a comparison of managers perceptions of short termism in sweden and the u s u s and u k firms have been thought to invest in a more short term manner than japanese and german firms this article uses a questionnaire and interviews to compare u s and swedish top executiv

predicting the effects of in kind transfers on labor supply few empirical questions in economics have received the degree of attention that has been directed at measuring the impact of income transfers on work incentives the labor market effects of cash assistance have been carefully examined by numerous investigators while in kind programs have received relatively scant treatment despite that over the past twenty years the composition of federal antipoverty expenditures has dramatically shifted in favor of in kind aid two arguments are frequently offered in support of this change in approach to combatting poverty the first expresses concern over the competence of the poor to make wise decisions regarding their own consumption activity restricted transfers are a means of helping the poor while ensuring that the assistance is used in accordance with society s views on what will best improve the lot of recipients the second argument is that in kind transfers are less attractive to the poor than unrestricted cash grants and as such offer greater incentives for the poor to work and leave the welfare rolls this is a question for which little direct evidence exists given the absence of explicit studies to draw upon it has been natural to consider the disincentive effects of in kind transfer programs within conventional models by treating the transfers as if they had taken the form of cash this is a valid approach only if these programs induce the same consumption patterns as do money transfers existing evidence indicates that this is often not so a sizeable literature has evolved concerning recipient valuation of in kind assistance studies that entail computation of cash equivalent values for food stamps 6 7 18 20 22 24 public housing 7 8 15 and medicaid 20 24 provide evidence that these transfers are frequently valued well below market cost this indicates that many current and prospective recipients of in kind assistance are by the nature of the programs forced to consume a different mix of commodities and leisure than they would have had they received cash in terms of economic theory this means that the appropriate model should incorporate quantity constrained commodity demand and labor

incentive effects of the u s welfare system a review the author would like to acknowledge support for prior work on this topic from the u s department of health and human services and helpful comments from three anonymous referees rebecca blank howard chernick john fitzgerald irwin garfinkel peter gottschalk edward gramlich david greenberg judith gueron james heckman v joseph hotz robert hutchens michael keane frank levy larry mead michael murray robert plotnick anuradha rangarajan philip robins howard rolston jeffrey smith and daniel weinberg all opinions and errors are those of the author alone

resource allocation in a few industries determinants and trends when the major corporations divisionalised their organisation after the second world war they devised a performance measurement system to monitor the development of their business units and a capital budgeting system to control the direction of investments the appraisal of investments was decentralised and capital budgeting became a bottom up process standardised through written routines and supervised via a pre approval control system since then investments in training rd indeed it rarely exists in professional service groups notwithstanding the industry does not invest less but concentrates on intangible types of investments the purpose of this article is to describe and identify the factors which dictate the design of the resource allocation system in a few industries and thereby perceive the direction in which the development is heading the analysis identifies five factors which determine the design of the resource allocation system and shows how this affects the resource allocation system in six industries it also discusses different means of control and the future trends and explains why the capital budgeting system becomes less important as industry becomes more knowledge intensive

food stamps and food insecurity what can be learned in the presence of nonclassical measurement error policymakers have been puzzled to observe that food stamp households appear more likely to be food insecure than observationally similar eligible nonparticipating households we reexamine this issue allowing for nonclassical reporting errors in food stamp participation and food insecurity extending the literature on partially identified parameters we introduce a nonparametric framework that makes transparent what can be known about conditional probabilities when a binary outcome and conditioning variable are both subject to nonclassical measurement error we find that the food insecurity paradox hinges on assumptions about the data that are not supported by the previous food stamp participation literature

the impact of housing assistance on the employment outcomes of labour market programme participants in australia this paper examines whether the employment outcomes of australian labour market programme participants vary according to whether they receive housing assistance this issue attracted attention when a series of us studies showed that clients of welfare to work programmes are more likely to achieve positive employment outcomes if housing assistance is also received this paper tracks the employment outcomes of labour market programme participants utilising six waves of data from the household income and labour dynamics in australia hilda database findings from a random effects model suggest that housing assistance status has little impact either negative or positive on employment outcomes differences in the institutional arrangements governing access to housing assistance could be responsible for the absence of any effect in australia

