the effect of taxes on labor supply in the underground economy this paper uses micro data from a randomized survey carried out in the metropolitan area of quebec city canada to analyze the decision to evade taxes and work in the underground economy the results indicate that taxes distort labor market activities away from the regular sector to the underground sector but the distortion is small for the average worker the distortion is large however for particular groups of the population such as welfare claimants copyright 1994 by american economic association

the welfare implications of foreign exchange intervention abstract this paper examines the welfare implications of foreign exchange intervention in a two country two currency general equilibrium model with limited participation in financial markets and cash in advance constraints on transactions both sterilized and nonsterilized intervention operations have significant impacts on the allocation of liquidity in international financial markets and therefore affect real economic activities the welfare effects of shocks to monetary policy sterilized and nonsterilized foreign exchange interventions are examined and compared the design of welfare maximizing intervention policy rules is also discussed

interpreting comovements in the trade balance and the terms of trade abstract i examine the relation between the trade balance and the terms of trade in a two country dynamic stochastic exchange economy with complete markets along an equilibrium path for this economy the relation is governed by the substitutability between foreign and domestic goods i find in contrast to non stochastic analyses of the harberger laursen metzler effect that a positive association does not require persistent shocks or non constant rates of time preference this contrast highlights the role played by the structure of asset markets complete and otherwise in generating equilibrium comovements

the peter pan syndrome in emerging markets the productivity transparency trade off in it adoption firms invest in technology to increase productivity yet in emerging markets where a culture of informality is widespread information technology it investments leading to greater transparency can impose a cost through higher taxes and the need for regulatory compliance the tendency of firms to avoid productivity enhancing technologies and remain small to avoid transparency has been dubbed the peter pan syndrome we examine whether firms make the trade off between productivity and transparency by examining it adoption in the indian retail sector we find that computer technology adoption is lower when firms are motivated to avoid transparency specifically technology adoption is lower when there is greater corruption but higher when there is better enforcement and auditing so firms have a higher productivity gain threshold to adopt computers in corrupt business environments that suffer from patchy and variable enforcement of the tax laws not accounting for this motivation to hide from the formal sector underestimates productivity gains from computer adoption thus in addition to their direct effects on the economy enforcement auditing and corruption can have indirect effects through their negative impact on adoption of productivity enhancing technologies that also increase operational transparency

agriculture in recent development theory abstract this paper is a critical review of recent contributions to the literature on agriculture in development theory it considers and compares the main lines of advance made within neoclassical neo marxian and structuralist approaches recent neo marxian and structuralist studies of agrarian development reveal that traditional agriculture is neither stationary nor efficient that resource allocation cannot be separated from wealth distribution or production organization that forms of surplus appropriation do not necessarily follow the dictates of efficiency that the social relations of production may inhibit accumulation and determine the forms of technological change that the state s role in primitive accumulation is more economic than explicitly coercive political and that political and macroeconomic constraints preclude a simple get the prices right view of the intersectoral terms of trade the thrust of these developments is to challenge both neoclassical and some orthodox marxian formulations of agrarian development issues and add to the insights to be gleaned from a political economy of development

off farm work decisions of husbands and wives joint decision making theoretical and econometric models are developed to examine joint wage labor participation and hours decisions of a husband and wife in farm households the econometric model is multiple equation and recursive the specification of the off farm labor supply equation of the husband wife depends on whether his her wife husband does or does not work off the farm and this structure is endogenous the model is fitted to data for iowa farm households the main conclusion is that the off farm labor supply equation of a married individual differs significantly depending on whether his or her spouse also works for a wage copyright 1989 by mit press

incomplete markets borrowing constraints and the foreign exchange risk premium abstract this paper solves a model consisting of two monetary economies with incomplete markets in which agents are subject to borrowing constraints the paper investigates if such a framework is able to account for the volatility and the size of the foreign exchange risk premium the model succeeds in increasing substantially the volatility of the risk premium to about 30 of that in the data however this more volatile risk premium does not translate into sufficiently large predictable excess returns it thus appears unlikely that excess returns from currency speculation can be uniquely explained by a time varying risk premium in an incomplete markets economy with exogenous borrowing constraints

exchange rate variability and asset trade in popular discussion about the merits of different international monetary arrangements it is often maintained that increased exchange rate variability has a negative influence on international tra

an empirical model of discrete and continuous choice in family labor supply because of the interdependent nature of family labor supply decisions the nonnegativity constrai nt on women s hours of work will spill over into other consumption an d labor supply decisions of the family here the author develops an e conometric model of family labor supply that captures this spillove r while addressing the usual censoring issues as well the model i s based on a flexible direct utility function and permits unobservabl e differences in tastes the model is estimated by the maximum likeli hood method on a sample of about 1 200 families from the panel study of income dynamics copyright 1987 by mit press

stochastic trade policy with asset markets abstract this paper uses a stockman dellas type two country two good stochastic general equilibrium model to consider the effects of commercial policy when asset markets are complete we show that i import and export tariffs do not have symmetric effects because interstate relative prices depend on the entire tariff structure ii when commercial policy is random and exogenously determined the ex post comparison of utility across states depends upon whether import or export tariffs are used and iii when endowments are random implying the optimal tariff varies across states the introduction of asset markets may be welfare reducing when only import tariffs are used

corruption centralization and the shadow economy in their pioneering work on corruption shleifer and vishny 1993 find that a centralized bureaucracy results in lower bribes our paper extends the analysis to economies with formal and informal sectors when corrupt officials operate in both sectors bureaucratic centralization is beneficial when confined to the formal sector however we show that crosssector centralization can result in higher bribes and lower welfare furthermore contrary to choi and thum 2005 we demonstrate that depending on the organization of the bureaucracy and the productivity of the informal sector the presence of the shadow economy may have adverse effects on corruption and welfare

