are likely to be of greater magnitude among poor households in developing countries the south african pension program provides an unusual opportunity to evaluate the possible effects of such a monetary transfer this paper exploits the rapid increase in the coverage and benefits of the old age pension program in south africa which took place in the early 1990 s anne case and angus deaton 1998 at the end of the apartheid era the government committed to achieving parity of benefits and eligibility requirements between whites and africans this was achieved mostly by increasing the benefits received by the africans in 1993 80 percent of african women above age 60 and 77 percent of african men above 65 received the pension the maximum benefit of 370 rands per month aproximately 3 per day was equal to half of the minimum wage and about twice the median income per capita in rural areas due to living arrangements inherited from the apartheid era close to onethird of african children under the age of 5 currently live with a pension recipient children who live with a pension recipient tend to come from relatively disadvantaged backgrounds as a consequence they tend to be smaller than other children their age to estimate the effect of receiving a pension on the anthropometric status of children this paper exploits the fact that height reflects accumulated investments in child nutrition the larger the proportion of her life during which a child is well nourished the taller she will be given her age due to the expansion of the program in the early 1990 s individuals of qualified age became more likely to receive a pension and the benefits became substantially larger thus children born after the expansion of the program are more likely to have spent a larger fraction of their lives wellnourished if they live with a pension recipient to the extent that the pension resulted in improved nutrition in this paper i present nonparametric evidence of the program s effect on nutrition based on this observation

the health implications of social security failure evidence from the russian pension crisis abstract we explore whether health is vulnerable to income shocks focusing on a recent crisis in russia during which many pensioners were not paid for an extended period of time using panel data spanning the crisis we find that among affected pensioners poverty rates doubled and the intake of calories and protein and the use of health services and medications declined significantly these pensioners were also 5 percent more likely to die in the two years following the crisis however households responded in ways that mitigated the impact of the crisis replacing one fifth of lost pension income through increased labor supply and asset sales

alternative approaches to evaluation in empirical microeconomics four alternative but related approaches to empirical evaluation of policy interventions are studied social experiments natural experiments matching methods and instrumental variables in each case the necessary assumptions and the data requirements are considered for estimation of a number of key parameters of interest these key parameters include the average treatment effect the treatment on the treated and the local average treatment effect some issues of implementation and interpretation are discussed drawing on the labour market programme evaluation literature

poverty and witch killing many observers have noted that poverty and violence go hand in hand there is a strong negative relationship between economic growth and crime across countries as well as across districts in india and a link between low income and the occurrence of civil war 1 yet existing studies are typically unable to resolve the key econometric identification issues of omitted variable bias and endogeneity to illustrate the unobserved quality of local government institutions may affect both income growth and crime rates and poverty could lead to violence if desperate people with nothing to lose commit more crimes but violence itself may in turn affect economic productivity this paper uses local rainfall variation to identify the impact of income shocks on murder in a rural tanzanian district 2 extreme rainfall resulting in drought or floods is exogenous and is associated with poor harvests and near famine conditions in the region and a large increase in the murder of witches there are twice as many witch murders in years of extreme rainfall as in other years the victims are nearly all elderly women typically killed by relatives these econometric results across 11 years in 67 villages provide novel evidence on the role of income shocks in causing violent crime and religious violence in particular and also provide insights into witchcraft an important social phenomenon in africa rarely studied by economists the view that economic conditions are a driving force behind witch murders is bolstered by the fact that most witch killing in tanzania takes place in poor rural areas largely dependent on rain fed agriculture and that most victims in our sample are from poor households however it is difficult to definitively disentangle this income shock theory from alternative socio cultural explanations the concentration of tanzanian witch murders in a region dominated by one particular ethnic group the sukuma and the especially high number of witch murders in villages where indigenous religious beliefs are strong both point to the important role of non economic factors economic theories and cultural theories are perhaps best viewed as complements the empirical findings demonstrate the power of economics to rationalize a phenomenon that has previously been understood almost solely through a socio cultural lens 3

