the persistence of female labor supply empirical evidence and implications previous research has shown that female hours of work are very persistent over women s lifetimes that women tend to be either workers or nonworkers this paper uses psid data from 1967 to 1987 to examine changes in persistence over time the overall finding is that there is little change in persistence because as women entered the labor force in greater numbers they tended to become continuous workers replacing continuous nonworkers among older women spells of reduced hours are now less prolonged holding constant a fixed effect among young women the persistence of hours has increased slightly over time and patterns of employment now appear to develop prior to marriage and continue into the married years

labor market returns to two and four year college the paper examines labor market returns to a two and four year college education analysis of the 1972 national longitudinal survey of youth observation that the average person who attended a two year college earned about 10 percent more than those without any college education comparison with the wages of those who attended a four year college education

claim timing and ex post adverse selection many health care treatments are not urgent and may be delayed if patients so choose because insurance coverage is typically determined by the treatment date individuals may have incentives to strategically delay treatments to minimize out of pocket costs the strategic delay of treatment a particular form of moral hazard can be an important source of subsequent adverse selection in which ex ante identical individuals select insurance coverage based on their differing accumulation of previously delayed treatments this article investigates these forces empirically in the context of the missing market for dental insurance using rich claim level data my analysis reveals that approximately 40 of individuals strategically delay dental treatments when incentivized to do so and this flexibility in delaying treatment can explain why the market for dental insurance has largely unraveled more generally the counterfactual analysis suggests features such as open enrolment periods and contracting on pre existing conditions may be helpful tools in overcoming adverse selection in insurance contexts where the timing of uncertainty is not contractible

do labor markets provide enough short hour jobs an analysis of work hours and work incentives i introduction female labor force participation has increased dramatically over the past three decades much of this change is due to the increased participation of married women and women with children 1 in households where both adults participate in the labor force or where there is a single working parent individuals will often have greater demands on their time at home and may therefore desire patterns of work hours that differ from other workers given the gender based division of labor in most american households many of the women entering the labor force may prefer shorter and perhaps more flexible work weeks 2 furthermore as sex roles adjust to accommodate the changing work and career aspirations of women it is reasonable to expect that increasing numbers of men will also prefer shorter work weeks the prospects for equality of economic opportunity between men and women rest in large measure on how well and how rapidly labor markets accommodate the hours preferences of workers who desire this flexibility in this paper we ask whether labor markets will provide the optimal number of short hour jobs in response to an increase in demand for short hours on the part of employees according to the simple textbook model of the determinants of work hours the answer to this question is clearly yes firms have an incentive to elicit information about their hours preferences because this allows them to offer labor contracts that minimize cost similarly workers have an incentive to reveal their preferences to finns because this information is used to construct wage and hours packages in which workers are asked to work the utility maximizing number of hours at the market clearing wage labor market outcomes may be considerably more complex however in a setting where firms rely on work incentives to regulate the effort exerted by employees 3 we find that in a simple efficiency wage model along the lines of shapiro and stiglitz 1984 and bowles 1985 but with a heterogeneous work force workers hours preferences may provide an indicator of their responsiveness to the work incentives in this setting employers will in general not be able to elicit accurate information about hours preferences from employees we show that this market failure may lead in turn to labor market equilibria that are characterized by an underprovision of short hour jobs we find further that the shortage of short hour jobs most likely occurs in high wage labor markets our model suggests that the simple textbook analysis of hours determination relies upon the wrong market metaphor the conventional approach presumes that the determination of work hours is similar to the determination of car colors workers have an incentive to reveal their true hours preferences and employers have anincentive to solicit these preferences for the same reason that consumers have an incentive to reveal their color preferences and car makers have an incentive to solicit these preferences in our view a more appropriate market metaphor for hours determination is the market for health insurance employees have an incentive to portray themselves as desiring long hours for the same reasons that purchasers of health insurance will want to portray themselves as having no health problems insurance providers must be concerned about the unobservable characteristics of individuals who are attracted to the various insurance contracts they offer we suggest that employers face similar concerns when offering wage and hours packages the paper proceeds as follows in the next section section ii we analyze the determination of wages and work hours when finns use dismissal threats to motivate a homogeneous group of workers section iii examines the case where workers have heterogeneous preferences with respect to hours of work in section iv we discuss the empirical plausibility of our model section v provides concluding remarks

on selecting a measure of labour activity evidence from registered nurses 1981 and 1989 the purpose of this paper is to demonstrate the effects of the selection of measures of labour activity on the conclusions that are derived from the analysis of individual labour supply the results of the analysis using three commonly specified single measures annual hours worked hours worked per week and weeks worked per year as the dependent variable in tobit equations are compared with those obtained using a probit 2sls in which the individual labour supply is measured by hours worked per week and weeks worked per year the rhs variables are those that are used in earlier individual labour supply studies and are the same in all of the models analysed among the findings are 1 wage rate effects that are quite strong in single equation models and disappear when a multi equation approach is used 2 the effects of children on labour supply is more complex than in indicated in single equation results and 3 duration dependence is much stronger than indicated results using a single measure of indiv