determinants and consequences of land reform implementation in the philippines abstract unlike the experience of other developing countries land reform in the philippines has been successful in converting many of share tenants to land reform beneficiaries this study indicates that the implementation of land reform is positively associated with yield growth made possible by the adoption of modern seed fertilizer technology a major reason underlying such association is considered to be an increased economic interest of tenants in land reform arising from divergence of rental value of land from leasehold rent and amortization fees prescribed by law

commodity trade and international risk sharing how much do financial markets matter abstract this paper evaluates the social gains from international risk sharing in some simple general equilibrium models with output uncertainty a simulation model calibrated to selected moments of u s and japanese data estimates the incremental loss from a ban on international portfolio diversification to be on the order of 0 20 percent of output per year even the theoretical gains from asset trade may disappear under alternative sets of assumptions on preferences and technology the paper argues that the small magnitude of potential trade gains may help explain the apparently inconsistent findings of empirical studies on the degree of international capital mobility

the effect of food subsidies on labor supply in sri lanka cash transfers or consumer subsidies can have substantial impacts on labor supply and thus on the level of net benefits of welfare programs under the standard theory of household utility maximization over leisure as well as goods a change in exogenous income or in the price of commodities will affect labor allocation as well as commodity choice ravi kanbur michael keen and matti tuomala show that the implications of transfers for labor supply are particularly important from a nonwelfarist perspective in which increasingly the consumption of certain goods often food rather than total household utility is the objective of the program in contrast from a welfarist perspective the consumption of leisure is valued at the marginal wage rate and treated as other commodities and thus utility is increased regardless of the consumption of commodities welfarist and nonwelfarist perspectives diverge with regard to not only marginal taxation and subsidies but targeting criteria as well for example kanbur keen and tuomala show that under nonwelfarist criteria the effectiveness of an income transfer targeted on the basis of indicators correlated with poverty depends on labor supply behavior everything else being equal groups with more elastic labor supply mitigate the effectiveness of a transfer in reducing poverty thus robert moffitt states the following in a recent review the lack of research on the effects of in kind transfer programs on labor supply is a serious problem in light of the critical role such transfers have played in the united states 2 this is concluded with full knowledge that there have been some relevant studies examining the labor supply effects of programs in the united states such as the

labour supply in italy an empirical analysis of joint household decisions with taxes and quantity constraints this study applies an econometric framework which allows for complex non convex budget sets highly non linear labour supply curves and imperfect markets with institutional constraints a married couple s version of the model is estimated on italian microdata the empirical results show that male labour supply is rather inelastic while labour supply among females especially participation is considerably more elastic the elasticities depend strongly on household income the largest elasticities are found for females living in poor households the results of the tax simulations suggest that there are only modest labour supply responses from replacing the 1987 system by proportional taxes copyright 1999 john wiley sons ltd

why do firms hide bribes and unofficial activity after communism abstract our survey of private manufacturing firms finds the size of hidden unofficial activity to be much larger in russia and ukraine than in poland slovakia and romania a comparison of cross country averages shows that managers in russia and ukraine face higher effective tax rates worse bureaucratic corruption greater incidence of mafia protection and have less faith in the court system our firm level regressions for the three eastern european countries find that bureaucratic corruption is significantly associated with hiding output

job search and mobility in developing countries theory and policy implications abstract a labor market model is developed in which the formal sector is characterized by search frictions whereas the informal sector is competitive we show that there exists a unique steady state equilibrium in this dual economy we then consider different policies financed by a tax on firms profits we find that reducing the unemployment benefit or the firms entry cost in the formal sector induces higher job creation and formal employment reduces the size of the informal sector but has an ambiguous effect on wages we also find that an employment wage subsidy policy and a hiring subsidy policy have different implications in particular the former increases the size of the informal sector while the latter decreases it

protection and social order abstract consider a simple world populated with two types of individuals those who work and create wealth peasants and those who steal the property of others bandits with bandits about peasants need to protect their output and can do so individually or collectively either way protection is costly it consumes resources and interferes with an individual s ability to create wealth this study investigates how individuals might make decisions in such circumstances how those decisions evolve over time and how broader societal characteristics can emerge from such decisions

exploring and controlling a bank s interest risk sensitivity analysis of an asset and liability co ordination model abstract for exploration and control of a bank s interest risk an asset and liability co ordination model is used that has been developed in close co operation with a big german commercial bank this model is capable of analyzing the sensitivity of a bank s interest surplus to sudden and unforeseen changes of the interest rate scenario furthermore a model based iterative procedure is suggested for control of interest risk by bank management a pragmatic approach is employed mainly in reference to the generation of alternative future interest rate scenarios the data required by the model are restricted to those that are usually available to commercial banks

assistance to expand agricultural production abstract bilateral and multilateral development assistance agencies have devoted major resources to programs to support more rapid growth of agricultural production in developing countries in this paper i review the effectiveness of assistance activities in land and water development agricultural research and extension the reform of land tenure arrangement and the development of agricultural credit institutions investments in several of these activities particularly land and water resource development and agricultural research have had relatively high rate of return yet in almost all areas there has been a continuous cycling of program priorities and thrusts there has been a persistent failure to learn from failure or from success in the future more attention needs to be given to the generation of socialscience knowledge for the design and reform of the institutional infrastructure needed to sustain agricultural development

currency prices terms of trade and interest rates a general equilibrium asset pricing cash in advance approach currency prices terms of trade and interest rates a general equilibrium asset pricing cash in advance approach