the effect of a program based housing move on employment hope vi in atlanta another public housing unit to those who took a housing voucher we also compare the change in the probability of employment associated with an exogenous move and a voluntary move and find that both types of moves are associated with a greater probability of employment as

why many eligible individuals choose not to go on welfare this article investigates why many eligible for welfare do not participate we show that on the job wage rising potential is the key factor motivating nonparticipation although individuals with very low earnings and little wage rising potential are typically welfare recipients those with good wage rising potential may choose to work participate in old age or never participate nonparticipation remains the best choice for eligible individuals with large wage rising potential even if universal old age social security is available we will also apply this model to a comprehensive welfare system in hong kong

corporate ownership and managerial short termism results from a finnish study of management perceptions abstract increased media exposure to layoffs and corporate quarterly financial reporting have created arguable a common perception especially favored by the media itself that the companies have been forced to improve their financial performance from quarter to quarter academically the relevant question is whether companies themselves feel that they are exposed to short term pressure to perform even if it means that they have to compromise company s long term future this paper studies this issue using results from a survey conducted among the 500 largest companies in finland the results indicate that companies in general feel moderate short term pressure with reasonable dispersion across firms there seems to be a link between the degree of pressure felt and the firm s ownership structure i e we find some support for the existence of potentially short term versus long term owners we also find significant ownership related differences in line with expectations in how such short term pressure is reflected in actual decision variables such as the investment criteria used

how income transfer programs affect work savings and the income distribution a critical review for helpful comments on earlier drafts we thank without implicating moses abramovitz yves balcer john bishop alan blinder richard burkhauser michael darby irwin garfinkel alan gustman daniel hamermesh martin holmer george jakubson robert lampman paul menchik robert moffitt michael murray joseph quinn timothy smeeding eugene smolensky barbara wolfe and two anonymous referees

the effect of health insurance on married female labor supply we investigate the effects of employer provided health insurance on the labor supply of married women because health benefits commonly are restricted to full time workers wives who prefer to work short hours but have no alternate source of insurance may work long hours in order to acquire coverage for their families we use data from the april 1993 current population survey benefits supplement and we exploit variation in coverage under husbands health plans to estimate the magnitude of this effect our reduced form labor supply models indicate a strong negative effect of husbands health insurance on wives work hours particularly in families with children this effect persists when we replace husbands insurance coverage with husbands offered insurance and when we use a multinomial logit model that accounts for unobserved heterogeneity in family labor supply preferences

corporate capital expenditure decisions and the market value of the firm abstract this paper is an event time study of the common stock prices of a sample of 658 corporations around the dates on which they publicly announced their future capital expenditure plans for industrial firms announcements of increases decreases in planned capital expenditures are associated with significant positive negative excess stock returns for public utility firm neither increases nor decreases in planned capital expenditures are associated with significant excess stock returns we interpret the evidence as being consistent with the hypothesis that managers seek to maximize the market value of the firm in making their corporate capital expenditure decisions

an economic model of welfare stigma perhaps the most basic assumption of the economic theory of consumer demand is that more is better than less virtually all of the major propositions of consumer theory can in a certain sense be derived from the assumption that goods are good interestingly however this tenet seems to be violated by the behavior of many individuals in the low income population for many turn out to be eligible for a positive welfare benefit but do not in fact join the welfare rolls for example it has been estimated that in 1970 only about 69 percent of the families eligible for afdc aid to families with dependent children participated in the program see richard michel 1980 the corresponding percentage for afdc u the program for which families with an unemployed male are eligible was only 43 percent and the participation rate in the food stamp program was only 38 percent see maurice mcdonald 1977 this phenomenon has puzzled many investigators because such individuals do not locate on the boundaries of their budget sets consequently most investigators ignore the problem when studying the effects of welfare programs on behavior in this paper this seemingly irrational rejection of an increase in income is modeled as resulting from welfare stigma that is from disutility arising from participation in a welfare program per se 1 the existence of stigma has been amply documented in the sociological literature patrick horan and patricia austin 1974 lee rainwater 1979 where interviews of recipients have often uncovered feelings of lack of self respect and negative self characterizations from participation in welfare nevertheless this phenomenon has not been modeled and many questions consequently remain when is the disutility of participation strong enough to prevent participation shouldn t we expect individuals to weigh the disutility of participation against the potential benefit in their decisions what is the elasticity of participation with respect to the potential benefit also in a slightly different vein how are the work disincentives of welfare affected by stigma these questions have been given scant attention by economists yet they are crucial for our ability to predict the impact of various welfare programs on the lowincome population here these questions are addressed by modeling nonparticipation as a utility maximizing decision the model is developed and estimated for the afdc program 2 the model posits an individual utility function containing not just disposable income but