subsidizing health insurance for low income adults evidence from massachusetts how much are low income individuals willing to pay for health insurance and what are the implications for insurance markets using administrative data from massachusetts subsidized insurance exchange we exploit discontinuities in the subsidy schedule to estimate willingness to pay and costs of insurance among low income adults as subsidies decline insurance take up falls rapidly dropping about 25 percent for each 40 increase in monthly enrollee premiums marginal enrollees tend to be lower cost indicating adverse selection into insurance but across the entire distribution we can observe approximately the bottom 70 percent of the willingness to pay distribution enrollees willingness to pay is always less than half of their own expected costs that they impose on the insurer as a result we estimate that take up will be highly incomplete even with generous subsidies if enrollee premiums were 25 percent of insurers average costs at most half of potential enrollees would buy insurance even premiums subsidized to 10 percent of average costs would still leave at least 20 percent uninsured we briefly consider potential explanations for these findings and their normative implications

sex segregation within occupations do the paychecks and career prospects of men and women differ because of rational optimizing decisions made by men and women given their respective skills experiences home responsibilities and intentions regarding future work and family activities the human capital model coherent logical and internally consistent has a certain elegance to it nevertheless empirically it cannot explain the sex composition of jobs in lines of work pursued by both men and women the results reported below are more consistent with the notion that employers statistically discriminate that is they reserve some jobs for men and others for women based on their perceptions of the average traits of the two groups however our results also call into question the assumption that statistical discrimination is merely an optimal decisionmaking strategy under conditions of uncertainty we summarize below our recent research on determinants of the sex composition of jobs in mixed occupations that research is based on data on staffing patterns job requirements and personnel policies collected by the u s employment service in over 400 california establishments between 1959 and 1979 details on sample representativeness procedures of data collection and the like can be found in our 1984 and 1986 papers

female labor supply following displacement a split population model of labor force participation and job search following permanent layoffs most women search for new jobs but some withdraw from the labor force we develop a joint model of the choice to undertake postdisplacement job search and unemployment durations for searchers and estimate it using data from the 1988 displaced worker survey maximum likelihood estimates of this split population model show that labor force withdrawal is an important factor explaining the distribution of postdisplacement jobless spells the model also allows us to distinguish the effect of any covariate on the decision to engage in postdisplacement search from its effect on search duration single population models obscure this distinction

work experience earnings and participation evidence from the women and employment survey this paper presents a probit model of labour force participation and a set of earnings equations estimated using data from the 1980 women and employment survey the results of the participation model compare with previous findings and the earnings models give typical results of human capital and job characteristics variables exclusion of the sample selection effect appears to be of importance and a linear piecewise experience variable outperforms the quadratic specification

ethical influences on the evolution of the us tradable permit approach to air pollution control abstract in 1975 a novel approach to air pollution control was implemented in the usa from this rather humble beginning this approach has now been expanded rather dramatically in several different directions this paper describes this evolution shows how the design of the system has been adapted to accommodate ethical concerns and describes how the latest versions of this approach have transformed the regulatory process which spawned the approach in the first place

emission trading vs rigid regulations in the control of vehicle emissions this paper presents the results of an empirical study of the cost savings associated with a marketable permit system for light duty vehicles relative to the current system of uniform standards the sensitivity of cost savings estimates to model specification are examined including estimation approaches for obtaining cost functions issues of the functional form of emission control cost functions and choice of pollution variables included in the estimated cost functions additionally the precision of point estimates of cost savings are explored using a simulation method for obtaining estimates of the standard errors of cost savings

returns to nursing education 1970 84 using four large micro data sets this paper examines the returns to investments in education by registered nurses during the period 1970 84 wage models are estimated by a maximum likelihood technique that accounts for selection bias no wage difference existed between associate and diploma degree nurses modest hourly wage premiums were found for baccalaureate bs compared with associate degree nurses returns to positions of responsibility were substantial however when career patterns of promotion were examined in a multinomial logit model and although statistically significant differences existed in favor of the baccalaureate nurses the differences were small blacks made substantial gains over the period while males consistently earned large wage premiums

are part time women paid less a model with firm specific effects this paper uses data from a survey of child care establishments to compare part and full time wages within two narrow occupations one high skill and one low skill unlike previous studies it controls for firm specific effects we find that when firm specific effects are accounted for only the low skill workers in our sample receive lower wages for working part time on the other hand when compensation is defined to include prorated fringe benefits establishments appear to compensate both high and low skill part timers at a lower hourly rate