accommodating diverse institutional investment objectives and constraints using non linear goal programming abstract institutional portfolio managers face a diverse mix of conflicting investment objectives and constraints such as risk and retum goals institutional liability considerations fund management legal restrictions institutional cash flow requirments and protfolio management performance targets this paper argues that lexicographic goal programming can be used to keep track of an institution s complex investment goals and will provide a best possible solution for the institution s portfolio selection problem three examples illustrate the applicability of non linear goal programming to institutions differing investment requirements

insecurity and the pattern of trade an empirical investigation corruption and imperfect contract enforcement dramatically reduce international trade this paper estimates the reduction using a structural model of import demand in which insecurity acts as a hidden tax on trade we find that inadequate institutions constrain trade as much as tariffs do we also find that omission of indices of institutional quality biases the estimates of typical gravity models obscuring a negative relationship between per capita income and the share of total expenditure devoted to traded goods finally we argue that cross country variation in the effectiveness of institutions and the consequent variation in the prices of traded goods offer a simple explanation for the stylized fact that high income capital abundant countries trade disproportionately with each other

two sided expropriation and international equity contracts abstract the paper considers a model in which investors in two symmetrical countries can trade equity claims on their endowments the governments of the two countries expropriate the foreign owned securities if doing so raises domestic welfare in spite of the possibility of expropriation agents may still choose to hold completely pooled portfolios depending on preferences in the two countries increases in the level of domestic output can increase or decrease the probability of expropriation in the equilibria we consider agents hold too much foreign equity a reduction in foreign investment raises welfare by reducing the probability of expropriation

current account dynamics and the terms of trade harberger laursen metzler two generations later this is a study of the current account dynamics resulting from the savings and investment dynamics in a small open economy which is subject to exogenous changes in its terms of trade and in world interest rates anticipated and unanticipated as well as temporary and permanent terms of trade changes have very different effects there is however a general tendency towards cycles in both savings and investment which gives rise to cycles in the current account it is shown that the classic harberger laursen metzler effect on saving of a terms of trade deterioration can have any sign for plausible parameter values both for temporary and permanent disturbances

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

a dynamic bank portfolio planning model with multiple scenarios multiple goals and changing priorities abstract the paper discusses a practical application of a two stage linear goal programming model to the management of the domestic and foreign currency denominated assets and liabilities of a large bank in finland the planning horizon includes three one year planning periods a number of alternative scenarios are used to describe uncertainty concerning future developments in these periods the scenarios are related to general economic conditions as well as the state of the domestic and foreign financial markets the bank is assumed to have multiple conflicting goals with different and changing priorities the goals deal with expected profits risk liquidity capital adequacy growth customer relationships and several other aspects of the bank s operations

formal measures of the informal sector wage gap in mexico el salvador and peru using comparable micro level data from three countries we ask what type of person works in the informal sector and whether informal workers earn lower wages than observationally equivalent workers in the formal sector the characteristics of informal workers are similar across countries surprisingly when we control for these personal characteristics we find a significant wage premium associated with formal employment in el salvador and peru but a premium associated with work in the informal sector in mexico a model of endogenous selection offers little help in explaining the differences in wage patterns the research casts doubt on the received wisdom that the informal sector always and everywhere is a poorly paid but easily entered refuge for those who have no other employment opportunities this abstract was borrowed from another version of this item

productivity in piece rate labor markets evidence from rural malawi abstract piece rate compensation is a common feature of developing country labor markets but little is known about how piece rate workers respond to incentives or the tradeoffs that an employer faces when setting the terms of the contract in a field experiment in rural malawi we hired casual day laborers at piece rates and collected detailed data on the quantity and quality of their output specifically we use a simplified becker degroot marschak mechanism which provides random variation in piece rates conditional on revealed reservation rates to separately identify the effects of worker selection and incentives on output we find a positive relationship between output quantity and the piece rate and show that this is solely the result of the incentive effect not selection in addition we randomized whether workers were subject to stringent quality monitoring monitoring led to higher quality output at some cost to the quantity produced however workers do not demand higher compensation when monitored and monitoring has no measurable effect on the quality of workers willing to work under a given piece rate together the set of worker responses that we document lead the employer to prefer a contract that offers little surplus to the worker consistent with an equilibrium in which workers have little bargaining power

multiple criteria decision making combined with finance a categorized bibliographic study abstract this paper provides a categorized bibliography on the application of the techniques of multiple criteria decision making mcdm to problems and issues in finance a total of 265 references have been compiled and classified according to the methodological approaches of goal programming multiple objective programming the analytic hierarchy process etc and to the application areas of capital budgeting working capital management portfolio analysis etc the bibliography provides an overview of the literature on mcdm combined with finance shows how contributions to the area have come from all over the world facilitates access to the entirety of this heretofore fragmented literature and underscores the often multiple criterion nature of many problems in finance

international business cycles with endogenous incomplete markets backus kehoe and kydland 1992 baxter and crucini 1995 and stockman and tesar 1995 find two major discrepancies between standard international business cycle models with complete markets and the data in the models cross country correlations are much higher for consumption than for output while in the data the opposite is true and cross country correlations of employment and investment are negative while in the data they are positive this paper introduces a friction into a standard model that helps resolve these anomalies the friction is that international loans are imperfectly enforceable any country can renege on its debts and suffer the consequences for future borrowing to solve for equilibrium in this economy with endogenous incomplete markets the methods of marcet and marimon 1999 are extended incorporating the friction helps resolve the anomalies more than does exogenously restricting the assets that can be traded