reform of police pensions in england and wales we analyse pension reforms for police officers in england and wales using force level data we quantify the impact on overall police pension plan liabilities examining incidence across police officers national and local taxpayers we also examine reforms of retirement rules especially concerning early retirement on grounds of ill health differences in ill health retirement across forces are statistically related to area specific stresses of policing and force specific human resources policies reforms in 2006 impacted primarily on the level of ill health retirement among forces with above average rates of early retirement we find residual differences in post 2006 ill health retirement rates across forces are related to differential capacities to raise revenue from local property taxes

migration risk and liquidity constraints in el salvador abstract this article utilizes panel data from el salvador to investigate the use of transnational migration as an ex post risk management strategy i show that adverse agricultural conditions in el salvador increase both migration to the united states and remittances sent back to el salvador i show that in the absence of any agricultural shocks the probability that a household sent members to the united states would have decreased on average by 24 26 i also show that the 2001 earthquakes reduced net migration to the united states a one standard deviation increase in earthquake damage reduced the average probability of northward migration by 37 11 the evidence suggests that the effects of the earthquakes had more to do with households retaining labor at home to cope with the effects of the disaster than with the earthquakes disrupting migration financing

shrouded costs of government the political economy of state and local public pensions abstract why do public sector workers receive so much of their compensation in the form of pensions and other benefits this paper presents a political economy model in which politicians compete for taxpayers and government employees votes by promising compensation packages but some voters cannot evaluate every aspect of promised compensation if pension packages are shrouded so that public sector workers better understand their value than ordinary taxpayers then compensation will be highly back loaded in equilibrium the welfare of public sector workers could be improved holding total public sector costs constant if they received higher wages and lower pensions centralizing pension determination has two offsetting effects on generosity more state level media attention helps taxpayers better understand pension costs and that reduces pension generosity but a larger share of public sector workers will vote within the jurisdiction which increases pension generosity a short discussion of pensions in two decentralized states california and pennsylvania and two centralized states massachusetts and ohio suggests that centralization appears to have modestly reduced pensions but as the model suggests this is unlikely to be universal

legislative representation bargaining power and the distribution of federal funds evidence from the us congress this article investigates the relationship between representation in legislatures and the geographic distribution of federal funds in a legislative bargaining model we demonstrate that funds are concentrated in high representation areas and two channels underlie this result the proposal power channel reflects the role of representation in committee assignments and the vote cost channel reflects the role of representation in coalition formation in our empirical analysis we find that small states relative to large states receive more funding in the us senate relative to the house we also find empirical support for the two channels underlying this relationship throughout the history of federations and international organisations a key consti tutional design question involves how jurisdictions of different sizes are represented in legislative bodies and how their votes will ultimately be weighted large jurisdictions typically argue for delegation sizes or voting weights that are roughly proportional to population whereas small jurisdictions typically argue for an equal number of delegates or votes for each jurisdiction this conflict over representation is presumably driven at least in part by a belief that increased representation strengthens bargaining power in the battle over the geographic distribution of funds authorised by these legislative bodies in this article i analyse the relationship between legislative representation bar gaining power and the geographic distribution of federal funds from both a theoretical and empirical perspective in addition to investigating the existence of a relationship between representation and federal funds i also explore the underlying mechanisms that is i ask which political institutions such as agenda control provided to commit tees and the formation of coalitions under majority rule shape the bargaining power of jurisdictions in central legislatures and thus facilitate the relationship between repre sentation and the distribution of federal spending to provide a framework for analysing these issues i begin by developing a simple theoretical model of a central legislature that determines the crossjurisdiction distri bution of local public goods which are financed by a national tax base both delegation sizes and population are variable allowing me to consider a variety of institutional arrangements for jurisdictional representation legislators represent local interests and given the common pool problem associated with concentrated benefits and dis persed tax costs attempt to increase ownjurisdiction spending but to restrain spending elsewhere the model follows a recent literature on legislative bargaining in which a proposer must secure a majority of votes in order to pass legislation and due to the