factors affecting levels and growth rates in the wage rates of women evidence from nursing using data from two surveys of nurses 1981 and 1989 the study examines the factors affecting the levels and growth rates in the wage rates paid to women especially married women who were licensed as registered nurses our results indicate that the influence of such household characteristics as marital status age and number of children and spouse s characteristic tended to diminish over the 1980s the evidence further suggests that the penalties for frequent switches in employment state were larger at the end of the decade than at the beginning further wages paid to nurses with baccalaureates were statistically the same as those paid to nurses with lesser formal education the return to the baccalaureate appears to be in the form of the higher wages and salaries earned by those who obtain post baccalaureate degrees

housework wages and the division of housework time for employed spouses while the popular press may have declared housework passe with the advent of the two income household see housework is obsolescent by barbara ehrenreich 1993 for one such example the facts indicate that housework continues to consume a substantial amount of time particularly for women while estimates vary widely depending on the sample examined and the methods used to generate the information representative values of housework time range around 6 14 hours per week for men and 20 30 hours for women since wages are likely to be influenced both directly and indirectly by the time and effort devoted to other activities and since gender differences in household responsibilities are significant and often assumed to be a driving force behind gender earnings differentials decisions regarding the overall amount of time spent on housework and the division of that time within the household are important ones the goal of this paper is to shed some light on these allocation decisions we begin by discussing the various methods by which time and effort spent on housework may affect wages and summarize the available empirical evidence overall the empirical evidence indicates that time spent on housework has a negative effect on wages an effect which is most pronounced for women we next examine the amount of time spent on housework and the division of that time between working spouses to do so we draw upon the human capital literature and the bargaining literature to construct simple regression equations for time spent on housework by each spouse as well as the share of housework time contributed by the husband the results indicate that husbands do less housework than their wives as their relative earnings and hours spent in the labor market increase

early career work experience and gender wage differentials we estimate a wage model that includes an array of variables measuring the fraction of time worked during each year of the career this array fully characterizes past employment experience regardless of how sporadic it has been our model yields substantially higher estimated returns to experience and lower returns to tenure than do models that measure experience cumulatively and use the standard quadratic functional form we find that the data reject the standard model but fail to reject our model furthermore we find that 12 of the male female wage gap is due to differences in the timing of work experience

the control of externalities abatement vs damage prevention both public policy discussions and the theoretical literature on externalities have focused on abatement by emitters as the chief means of mitigating the harmful effects of pollution the purpose of this paper is to broaden that focus by illuminating the role of damage reduction activities undertaken by victims and by showing how the efficient solution is affected when these preventive actions are incorporated into the standard theory of externalities finding the efficient solution requires a comparison of emitters abatement costs and the damages sustained by victims as browning 5 has shown the correct short run measure of damage is the loss in the victims profits given that they have acted optimally to minimize the harmful effects of the pollution if victims have no options other than passive acceptance of ambient pollution levels this loss in profits simply equals the profit level in the absence of the externality less the harm inflicted directly by exposure to it however if victims have available to them some cost effective means of reducing the harmful effects of untreated pollution the loss in profits will be smaller since a victim sees damage from pollution as a cost it will attempt to minimize this cost at each level of its output just as it endeavors to minimize other private costs of production such as labor or fuel costs the victim will maximize its profits only if it takes into account both the cost of pollution damages and the cost of damage reduction measures surprisingly the theoretical literature on externalities includes very little explicit discussion of victims defensive actions browning for example displayed a victim s set of marginal cost curves corresponding to different pollution levels each curve was drawn under the assumption that the victim had undertaken the efficient amount of damage prevention given the quantity of pollution it had received the mechanism by which it chose this amount of prevention was not discussed a different approach was taken by bohm 2 3

correlated uncertainty and policy instrument choice abstract for two decades environmental economists have generally maintained that benefit uncertainty is irrelevant for choosing between price and quantity instruments but that cost uncertainty matters with the identity of the efficient instrument depending upon the relative slopes of the marginal benefit and cost functions but in the presence of simultaneous correlated uncertainty such policy instrument recommendations may be inappropriate with plausible values of relevant parameters the conventional identification of a price instrument will be reversed to favor instead a quantity instrument the opposite reversal from the choice of a quantity instrument to a price instrument seems less likely to occur

globalization and its challenges rudi was born and grew up in krefeld germany he was an undergraduate at the university of geneva and completed his ph d at the university of chicago in 1971 which is where we met he was a student of robert mundell and both the subject matter the development of the mundell fleming model and the elegance and insights of his early work reflected mundell s influence he taught at the university of rochester and at the university of chicago before accepting an offer from mit in 1975

an emission saved is an emission earned an empirical study of emission banking for light duty vehicle manufacturers abstract this paper presents results of an empirical study of emission banking for light duty vehicle manufacturers an intertemporal model of manufacturers choices is combined with econometrically estimated abatement cost functions to simulate the cost savings and emission effects of an averaging trading and banking marketable permit system relative to command and control regulations while the cost savings of such a system are estimated to be modest the intertemporal emission effects may be sizable the sensitivity of the results to discount rates abatement cost functions and model specifications is also explored