the effects of housing assistance on labor supply evidence from a voucher lottery this study estimates the effects of means tested housing programs on labor supply using data from a randomized housing voucher wait list lottery in chicago economic theory is ambiguous about the expected sign of any labor supply response we find that among working age able bodied adults housing voucher use reduces labor force participation by around 4 percentage points 6 percent and quarterly earnings by 329 10 percent and increases temporary assistance for needy families program participation by around 2 percentage points 15 percent we find no evidence that the housing specific mechanisms hypothesized to promote work such as neighborhood quality or residential stability are important empirically jel i38 j22 r23 r38

investments and investment processes in professional service groups this article describes and analyses the size and character of investments the investment criteria and the investment processes in some professional service groups the focus is on means of control used by the corporate level to influence the volume and direction of investments in groups of companies comparisons are made with standardized service and manufacturing groups professional service groups are of special interest because theirs is a growth industry moreover many manufacturing groups have become more knowledge intensive and have adopted project based structures similar to those found in professional service groups the article shows that professional service groups invest just as heavily as do manufacturing firms but concentrate their investments on training and the development of new knowledge the principles of investment planning and control are the same as in manufacturing groups but the means and the weight attached to them differ investment requests are initiated on the business unit level and major investment requests are channelled through the executive team system for approval however there is no system of defining requesting and reviewing intangible investments rather review is by projects and units the focus is on market and social not administrative means of control

the food stamp program and food insufficiency food stamp participants have higher food insufficiency rates than eligible nonparticipants even after controlling for other factors given the food stamp program s prominent role in the alleviation of hunger this is a counterintuitive result we conjecture that these higher rates are due to adverse selection insofar as households more likely to be food insufficient are also more likely to receive food stamps we establish a theoretical framework to address this adverse selection using a simultaneous equation model with two probits we show that once one controls for this adverse selection food stamp recipients have the same probability of food insufficiency as nonrecipients copyright 2001 oxford university press

the persistence of subjective poverty in urban ethiopia using panel data spanning 15 years this paper investigates the persistence and correlates of subjective and consumption poverty in urban ethiopia despite the decline in consumption poverty in recent years which has been linked to rapid economic growth subjective poverty has remained largely unchanged dynamic probit regression results show that households with a history of past poverty continue to perceive themselves as poor even if their material consumption improves our results also suggest that the relative economic position of households is a strong determinant of subjective poverty and having at least some type of employment reduces the likelihood that households will perceive themselves as poor even if they remain in objective poverty receiving remittances from abroad on the other hand does not reduce perceived poverty even if it raises material consumption we argue that any analysis to measure the impact of growth on welfare should encompass subjective measures as well

forecasting the effects of a negative income tax program this paper outlines a scheme that forecasts the change in net earnings or in hours worked that results from the introduction of a negative income tax nit program the authors illustrate this scheme by estimating labor supply functions for married men married women and single women who participated in the seattle denver income maintenance experiments these functions are then used to simulate the effects of several nit programs the findings suggest that changes in the wage rate of an individual covered by an nit program result in important changes in the hours of work of the individual s spouse

price competition short termism and environmental performance this paper studies the relationships between the intensity of price competition time horizon and environmental performance we hypothesize that more intense price competition discourages environmental performance by inducing short termism in companies we test the hypotheses on a sample of 3152 companies from twelve european countries using structural equation modeling test results show that price competition significantly shortens the time horizon that companies apply in strategic decisions and that long time horizon significantly increases their environmental performance however the net negative effect of the intensity of price competition on environmental performance is small in absolute terms the policy implication is that there is no serious dilemma between fostering environmental performance on one hand and increasing consumer surplus by encouraging price competition on the other hand