informality and credit constraints evidence from sub saharan african mses abstractthe attributes of micro and small enterprises mses influencing access to credit in particular the level and role of firm informality are analysed in the article the puzzle is the push for mses to join the formal sector and the tug to avoid the extra burden it places on the firm it is important to know more clearly what forces are at work and the sources of the causal effects this study uses data from the world bank enterprise surveys for five low income countries lics in sub saharan africa the method is empirical and as we find informality to be endogenous to credit constraints an instrumental variable approach is estimated further to address the possibility of reverse causality an instrument for the informality variable is required not registered with inland revenue tax office is the chosen instrument variable the findings reveal that as the probability of a firm operating in the formal sector increases there is greater access to external credit the causality relationships are

fiscal policy and the structure of production in a two sector developing economy abstract this paper develops a two sector model of a developing economy and examines the role of the informal sector in limiting the government s ability to increase tax revenues a key feature is the introduction of auditing of the informal sector and degree of tax enforcement in that sector we emphasize the interdependence between tax policy and enforcement in achieving a developing economy s fiscal objectives and show that by judicious policy choices the presence of the informal sector need not hinder its ability to raise tax revenues we supplement the formal analysis with numerical simulations highlighting the contrasting intertemporal tradeoffs implied by higher tax rates and tax enforcement levels

the demands for funds by agricultural households evidence from rural india this study presents estimates of borrowing functions based on rural household data for india it improves upon existing work in three key areas first it is shown that existing studies have used an inappropriate definition of the demand for funds which when rectified produces quite different results second the interaction between agricultural technical change and the rural finance market is examined and it is shown that farmers in a position to benefit from technical change tend both to borrow more and to face lower interest rates third it is shown that farm specific interest rates when introduced endogenously are quite sensitive to personal and locational characteristics and are significant determinants of borrowing

family labor supply with taxes over the period 1960 1983 the proportion of federal tax revenue raised by taxation of labor supply has risen from 57 77 percent in this paper we specify and estimate a model of family labor supply which treats both federal and state taxation husbands and wives labor supply are treated jointly rather than in aseparate manner as in previous research a method to calculate the virtual wage for nonworking spouses is used within a utility maximizing framework to treat correctly the joint family labor supply decision joint family efforts are found to be important the efficiency cost deadweight loss of labor taxation is estimated to be 29 6 of tax revenue raised the effect of the new 10 deduction to ease the marriage tax for working spouses leads to a prediction of 3 8 increase in wives labor supply and a 9 decrease in husbands labor supply overall taxes paid are predicted to decrease by 3 4 this abstract was borrowed from another version of this item

wage functions and occupational selection in a rural less developed country setting economists are just beginning to develop empirical knowledge about the basic relationships that determine the distribution of incomes and allocation of resources in the poor rural regions of the world understanding interactions between agriculture and the rest of the economy is particularly important in this context this paper empirically investigates the allocation of human resources between farm work and other jobs and the compensation received by individuals for their work in agriculture and elsewhere specifically two related tasks are undertaken in this paper 1 the estimation of wage functions and 2 the estimation of functions determining the allocation of time among occupations there have been a series of papers which estimate the earnings function using data from poor countries for examples see blaug 1974 chiswick 1977 and valdes 1971 however this study focuses not on total earnings but on the wage rates a person may earn in labor market work because the wage rate is the relevant price of time for many allocative decisions for example in dividing the work year between self employed farming and work as an employee off the farm a key price is the potential wage rate the person can earn in the labor market for discussion and evidence on this issue see sumner 1978 recently a few studies have appeared which illustrate the importance of understanding potential wage variations across individuals in less developed countries rosenzweig 1978 uses wage estimates from aggregate indian data in a model determining the impact of land reform bardhan 1979 develops wage functions from a sample survey in rural india as a step in estimating labor supply for rural households kusnic and davanzo 1980 use wage functions to impute potential incomes and to measure the full income distribution these previous studies illustrate the importance of understanding the determinants of market wages the present paper develops wage functions in more detail focusing especially on industrial differentials in many rural areas employment opportunities may be usefully categorized into 1 self employment mainly on small farms 2 work for wages on large farms and 3 work for wages in non farm industries the combination of selfemployment and work as an employee is also important in many rural areas in both rich and poor countries this paper examines the impact of personal characteristics on the choice to participate in work for wages and on the choice of industry these estimates also form a basis for studying industrial wage differentials tentative estimates of the dependence of participation on expected wages are also presented below the empirical analysis in this paper is based on a 1974 sample of five villages in central guatemala see corona 1978 and stein 1978 one village petapa is larger richer and more urban than the others it lies south of guatemala city within commuting distance of the capital the other villages are outside the capital city region the population sampled is almost exclusively ladino spanish culture as opposed to indian data are available on the earnings hours of work industry age schooling literacy and village of 1 005 male heads of households approximately one third of the sample work as both self employed farmers and hired workers and most of these men work on fincas large plantations another quarter of the sample work as self employed farmers and do no work for wages the suburban village has mostly nonagricultural workers whereas the four other villages have predominantly farmers and farm employees in received for publication june 21 1979 revision accepted for publication december 31 1980 north carolina state university research on this paper began while i was a rockefeller foundation supported post doctoral fellow in the labor and population group of the economics department of the rand corporation and continued at north carolina state university supported by the agricultural research service at rand robert newman served as my research assistant and at n c state james cochell provided able assistance i have benefited from the comments of colleagues at both institutions and from members of the labor economics workshop at the university of north carolina at chapel hill i also thank two anonymous referees for useful suggestions this is paper number 6558 of the journal series of the north carolina agricultural research service raleigh n c