are ols estimates of the return to schooling biased downward another look the authors examine evidence on bias in ols estimates of the economic return to schooling to study omitted ability bias they use test scores available in the national longitudinal survey of youth as proxies for ability allowing for measurement error in these test scores the authors also explore biases from the endogeneity of schooling or experience or measurement error in these variables in their data ols estimation including test scores appears to be appropriate and indicates an upward bias of roughly 40 percent in the ols estimate ignoring ability this contrasts with evidence from other recent research using different statistical experiments to purge schooling of its correlation with the wage equation error copyright 1995 by mit press

equilibria in health exchanges adverse selection versus reclassification risk this paper studies equilibrium and welfare in a class of regulated health insurance markets known as exchanges we use detailed health plan choice and utilization data to model individual level i projected health risk and ii risk preferences we combine the estimated distributions of risk and risk preferences with a model of competitive insurance markets to predict allocations and prices

a structural model of multiple welfare program participation and labor supply work on estimating the labor supply effects of high marginal tax rates in welfare programs has been hindered by the difficulty of estimating the effects of participation in multiple welfare programs simultaneously the authors solve this problem by applying methods of simulation estimation to a model of labor supply and multiple program participation the results show asymmetric wage and tax rate effects with fairly large wage elasticities of labor supply but very inelastic responses to moderate changes in cumulative marginal tax rates implying that high welfare tax rates do not necessarily induce major reductions in work effort copyright 1998 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

the control of externalities in a growing urban economy the received theory of externality control which implicitly assumes that both the social marginal damage and marginal treatment cost schedules will remain fixed during the time any policy is operative concludes that an effluent tax and an auction of rights to emit pollutants in the amount of a given emissions standard will be equally efficient in meeting that standard we show that urban growth causes shifts in both schedules these shifts in turn substantially increase the welfare loss from a fixed effluent tax relative to that from an auction market with a fixed number of licenses

the value of medicaid interpreting results from the oregon health insurance experiment we develop frameworks for welfare analysis of medicaid and apply them to the oregon health insurance experiment across different approaches we estimate low income uninsured adults willingness to

seller incentive properties of epa s emission trading auction abstract the new clean air act amendments instruct the environmental protection agency epa to conduct annual sealed bid offer auctions of emission allowances the auction pricing rules are discriminative and sellers with the lowest asking prices receive the highest bids this paper assesses the seller incentives of this auction and demonstrates that the auction rules cause sellers to choose asking prices that under reveal their cost of emission control furthermore increasing the number of sellers intensifies this misrepresentation if the number of buyers remains fixed the epa s rules can therefore generate significantly biased price signals and reduce the efficiency of the allowance trading market

simultaneously modeling the supply of weeks and hours of work among female household heads this paper explores the differential nature of labor supply decisions regarding weeks of work per year and hours of work per week among female household heads a model of labor supply that separates the weeks hours decision is presented and estimated allowing for simultaneity in the weeks hours decision as well as for the presence of either fixed costs or weeks and hours constraints the results indicate that not only are weeks and hours decisions separate from the labormarket participation decision but they are also quite different from each other although they appear to be simultaneously determined

economic prescriptions for environmental problems how the patient followed the doctor s orders o ne of the dangers with ivory tower theorizing is that it is easy to lose sight of the actual set of problems which need to be solved and the range of potential solutions as one who frequently engages in this exercise i can attest to this fact in my view this loss of sight has become increasingly evident in the theoretical structure underlying environmental economics which often emphasizes elegance at the expense of realism in this paper i will argue that both normative and positive theorizing could greatly benefit from a careful examination of the results of recent innovative approaches to environmental management the particular set of policies examined here involves two tools which have received widespread support from the economics community marketable permits and emission charges pigou 1932 dales 1968 kneese and schultze 1975 both tools represent ways to induce businesses to search for lower cost methods of achieving environmental standards they stand in stark contrast to the predominant command and control approach in which a regulator specifies the technology a firm must use to comply with regulations under highly restrictive conditions it can be shown that both of the economic approaches share the desirable feature that any gains in environmental quality will be obtained at the lowest possible cost baumol and oates 1975 until the 1960s these tools only existed on blackboards and in academic journals as products of the fertile imaginations of academics however some countries have recently begun to explore using these tools as part of a broader strategy for managing environmental problems

private information and insurance rejections across a wide set of nongroup insurance markets applicants are rejected based on observable often high risk characteristics this paper argues that private information held by the potential applicant pool explains rejections i formulate this argument by developing and testing a model in which agents may have private information about their risk i first derive a new no trade result that theoretically explains how private information could cause rejections i then develop a new empirical methodology to test whether this no trade condition can explain rejections the methodology uses subjective probability elicitations as noisy measures of agents beliefs i apply this approach to three nongroup markets long term care disability and life insurance consistent with the predictions of the theory in all three settings i find significant amounts of private information held by those who would be rejected i find generally more private information for those who would be rejected relative to those who can purchase insurance and i show it is enough private information to explain a complete absence of trade for those who would be rejected the results suggest that private information prevents the existence of large segments of these three major insurance markets publication abstract