calvin s restrictions on interest guidelines for the credit crisis calvin s view on the legitimacy of interest has had a great impact on the economic development of western society although calvin took a fundamentally positive attitude to interest he also proposed several restrictions on the charging of interest in this article we investigate the relevance of these restrictions to the current credit crisis we find that each of them provides a relevant interpretation of what went wrong in the buildup of the credit crisis and gives directions to improve policies of banks and governments as well

in kind transfers and work incentives recent developments in rationing theory are used to examine the differences between the effects of in kind and cash transfers on labor supply it is not possible to tell a priori which type of transfer will cause the greater reduction in hours of work the answer depends on the extent to which in kind transfers distort consumption choices and on the relationship between the transferred commodities and leisure hicks allen complements can cause greater reductions in labor supply than equally generous cash transfers while strong hicks allen substitutes can induce increases in market work

dynamic hours of work functions for husbands wives and single females hours of work equations are derived from the constrained maximization of a utility function that is not separable over time and that varies with a household s demographic structure these equations are fitted to observations on wage rates nonlabor income and other variables for husbands wives and unmarried women the dependence of each household s current work and consumption behavior upon its work and consumption behavior in the past is examined closely and different interpretations of the relationship are confronted with the data

capital budgeting methods among sweden s largest groups of companies the state of the art and a comparison with earlier studies abstract this study presents a general description of the state of the art of capital budgeting methods used by swedish corporations it is based on a questionnaire sent to 528 companies selected from 500 of the largest swedish corporations and some from the o list of companies the response rate is 24 4 the study shows that the public sector companies are most frequent users of discounted cash flow dcf methods the payback method is the most used in all industries also matters size of company the use of the net present value method has increased over the years although the use of dcf methods is generally unchanged value based management models have been introduced in the listed companies another conclusion is that tradition is an important factor explaining the choice of capital budgeting method large companies within the manufacturing industry use dcf methods more often than other companies in general the companies seem unconcerned with the tax consequences of capital budgeting decisions it would appear as if the public companies have not adopted capital budgeting practices supporting shareholder value increases

how inefficient are multiple in kind transfers the inefficiencies from multiple in kind transfers are smaller than one would guess from studying such programs singly though medicaid can give rise to average discounts as large as 60 percent the benefits from the programs are quite large relative to recipients incomes effective marginal tax rates under in kind transfers are appreciably lower than they would be if the programs gave cash poverty rates among recipients are markedly lowered if one counts the value of in kind transfers as income this effect is insensitive to whether one accounts for the discounting of in kind transfers by recipients

cash equivalence welfare stigma and food stamps the food stamp program fsp is one of the largest domestic redistributive transfer programs with approximately 22 million participants at a cost of 12 billion in 1983 the stated objective of the fsp is to raise the levels of nutrition among low income households by providing such households with an opportunity to obtain a low cost nutritionally adequate diet 29 5 for program evaluation and cost forecasting accurate estimates of the determinants of eligible households program participation and food expenditure decisions are of particular concern in light of the elimination of the purchase requirement epr and other recent structural changes in the program the problem of obtaining these estimates has three dimensions first observations on the behavior of eligible households under the post epr institutional setting are required second the roles of welfare stigma and the cash equivalence of the in kind food stamps must be clarified finally because program participation is a household choice that affects food expenditures the interdependence of eligible households fsp participation and food expenditure decisions must be accommodated emphasizing an important component of this interdependence the connection between cash equivalence of stamps in the participation decision and in expenditures for food this paper tackles all three dimensions the purpose of this study is to determine the extent to which food stamps are cash equivalent and to determine which program and household characteristics including the degree of cash equivalence and stigma affect post epr food stamp program participation