wage and employment effects of malawi s fertilizer subsidy program this article uses three waves of nationally representative household level panel data from malawi to estimate how a large scale fertilizer subsidy program impacts the agricultural labor market known as ganyu in that country i find that when looking across the entire population of smallholders receiving an additional 100 kg of subsidized fertilizer causes the average household to supply about three fewer days of ganyu the fertilizer subsidy program also has a small positive effect on the probability that a household demands agricultural labor with the results approaching statistical significance in addition a 10 kg increase in the average amount of subsidized fertilizer acquired per household in a community boosts the median agricultural wage rate by 1 4 in that community the increase in wage rates translates to a us 1 40 per year increase in average household income in the years after malawi s subsidy program was scaled up and a us 1 86 per year increase in average household income for those who sold their labor before the subsidy program was scaled up this finding suggests that households who sell their labor off farm may experience some small spillover benefit from the program in the form of higher agricultural wage rates

an oligopsonistic model of wage determination in agrarian societies the theory of rural wages in less developed countries is itself only partially developed three major explanations have been put forward but none of these can account for observed variations in nominal wages over time over regions and across individuals it is therefore time to take a fresh look at the problem and to develop new models which are more in accord with the data this task is undertaken in section ii where a model of heterogeneous labour is used to analyse rural labour markets and explain the wage payments system section i contains a brief summary of existing theory and its deficiencies in order to derive the main properties of the model quickly formal proofs of assertions are relegated to the technical appendix and most of the discussion of the assumptions and detailed explanations are left to section iii this section also contains general conclusions as well as a discussion of some of the more controversial issues

welfare gains from international risksharing abstract this paper uses consumption data to compute yet unexploited welfare gains that can be achieved through risksharing among twenty oecd countries there is both aggregate national consumption risk and nondiversifiable individual specific risk countries engage in an optimal risksharing arrangement to pool risk associated with the aggregate consumption endowment streams welfare gains are associated with reduced consumption variability and with the international pricing of the consumption streams of individual countries the paper considers the standard vnm time additive preferences as well as nonexpected utility and habit formation preferences large unexploited gains are found under all sets of preferences leading to an international risksharing puzzle

the impact of demographic changes on income distribution in a developing country abstract a common hypothesis regarding the distribution of income is that it tends to become more unequal in the initial and middle stages of economic development in part because of demographic changes however previous studies of the effect of demographic changes on income distribution are not based on the underlying micro determinants of the income components we provide such estimates the micro determinants of the probability of receipt and amount received conditional on receipt of four income components are estimated for three regions defined by the degree of urbanization five simulations of hypothetical demographic changes are conducted the simulated effects on some of the regional income component distributions are fairly considerable in regard both to equalizing the distributions and increasing the shares of the poorest however the overall effects are regressive in both urban and rural regions

tax evasion with labour income allingham and sandmo s 1972 classic paper on tax evasion set out a simple framework for looking at the effects of regular tax parameters and of the structure of penalties on the amount of tax dodging carried out by a tax evader subsequent papers have enriched the basic model of individual behaviour and have attempted to adduce some empirical evidence 2 but with few exceptions the essential nature of the assumed underlying problem has remained the same how much income shall i reveal to the authorities in the face of the known penalties and the known possibility of getting caught whilst this approach is useful for some types of tax evasion by individuals it is clearly inappropriate for others such as the phenomenon of working off the books rather than concealing a portion of a uniform lump of income that is undistinguished as to its source the person cheats the government by taking one or more different jobs either in addition to or as a replacement for his regular employment the income from which is administratively difficult to tax this paper examines the implications of the possible diversity of form of the tax evasion problem for the analysis of the fundamental questions which allingham and sandmo addressed the effect of government instruments on the incentives to participate in legal and illegal work activities to do this we must concentrate on one major development of the original model namely that where income is endogenous in effect we construct a particular version of the analysis of labour supply under uncertainty within which to

a bank asset and liability management model in managing its assets and liabilities in light of uncertainties in cash flows cost of funds and return on investments a bank must determine its optimal trade off between risk return and liquidity in this paper we develop a multiperiod stochastic linear programming model alm that includes the essential institutional legal financial and bank related policy considerations and their uncertainties yet is computationally tractable for realistically sized problems a version of the model was developed for the vancouver city savings credit union for a 5 year planning period the results indicate that alm is theoretically and operationally superior to a corresponding deterministic linear programming model and that the effort required for the implementation of alm and its computational requirements are comparable to those of the deterministic model moreover the qualitative and quantitative characteristics of the solutions are sensitive to the model s stochastic elements such as the asymmetry of cash flow distributions we also compare alm with the stochastic decision tree sdt model developed by s p bradley and d b crane alm is computationally more tractable on realistically sized problems than sdt and simulation results indicate that alm generates superior policies

informal sector the credit market channel abstract we build a model of firms choice between formality and informality complying with costly registration procedures allows the firms to benefit from key public goods enforcement of property rights and contracts that make the participation in the formal credit market possible in a moral hazard framework with credit rationing their decision is shaped by the interaction between the cost of entry into formality and the relative efficiency of formal versus informal credit mechanisms and their related institutional arrangements the model is consistent with existing stylized facts on the determinants of informality

government policies and graft in an economy with endogenous labor supply abstract this paper is an extension of marcouiller and young s am econ rev 85 1995 630 paper which shows that in a two good economy with constant labor supply the government can always increase graft by squeezing the formal sector out of existence in this paper we find that if individuals choose the amount of labor they supply the government can increase graft by eliminating formal production in relatively rare cases