knowledge of future job loss and implications for unemployment insurance this paper studies the implications of individuals knowledge of future job loss for the existence of an unemployment insurance ui market learning about job loss leads to consumption decreases and spousal labor supply increases this suggests existing willingness to pay estimates for ui understate its value but it yields new estimation methodologies that account for and exploit responses to learning about future job loss although the new willingness to pay estimates exceed previous estimates i estimate much larger frictions imposed by private information this suggests privately traded ui policies would be too adversely selected to be profitable at any price

consumption pollution tradeoffs in an environment vulnerable to pollution related catastrophic collapse abstract this paper considers the consequences of an avoidable risk of irreversible environmental catastrophe for society s optimal long run consumption pollution tradeoffs the risk is assumed to be a nondecreasing function of pollution concentration which evolves as a dynamic environmental renewal process the main objective of the paper is to derive qualitative insights regarding the effects of such risk on optimal management

auctions and alternative procedures for allocating pollution rights this paper considers two different types of auctions which the government could use to sell discharge rights 1 an auction where rights are sold for a single clearing price and 2 a special type of discriminating auction that discourages strategic manipulation of bids by individual dischargers based on both theoretical and practical considerations there appears to be a fundamental trade off between reducing the financial burden of rights purchases and eliminating the incentives for strategic behavior very few discharges in either case study would have lower expenses under government sales of rights than under uniform treatment the simulations also suggest that there may be opportunities for strategic behavior under nonincentive compatible procedures because of small numbers of dischargers despite its problems with respect to incentive compatibility the right allocation approach of free distribution followed by exchange may offer the most desirable package of features this approach can yield dischargers savings over the expenses of present uniform regulations as well as provide incentives for efficient allocation of treatment efforts 25 references 1 figure 5 tables

disability earnings income and consumption using longitudinal data for the period 1968 2005 for a sample of male household heads we determine the prevalence of disability during the working years and examine how the extent of disability affects a range of outcomes including earnings income and consumption we have seven main findings first disability rates are high we divide the disabled along two dimensions based on the persistence and severity of their work limiting condition we estimate that a person reaching age 56 has a 53 percent chance of having been disabled at least once during his working years and a 19 percent chance that he has begun a chronic and severe disability second the economic consequences of disability are frequently profound ten years after disability onset a person with a chronic and severe disability on average experiences a 68 percent decline in earnings a 32 percent decline in after tax income a 22 percent decline in food and housing consumption and a 21 percent decline in food consumption third the various economic consequences differ sharply across disability groups the outcome declines for those with a chronic and severe disability are often more than twice as large as those for the average disabled fourth our findings show the partial and incomplete roles that individual savings family support and social insurance play in reducing the consumption drop that follows disability only about half of this most disabled group reports receiving social security disability insurance or supplemental security income fifth we find a noticeable fall in earnings and income prior to the onset of a reported disability consumption also falls somewhat suggesting that future disability is partially but incompletely predictable in the short run sixth time use and detailed consumption data further indicate that disability is associated with a decline in well being seventh the quantities we have estimated combined with elasticities from the literature allow us to examine the optimality of current compensation for the disabled we find that the current compensation for our most disabled group appears to be lower than is optimal