the macroeconomic consequences of disasters abstract natural disasters have a statistically observable adverse impact on the macro economy in the short run and costlier events lead to more pronounced slowdowns in production yet interestingly developing countries and smaller economies face much larger output declines following a disaster of similar relative magnitude than do developed countries or bigger economies a close study of the determinants of these adverse macroeconomic output costs reveals several interesting patterns countries with a higher literacy rate better institutions higher per capita income higher degree of openness to trade and higher levels of government spending are better able to withstand the initial disaster shock and prevent further spillovers into the macro economy these all suggest an increased ability to mobilize resources for reconstruction financial conditions also seem to be of importance countries with more foreign exchange reserves and higher levels of domestic credit but with less open capital accounts appear more robust and better able to endure natural disasters with less adverse spillover into domestic production

using weather variability to estimate the response of savings to transitory income in thailand this paper measures the extent to which farmers are able to use savings and dissavings to smooth consumption in response to unexpected shocks to income time series information on regional rainfall is used to construct estimates of transitory income due to rainfall shocks the relationship between these measures of transitory income and savings indicates that farm households save a significantly higher fraction of transitory income than nontransitory income jel d91 016 the incomes of farm households in developing countries are notorious for being both low and uncertain policies that increase the incomes of farmers may well be different

property values and pension underfunding in the local public sector abstract this paper reexamines the empirical implication of the c tiebout j pol econ 64 416 424 1956 hypothesis taking account of the fact that many municipal pensions are grossly underfunded ols results show that underfunding has no impact on local property values the motives for incomplete funding of pensions are also examined and are built into a simultaneous equation model the ols results are confirmed and some light is shed on factors leading to the underfunding of pensions

on the political economy of land value capitalization and local public sector rent seeking in a tiebout model abstract the political economy of capitalization in a tiebout model when there is a rent seeking local public sector is examined a new approach to test for the effects of successful local public worker rent seeking on property values is suggested and initial results are presented we find evidence that potential residents are compensated through lower property prices in cities where local public employees earn substantially higher wages than similar local public employees earn on average in other cities finally we expand upon how landowners public workers and renters can use the regulatory process to capture a share of the short run rents associated with a tiebout disequilibrium

behavioral identification in coalitional bargaining an experimental analysis of demand bargaining and alternating offers alternating offer and demand bargaining models of legislative bargaining make very different predictions in terms of both ex ante and ex post distribution of payoffs as well as in the role of the order of play the experiment shows that actual bargaining behavior is not as sensitive to the different bargaining rules as the theoretical point predictions whereas the comparative statics are in line with both models we compare our results to studies that attempt to distinguish between these two approaches using field data finding strong similarities between the laboratory and field data regardless of the underlying bargaining process

malapportionment and multilateral bargaining an experiment abstract members of collective decision making bodies often represent communities that differ in population sizes malapportionment results when decision making power is not allocated evenly across the population two well known institutions with malapportionment have emerged bicameralism and weighted voting this paper studies experimentally how agenda setting power affects the distribution of resources comparing across those two institutions conventional wisdom suggests that malapportionment favors scarcely populated states i find that this is the case under weighted voting but not necessarily in a bicameral system in the later case the allocation of agenda setting power can be used to eliminate distortions stemming from malapportionment

the old age security hypothesis reconsidered abstract that the introduction of a means for transferring present to future consumption other than children in a developing country will reduce the rate of population growth is shown to depend crucially on the assumption that parents do not care about the numbers or the welfare of the children they have when parents do care the conclusion no longer unambiguously follows because the new means for providing for parents old age leads to a positive income effect

communication in multilateral bargaining one of the most robust phenomena in the experimental literature on multilateral bargaining is the failure of proposers to extract equilibrium rents however all previous experiments have overlooked the fact that outside the lab committee members are allowed to and do engage in sometimes intense communication processes prior to voting on a proposal we conduct an experimental test of the baron ferejohn model in which we allow committee members to engage in unrestricted cheap talk communication before a proposal is submitted we find that proposers extract a significantly higher share of resources when communication is allowed communication increases proposer power through two channels first it mitigates the uncertainty surrounding the amount a coalition member is willing to accept second it allows potential coalition members to compete for a place in the coalition by lowering this stated price