land inheritance and market transactions in uganda studies on the role of nonmarket land transactions remain limited this paper addresses two questions is land inheritance driven by underdeveloped land markets how does land inheritance influence land disposal and acquisition we use a switching regression model on household data from rural uganda we find that the initially landless or near landless households due to little or no land inheritance obtain land through land markets while those that are land rich dispose of land through land sales and bequests the results suggest that a process of land equalization is unfolding within the sample

labor markets and poverty in village economies we study how women s choices over labor activities in village economies correlate with poverty and whether enabling the poorest women to take on the activities of their richer counterparts can set them on a sustainable trajectory out of poverty to do this we conduct a large scale randomized control trial covering over 21 000 households in 1 309 villages surveyed four times over a seven year period to evaluate a nationwide program in bangladesh that transfers livestock assets and skills to the poorest women at baseline the poorest women mostly engage in low return and seasonal casual wage labor while wealthier women solely engage in livestock rearing the program enables poor women to start engaging in livestock rearing increasing their aggregate labor supply and earnings this leads to asset accumulation livestock land and business assets and poverty reduction both accelerating after four and seven years these gains do not come at the expense of others non eligibles livestock rearing businesses are not crowded out and wages received for casual jobs increase as the poor reduce their labor supply in such labor activities our results show that i the poor are able to take on the work activities of the non poor but face barriers to doing so and ii one o interventions that remove these barriers lead to sustainable poverty reduction

can africa compete with china in manufacturing the role of relative unit labor costs in this paper examine sub saharan africa s ssa bilateral trade and cost competitiveness with china we review patterns of bilateral trade between ssa and china showing an extraordinary imbalance in the structure of trade in that china overwhelmingly exports manufactured products to ssa and almost exclusively imports primary products in return our principal means of assessing the competitiveness of ssa s manufacturing sector vis a vis china are measures of relative unit labor costs rulc we find that african rulc levels have generally been very high relative to china but declined over the 2000s as china s wages have risen faster than chinese productivity while the reverse is true for the ssa countries in our sample nevertheless rulc vis a vis china remained elevated for many ssa countries as of 2010 generally high rulc along with weaknesses in the business climate suggest that most ssa countries are unlikely to be competitive in labor intensive manufacturing any time soon

household labor supply in urban areas of bolivia we analyze labor supply behavior and the choice between formal and informal sector work of the two spouses in families in urban areas of a developing country using cross section data from bolivia drawn in 1989 the model generalizes the neoclassical family labor supply model nonmonetary returns of formal sector employment capture the fact that the choice between sectors is not exclusively based on wage differentials wage equations nonmonetary returns equations and labor supply equations are estimated jointly by smooth simulated maximum likelihood we find substantial cross wage elasticities of working hours of both partners and large substitution elasticities between the two sectors

labor supply and targeting in poverty alleviation programs the introduction of variable labor supply raises some fundamental issues in analyzing the targeting of poverty alleviation programs in developing countries it forces a reconsideration of the standard objective function which is based on income or expenditure and so makes no allowance for the effort made in earning that income the authors show that alternative views on the appropriate valuation of effort have very different implications for commodity based targeting rules they also establish a benchmark for marginal effective tax rates inclusive of benefit withdrawal in income tested schemes and show that indicator targeting rules may also have to be modified significantly when labor supply responses are recognized

real wage determination in bangladesh agriculture an econometric investigation thsi paper develops and estimates a real wage model for the agricultural sector in bangladesh for the period 1973 2 1985 4 the model is developed within the framework of the market theory of labour demand and labour supply the empirical results are supportive of the market theory of wages

patience persistence and welfare costs of incomplete markets in open economies abstract we investigate the welfare implications of alternative financial market structures in a two country endowment economy model we obtain an analytic expression for the expected lifetime utility of the representative household when sovereign bonds are the only internationally traded asset and we compare this welfare level with that obtained under complete asset markets the welfare cost of incomplete markets is negligible if agents are very patient and shocks are not very persistent but this cost is dramatically larger if agents are relatively impatient and shocks are highly persistent for realistic cases in which agents are very patient and shocks are highly persistent the welfare cost of incomplete markets is highly sensitive to the specific values of these parameters

endogenous authoritarian property rights abstract taxation and state enforcement of property rights share many common resources both are involved in determining the revenue of the state due to these interactions taxation and property rights enforcement of a proprietary state are complementary any change in the administrative capacity of the state that increases the taxation rate also increases the level of property rights enforcement and vice versa the capacity and incentive of the proprietary state to tax are also essentially the capacity and incentive to enforce property rights extra enforcement powers of the proprietary state might therefore increase rather than decrease production