the life cycle labor supply of married women and its implications for household income inequality i introduction there has been an abundance of papers on female labor supply over the years but most do not rigorously test the life cycle model of labor supply and none focus on the potentially important role of nonlabor income in shaping labor supply 1 their primary focus is on the wage elasticity and most recently on the intertemporal wage elasticity the intertemporal wage elasticity or the change in labor supply as wages change over the woman s life cycle is economically cleaner to interpret because it contains only a substitution effect the income effect is constant over the life cycle but this advantage comes at a cost we learn nothing about why labor supply varies across women such variability is extremely important for policy purposes because for example it has implications for income inequality the popular press often creates the impression that income inequality is worsening as upper income men marry upper income women the implication is that the rising labor force participation rate of women is increasing family income inequality on the other hand it is possible that the income of wealthy husbands exerts a negative income effect on their wives labor supply so income inequality is little changed or declines as participation rates of wives rise the objectives of this paper are twofold to estimate a life cycle labor supply model with panel data that emphasizes the husband s income effect on the wife s hours of work and to draw implications for family income inequality i provide new estimates of the income elasticity that nest the life cycle hypothesis of labor supply with the current income hypothesis the life cycle model suggests that it is the permanent income of the husband that matters not his current income yet nearly all models of female labor supply include only current income the exception is jakubson 1988 i include both and add a varying parameters specification for changes in tastes the implications for income inequality arise as an application of the life cycle labor supply model a summary of the empirical results is contained in the conclusion this paper is unusual in that it covers two relatively disparate topics though their linkage is important and demands their integration in one paper ii specification of the labor supply model following the standard life cycle labor supply model assume that an individual maximizes lifetime utility v where utility is separable over time and separable between consumption and leisure 2 mathematical expression omitted where c and l are consumption and hours of leisure for individual i rho is the rate of time preference gamma sub it reflects consumers tastes for home production leisure etc and omega is less than 1 is fixed across individuals the lifetime budget constraint is mathematical expression omitted for interest rate r wage rate w sub it hours of work h sub it and the present value of nonlabor income a sub i for an interior solution the leisure equation is 2 ln l sub it 1 omega 1 ln lambda sub i ln gamma sub it ln omega ln 1 r sup t 1 rho sup t ln w sub it where lambda sub i is the marginal utility of lifetime wealth the marginal utility of wealth lambda sub i is a fixed effect that captures all the permanent income effects that influence labor supply including expected lifetime potential wages and lifetime nonlabor income for the labor supply of a married woman the largest wealth effect is likely to be her husband s income as it enters through lambda an increase in the husband s lifetime earnings will decrease the marginal utility of lifetime wealth and decrease the wife s labor supply 3 incorporating this relationship in the parameterization of lambda mathematical expression omitted where mathematical expression omitted is the husband s lifetime income education e

simulation of a health insurance market with adverse selection a health insurance market is examined in which individuals with a history of high utilization of health care services tend to select fee for service ffs insurance when offered a choice between ffs and health maintenance organizations hmos in addition hmos are assumed to practice community rating of employee groups based on these observations and health plan enrollment and premium data from minneapolis st paul a deterministic simulation model is constructed to predict equilibrium market shares and premiums for hmo and ffs insurers within a firm despite the fact that favorable selection enhances their ability to compete with ffs insurers the model predicts that hmos maximize profits at less than 100 market share and at a lower share than they could conceivably capture that is hmos would not find it to their advantage to drive ffs insurers from the market even if they could in all cases however the profit maximizing hmo premium is greater than the experience rated premium and thus the ave

selection on moral hazard in health insurance economic analysis of market failure in insurance markets tends to analyze selection and moral hazard as distinct phenomena in this paper we explore the potential for selection on moral hazard in insurance markets by this we mean the possibility that moral hazard effects are heterogenous across individuals and that individuals selection of insurance coverage is affected by their anticipated behavioral response to coverage we examine these issues empirically in the context of employer provided health insurance in the united states specifically we break down the general

estimating welfare in insurance markets using variation in prices we provide a graphical illustration of how standard consumer and producer theory can be used to quantify the welfare loss associated with inefficient pricing in insurance markets with selection we then show how this welfare loss can be estimated empirically using identifying variation in the price of insurance such variation together with quantity data allows us to estimate the demand for insurance the same variation together with cost data allows us to estimate how insurers costs vary as market participants endogenously respond to price the slope of this estimated cost curve provides a direct test for both the existence and the nature of selection and the combination of demand and cost curves can be used to estimate welfare we illustrate our approach by applying it to data on employerprovided health insurance from one specific company we detect adverse selection but estimate that the quantitative welfare implications associated with inefficient pricing in our particular application are small in both absolute and relative terms

the empirical properties of two classes of designs for transferable discharge permit markets abstract previous work by atkinson and lewis j environ econ manag 1 237 250 1974 and anderson et al an analysis of alternative policies for attaining and maintaining a short term no2 standard mathtech inc princeton n j 1979 has indicated the tremendous cost advantages to be achieved by moving from a policy based on emission standards to one based on marketable emission permits as tietenberg land econ 56 391 416 1980 points out however neither of the major permit designs treated in the literature are optimal from all points of view this has triggered a search for alternative permit designs which while they may not minimize compliance costs have sufficient other virtues as to make them attractive on other grounds the purpose of this paper is to examine within the context of an empirical mathematical programming model the air quality emission and cost consequences of two classes of the permit designs which can be implemented in the absence of information on control costs this case study involves particulate control in st louis

a unified welfare analysis of government policies we conduct a comparative welfare analysis of 133 historical policy changes over the past half century in the united states focusing on policies in social insurance education and job training taxes and cash transfers and in kind transfers for each policy we use existing causal estimates to calculate both the benefit that each policy provides its recipients measured as their willingness to pay and the policy s net cost inclusive of long term impacts on the government s budget we divide the willingness to pay by the net cost to the government to form each policy s marginal value of public funds or its mvpf comparing mvpfs across policies provides a unified method of assessing their impact on social welfare our results suggest that direct investments in low income children s health and education have historically had the highest mvpfs on average exceeding 5 many such policies have paid for themselves as governments recouped the cost of their initial expenditures through additional taxes collected and reduced transfers we find large mvpfs for education and health policies amongst children of all ages rather than observing diminishing marginal returns throughout childhood we find smaller mvpfs for policies targeting adults generally between 0 5 and 2 expenditures on adults have exceeded this mvpf range in particular if they induced large spillovers on children we relate our estimates to existing theories of optimal government policy and we discuss how the mvpf provides lessons for the design of future research

predicting female labor supply this study examines the empirical associations between female labor supply and child status and marital status using 1970 and 1980 u s census data and 1971 and 1981 canadian census data when the data are used in a purely cross sectional manner without controlling for previous labor supply we find as others have that female labor supply is negatively related to the number of children a woman has had however this relationship changes when we condition on weeks of work in the previous year this study makes use of longitudinal information in the canadian and u s census data that has been largely ignored the paper also explores certain econometric issues raised by the nature of the empirical results

marketable permits market power and cheating abstract in this paper we present a model of a noncompliant firm operating in a marketable pollution permit market in the main result of the paper we show how compliance is related to the initial distribution of permits a firm with market power will cheat less the larger its endowment of permits is from a fixed stock of permits the competitive fringe however will cheat more as its endowment of permits is reduced generating an ambiguous global impact on cheating

market power and transferable property rights the appeal of using markets as a means of allocating scarce resources stems in large part from the assumption that a market will approximate the competitive ideal when competition is not a foregone conclusion the question naturally arises as to how a firm might manipulate the market to its own advantage this paper analyzes the issue of market power in the context of markets for transferable property rights first a model is developed that explains how a single firm with market power might exercise its influence this is followed by an examination of the model in the context of a particular policy problem the control of particulate sulfates in the los angeles region

a simultaneous equation model of labor supply fertility and earnings of married women the case of registered nurses a simultaneous equation model of labor supply fertility and earnings is developed and estimated for an important subset of the female population married registered nurses rns measures of variables specific to married nurses age 21 64 are developed by aggregating observations on individual nurses or their families into standard metropolitan statistical area smsa averages from the 1 in 100 public use sample of the 1970 census of population in the u s the sample was restricted in certain ways the grouped observations apply only to white rns who are married with husband present and live in smsas of over 250000 population in 1970 except honolulu the sample is further restricted so that each included observation representing an smsa average is based upon an underlying pool of at least 15 individual nurses this last restriction reduces the sample of smsas to 88 from 124 the coefficient on the nurse wage variable is positive and statistically significant with an implied wage elasticity of 40 at the means these estimates are consistent with those observed using the analogous microcensus data on rns rn fertility has the predicted negative effect on nurse labor supply but is statistically insignificant but the magnitude of the fertility coefficient is plausible a 10 increase in nurse fertility within an smsa number of children ever born 1000 nurses ever married within an smsa is associated with a reduction in the smsa nurse labor supply the estimated coefficients of the husband earnings and nonlabor income variables are negative but only the former is statistically significant at the 90 level or above the estimated effect of the nurses earnings opportunities on her fertility are statistically insignificant but the wage coefficient is negative as expected and implies an elasticity of nurse fertility with respect to the nurse wage rate of approximately 2 the coefficient on the labor supply variable is negative and statistically significant confirming the hypothesis that increased labor market activity increases the opportunity costs of children husbands earnings are not a significant determinant of rn fertility the estimates suggest that nurse labor supply and fertility decisions are relatively unimportant factors in determining the nurses market earnings

children and household economic behavior this paper looks at some of the methodological issues that arise in modeling the effects of children on household behavior and presents some estimates for selected areas for our purposes household behavior will be taken to refer to household decisions on labor supply the allocation of expenditure to different periods and the decision as to what to do with the difference between income and expenditure i shall be concerned mainly with the effects of dependent children and i restrict attention largely to western societies excerpt

on the efficiency of environmental instruments in a spatial economy this paper develops an efficiency criterion to evaluate environmental policy instruments in a spatial economy we call an environmental policy regime at the regional level efficient if it guarantees not only an efficient distribution of emission permits within a region but also an efficient locational pattern of mobile firms across the regions of a federation using marketable pollution rights or emission taxes efficiency in this broad sense can only be achieved if revenues of regional environmental agencies are not transferred to regional firms direct controls neither support an efficient allocation of emission rights within a region nor locational efficiency of firms

the rise and fall of customary wage differentials among nursing personnel in us hospitals 1956 1985 between 1956 and 1985 the employment of registered nurses rns relative to other nursing personnel rose despite constant relative wages among rns licensed practical nurses and nurses aides over this thirty year period hospital management proclaimed chronic shortages of rns economists have used monopsonistic models to explain the persistence of these shortages as an alternative to the monopsonistic model this paper presents an institutional argument for why hospital management sought to maintain relative wages among classes of nursing personnel while at the same time successfully raising the relative use of rns through a variety of nonwage inducements and manipulations of rn supply c 1995 academic press inc copyright 1995 by oxford university press