rural wages labor supply and land reform a theoretical and empirical analysis land reform is one of the most mentioned of the theoretical policy instruments discussed in the development literature yet relatively little attention has been paid to the wage rate consequences of such a program despite the fact that perhaps more than one half of rural families in a developing country receive a substantial proportion of their income from wage earnings in agriculture one reason for this lacuna may be that the determination of wages and family labor supply in the agricultural sector of ldcs has also been somewhat neglected particularly in the context of a heterogeneous labor force 2 the subsistence or institutional wage models of w arthur lewis john fei and gustav ranis and gerald rodgers for instance offer no theory of how rural wage levels or differentials are set and thus provide little guidance on how wage rates would be affected by changes in land ownership patterns more recently pranab bardhan and t n srinivasan david newbery and clive bell and pinhas zusman who formulate general equilibrium market or bargaining models determining endogenously the rental share paid by tenant sharecroppers have assumed that agricultural wage rates are exogenous or determined only by nonagricultural factors all of these models assume that rural labor is homogeneous another reason why the potential wage impact of a land reform program may have received little attention is that models of peasant family behavior such as those of a k sen dipak mazumdar and robert mabro typically embody two restrictive assumptions which would tend to make the equalization of landholdings appear wage augmenting although this implication has never been formally derived these assumptions are that 1 agriculture is dualistic with small farm families facing lower shadow prices of labor leisure than large farm landlords because of impediments to labor mobility and 2 agricultural households are dichotomous small farmers employ family labor and maximize utility while large farms only utilize wage labor and maximize profits data from a 1970 71 allindia survey of over 5 000 households collected by the national council of applied economic research3 indicate however that almost all cultivator households large and small participate actively in the labor market as either buyers or sellers of labor services with almost 88 percent of households cultivating a gross cropped area less than 1 5 acres utilizing some hired labor seventynine percent of these small farm households associate professor yale ujniversity the research embodied in this paper was supported in part by a grant from the ford and rockefeller foundations program in support of social science and legal research on population policy and with funds from the u s agency for international development under order no aid otr 1432 helpful suggestions and comments were provided by james l mccabe mark gersovitz an anonymous referee the managing editor and members of the economic growth center yale university i am also grateful to the members of the research program in development studies princeton university for the use of their facilities research assistance was provided by james devine anne morgan and roberta robson inotable exceptions are r albert berry mark gersovitz and m a rahman all of these authors however employ geometric analyses with differing assumptions leading to wholly different predictions regarding wage effects none consider the heterogeneity of agricultural labor pay attention to questions of stability or attempt to apply their models to data 2lnformation on the differential impact of alternative agricultural policies including land reform on sex or age specific wage rates is not only important in settling income distribution and equity issues but as suggested in an article by the author and robert evenson may have significant implications for population growth and schooling as well 3for a more detailed discussion of these data see the author

consumption real exchange rates and the structure of international asset markets abstract international real business cycle irbc models that assume complete asset markets yield strong restrictions for consumption and bilateral real exchange rate series empirical tests with data for the us japan france uk italy canada and sweden suggest that neither the trend behavior nor high frequency movements of consumption and real exchange rates are well explained by irbc models with complete markets it appears however that high frequency fluctuations of consumption and real exchange rates are consistent with unrestricted international trade in risk free bonds

caste female labor supply and the gender wage gap in india boserup revisited abstractthe gender wage gap is notable not just for its persistence and ubiquity but also for its variation across regions and countries a natural question is how greater workforce participation by women matters to female wages and the gender wage gap within india a seeming paradox is that gender differentials in agricultural wages are the largest in southern regions of india that are otherwise favorable to women ester boserup hypothesized that this is due to greater labor force participation by women in these regions this is not obvious as greater female labor supply could depress male wages as well other factors also need to be accounted for especially since women have fewer opportunities for nonfarm employment this article undertakes a formal test of the boserup proposition we find that differences in female labor supply are able to explain 55 of the gender wage gap between northern and southern states of india the article also finds that women gain from greater nonfarm employment even if

utility based estimation of labour supply functions in the regular and irregular sectors recent theoretical work on labor supply has shown that the tax and transfer system can induce some individuals to work in the irregular labor market models designed to represent such behavior are unable to sign unambiguously the impact of the marginal tax rate as well as many key exogenous parameters on the hours supplied in the irregular market except under strong restrictions on preferences in this paper the authors estimate a simultaneous labor supply model that allows testing some of the more common assumptions found in the literature using a unique data set on the underground economy of the metropolitan area of quebec city canada estimates of elasticities with respect to predetermined variables are presented moreover they test and empirically reject the assumptions of perfect substitution between regular and irregular work activities as well as additive separability of the utility function copyright 1992 by royal economic society

income tax evasion labour supply and the equity efficiency tradeoff abstract this paper is an attempt to incorporate tax evasion into the analysis of optimum income taxation a model of variable labour supply with tax evasion is used to derive supply functions for labour in regular and irregular markets given taxpayer behaviour the government chooses tax rates penalties and the probability of detection to maximize a utilitarian social welfare function the results consist in the derivation of a formula for the optimum marginal tax rate and a characterization of the factors determining the choice between the penalty rate and the probability of detection as instruments for the control of tax evasion

opportunity inequality and the intergenerational transmission of child labour this paper presents a model in which opportunity differences within society result in child labour where opportunity is broadly defined but can include school quality access to higher paying jobs access to information about the returns to education and actual discrimination if opportunity differences exist child labour and poverty are shown to be symptomatic of this underlying socioeconomic condition it is then shown that policies that ban child labour and or introduce compulsory education laws can actually reduce dynastic welfare increase poverty and further exacerbate income inequality within society because they treat the symptom rather than the disease the lack of opportunity

offered wage and recipient attribute wage functions for rural labour in india abstract wage functions are estimated for daily hire labour in two village markets in india through a single equation procedure with the dependent variable defined to yield a true measure of offered wage in the presence of censorship wages for males rise with age up to forty but decline thereafter for females by contrast reward for experience is relatively unimportant but there is a positive association between offered wage and economic status these findings differ from those reported so far in the literature without correction for censorship bias and challenge the assumed homogeneity of rural labour in much theorising about factor markets in less developed countries

bank asset and liability management under uncertainty abstract this study presents a multiperiod stochastic linear simple recourse model for asset and liability management in banking the model determines the portfolio of assets and liabilities over the planning horizon given a set of deterministic rates of returns of investments and costs of borrowings and a set of random outstanding deposit levels liquidity and total reserve requirements with a given discrete probability distribution the intention is to develop an optimization tool to assure sustained profitability and good management of risks while balancing sources and uses of funds to meet legal and policy requirements and satisfy withdrawal requests of depositors on time and in full effects of changes in bank policies and banking regulations environmental factors potential risks additional decision alternatives and constraints can be handled and evaluated by the model therefore it can be used both for planning and analysis the model is verified using a turkish sample bank s data over the period 1987 1990 and several sensitivity anallyes are reported as the model takes into account the stochastic behaviour of crucial uncontrollable variables the results of the model can be deemed more realistic compared with the deterministic model

managing interest rate risk in banking institutions abstract this paper develops and employs a multiperiod goal programming model to examine the normative effects of changing interest rates on the rearrangements of depository bank balance sheets and associated profits a two stage state preference framework allows a dynamic interpretation of the model s prescribed decisions as well as a natural incorporation of profit sensitivity to interest rate risk the model includes on and off the balance sheet decision variables experimental results indicate that constraining the latter decision can seriously curtail the bank s ability to achieve its profit objectives

explaining tractorization in nepal an alternative to the consequences approach abstract the debate on whether or not agricultural mechanization should be subsidized in developing countries usually focuses on the employment and yield effects of mechanization this paper takes the alternative tack that designing mechanization policy requires understanding the determinants of the mechanization choice a model of investment and factor use is developed and applied to the land preparation decision of 99 farmers in the terai region of nepal farmers ownership and use of tractors are accurately predicted by the hypothesis that farmers maximize expected accounting profits since farmers are privately efficient tractor subsidies which increase the wedge between the private and social shadow prices of mechanical power will decrease economic effiency

the international diversification puzzle is not as bad as you think the international diversification puzzle is the fact that country portfolios are on average biased toward domestic assets while one good international macro models with nondiversifiable labor income risk predict the opposite pattern of diversification this paper embeds a portfolio choice decision in a two good international business cycle model and provides a closed form solution for equilibrium country portfolios equilibrium portfolios are biased toward domestic assets because endogenous international relative price fluctuations make domestic assets a good hedge against labor income risk evidence from developed economies in recent years is qualitatively and quantitatively consistent with the mechanisms highlighted by the theory

the not so dark side of trust does trust increase the size of the shadow economy this paper reports a negative relationship between the size of the shadow economy and generalized trust in a sample of countries both developed and developing that relationship is robust to controlling for a large set of economic policy and institutional variables to changing the estimate of the shadow economy and the estimation period and to controlling for endogeneity it is independent from trust in institutions and from income inequality and is mainly present in the sample of developing countries those findings suggest that the tax compliance effect of trust dominates its role as a substitute for the formal legal system

oligarchic land ownership entrepreneurship and economic development abstract this paper develops a theory in which oligarchic ownership of land or other natural resources may impede entrepreneurship in the manufacturing sector and may thereby retard structural change and economic development we show that due to oligopsony power of owners in the agricultural labor market higher ownership concentration depresses entrepreneurial investments by landless credit constrained households whose investment possibilities depend on the income earned in the primary sector we discuss historical evidence from latin america india taiwan and south korea which supports our theory

behavioural and material determinants of production relations in agriculture in this essay we develop a framework for analysing the major institutions governing the production and exchange of output and the primary factors of production in rural areas the analysis incorporates general considerations of risk and information constraints jointly with the principal material attributes of agriculture and of agricultural production factors the framework is used to analyse barriers to the existence of the major intertemporal and factor markets it is applied specifically to land scarce environments for which it provides an internally consistent explanation for many of the well documented institutional features of such settings in addition the analysis provides new implications for among other phenomena the inter relationships among ownership holdings operational scale family size and factor productivity for the scarcity of animal rental markets and use of animals as collateral for the renting out of land by small landowners and for the existence of plantations for certain crops

a goal programming model for bank assets and liabilities management abstract assets and liabilities management is one of the most important issues in bank strategic planning in the past this problem has often been addressed through conventional mathematical programming i e linear programming however bank management typically involves several conflicting goals such as the maximisation of returns minimisation of risk expansion of deposits and loans etc the complexity of this problem can be captured more adequately by multiobjective mathematical programming this paper discusses the construction and application at the commercial bank of greece of a goal programming model that takes into account the essential institutional financial legal and bank policy considerations

making negotiated land reform work initial experience from colombia brazil and south africa abstract the paper describes background initial experience and future challenges associated with a new negotiated approach to land reform this approach has emerged as following the end of the cold war and broad macroeconomic adjustment many countries face a second generation of reforms to address deep rooted structural problems and provide the basis for sustainable poverty reduction and economic growth it reviews possible theoretical links through credit market or political channels between asset ownership and economic performance program characteristics in each country as well as lessons for implementation and implications for monitoring and impact assessment are discussed

cleaning house new perspectives on households and economic development abstract this paper provides a critical review of the recent literature on households and economic development three related points are developed 1 household activities can be analyzed in economic terms particularly if these terms are broadly defined to encompass such factors as risk and uncertainty 2 significant differences between the economic position of men women and children within the patriarchal household mean that it cannot be treated as an undifferentiated unit of analysis 3 microeconomic analysis of the household must be situated within a larger structural analysis of gender and age based inequalities and their interaction with class structure and national position within the world capitalist system

the relation between farm size and farm productivity the role of family labor supervision and credit constraints abstract the paper shows that if the performance of hired farmhands is affected by supervision from family members and if the availability of credit is dependent on the amount of land owned then a systematic positive or negative relationship between per acre yields and farm size will prevail a model with no supervision effects on labor productivity would predict that yields are unaffected by farm size the paper also investigates the relation between land utilization and owned holding size when land rental possibilities are limited results are shown to be compatible with various observed patterns in ldcs