differential environmental regulation effects on electric utility capital turnover and emissions this paper tests the hypothesis that differential regulations reduced the rate of capital turnover in the electric utility industry resulting in increased emissions of sulfur dioxide based on a sample of forty four privately owned electric utilities operating over the period 1969 83 the authors results indicate that 1 regulation increased the age of capital by an average of 3 29 years 24 6 percent 2 increases in the age of capital have no statistically significant impact on emissions and 3 in the absence of regulation emissions would have increased by 3 79 tons per million kwhs 34 6 percent copyright 1993 by mit press

the effect of medicaid premiums on enrollment a regression discontinuity approach abstract this paper estimates the effect that premiums in medicaid have on the length of enrollment of program beneficiaries whether and how low income families will participate in the exchanges and in states medicaid programs depends crucially on the structure and amounts of the premiums they will face i take advantage of discontinuities in the structure of wisconsin s medicaid program to identify the effects of premiums on enrollment for low income families i use a 3 year administrative panel of enrollment data to estimate these effects i find an increase in the premium from 0 to 10 dollars per month results in 1 4 fewer months enrolled and reduces the probability of remaining enrolled for a full year by 12 percentage points but other discrete changes in premium amounts do not affect enrollment or have a much smaller effect i find no evidence of program enrollees intentionally decreasing labor supply in order to avoid the premiums

endowments and the allocation of schooling in the family and in the marriage market the twins experiment 03 we show how comparisons between the within twin correlations of human capital outcomes across identical and nonidentical twins can be used to identify the variability in the individual specific component of endowments and the responsiveness of schooling to individual specific endowments in the family and in the marriage market even when schooling is measured with error estimates from two twins samples indicate that 27 42 percent of the variance in log earnings obesity is due to variability in individual specific endowments allocations of schooling reinforce specific endowments and individual specific earnings endowments of men and their wives schooling are negatively associated

economic instruments for environmental regulation our knowledge about economic incentive approaches to pollution control has grown rapidly in the two decades in which they have received serious analytical attention not only have the theoretical models become more focused and the empirical work more detailed but we have now had over a decade of experience with emissions trading in the u s and emission charges in europe as the world community becomes increasingly conscious of both the need to tighten environmental controls and the local economic perils associated with tighter controls in a highly competitive global marketplace it seems a propitious time to stand back and to organize what we have learned about this practical and promising approach to pollution control that may be especially relevant to current circumstances this paper draws upon economic theory empirical studies and actual experience with implementation to provide a brief overview of some of the major lessons we have learned about two economic incentive approaches emissions tradi copyright 1990 by oxford university press

dynamic inefficiencies in insurance markets evidence from long term care insurance we examine whether unregulated private insurance markets efficiently provide insurance against reclassification risk the risk of becoming a bad risk and facing higher premiums to do so we examine the ex post risk type of individuals who drop their long term care insurance contracts relative to those who are continually insured consistent with dynamic inefficiencies we find that individuals who drop coverage are of lower risk ex post than individuals who were otherwise equivalent at the time of purchase but who do not drop out of their contracts these findings suggest that dynamic market failures in private insurance markets can preclude the efficient provision of insurance against reclassification risk this abstract was borrowed from another version of this item

a general formula for the optimal level of social insurance in an influential paper baily 1978 showed that the optimal level of unemployment insurance ui in a stylized static model depends on only three parameters risk aversion the consumption smoothing benefit of ui and the elasticity of unemployment durations with respect to the benefit rate this paper examines the key economic assumptions under which these parameters determine the optimal level of social insurance i show that a baily type expression with an adjustment for precautionary saving motives holds in a general class of dynamic models subject to weak regularity conditions for example the simple reduced form formula derived here applies with arbitrary borrowing constraints durable consumption goods private insurance arrangements and search and leisure benefits of unemployment

adverse selection and an individual mandate when theory meets practice we develop a model of selection that incorporates a key element of recent health reforms an individual mandate using data from massachusetts we estimate the parameters of the model in the individual market for health insurance we find that premiums and average costs decreased significantly in response to the individual mandate we find an annual welfare gain of 4 1 per person or 51 1 million annually in massachusetts as a result of the reduction in adverse selection we also find smaller post reform markups

sources of bias in women s wage equations results using sibling data we use data on sisters to jointly address heterogeneity bias and endogeneity bias in estimates of wage equations for women this analysis yields evidence of biases in ols estimates of wage equations for white and black women some of which are detected only when the two sources of bias are addressed simultaneously for both white and black women there is evidence of upward bias in the estimated returns to schooling bias corrected estimates of the effect of marriage on wages for white women suggest a positive marriage premium we also use the sibling data to identify our models and test a number of other commonly used identifying assumptions as overidentifying restrictions