valuing food store access policy implications for the food stamp program food stamp recipients may lack access to larger stores reducing the availability of nutritious food reliance on smaller stores may have undesirable impacts policy alternatives include limiting food stamp redemption to larger stores and subsidizing store development i estimate that limiting redemption to supermarkets and grocery stores or supermarkets alone results in losses ranging from 499 2 million to 1 05 billion or 1 17 billion to 2 44 billion respectively annual loss in food stamp recipient welfare nationwide the impact of improving access is also significant ranging from 333 6 million to 931 2 million

refusals to deal and orders to supply in competitive markets abstract a number of recent antitrust cases in north america and europe have involved allegations that manufacturers of durable products have refused to supply parts to independent service organizations apparently to monopolize the market for repairs of their products this paper analyzes such refusals in a competitive market and connected aftermarket in this model the refusals help to support higher prices for high intensity high value users however these higher charges permit the recovery of higher costs incurred during an initial warranty period since full prices equal full marginal costs in equilibrium the refusals permit the attainment of a first best outcome and an attempt by antitrust authorities to force supply will be welfare reducing

testing for short termism in the uk stock market this paper uses data on the stock market valuations of a large sample of uk companies to assess if that market displays short termism tests are undertaken of whether discount rates implicit in market valuations applied to cash flows which accrue in the longer term are too high both absolutely and relative to the rates applied to cash flows in the near term i find prima facie evidence that these longer term discount rates are too high a result consistent with the existence of short termism an alternative interpretation of the results is that risk premia applied to expected cash flows systematically increase with the maturity of those flows whether this interpretation is consistent with asset pricing theories is questionable copyright 1993 by royal economic society

public provision of private goods government may provide a good that can if legally permitted be supplemented by private purchases policy is determined by majority rule under standard assumptions on preferences a majority voting equilibrium exists a regime of positive government provision with no restriction on private supplements is shown to be majority preferred to a regime of either only market provision or only government provision combined public and private expenditure on the good is higher under this dual provision regime than under either of the alternatives under some preference configurations the median income voter is pivotal under others a voter with income below the median is pivotal

means testing versus basic income the lack of political support for a universal allowance this paper studies the political economy of a basic income bi versus a means tested welfare scheme we show in a very simple setting that if society votes on the type of system its generosity as well as the severity of means testing if any a bi system could only emerge in the political equilibrium under very strong and empirically implausible conditions instead the political process leads to a means tested system the necessity to draw political support does affect the design of the system but it only implies that means testing becomes less severe so that benefits are extended also to themiddle classes however a fully universal system is rejected by a majority

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

labour supply impacts of effective welfare programme parameters a reanalysis we quantify the impact of effective welfare programme parameters on the labour supply of single female household heads the primary group of welfare recipients in the usa our panel of data is derived from the us census bureau s current population survey for the years 1979 to 1990 inclusive behavioural impacts from a range of economic variables are consistent in sign with predictions made by economic theory we find that effective welfare gurantee levels and the effective tax rate on earned income both significantly decrease labour supply the marginal effects of these welfare programme parameters are economically small a us 1000 increase in the expected welfare guarantee level reduces annual labour supply by about 36 hours a 10 percentage point increase in the effective tax rate on earned income reduces annual labour supply by about 7 5 hours

participation in the afdc program and the stigma of welfare receipt estimation of a choice theoretic model one of the important issues in policy discussions of the present welfare system and of welfare reform alternatives concerns the degree to which low income families eligible for welfare will in fact participate in the major program in the current system aid to families with dependent children afdc participation rates have risen over time particularly in the late 1960 s but have never been 100 percent explaining such changes in participation rates is an important subject of investigation because a participation rates lead directly to caseload sizes and thus to the possibility of a welfare explosion and b the estimates of the effect of welfare program tax rates and guarantees 10 are strictly applicable only to participants and not to non participants the most likely explanation for this seemingly irrational phenomenon of families rejecting an increase in disposable income lies in the stigma of welfare receipt for many families consider welfare participation to be demeaning socially undesirable and or destructive of self respect and feelings of self worth however although there has been considerable discussion of the nature of stigma 13 particularly in the sociological literature 11 there is a need to establish a firm theoretical base for the phenomenon and to formally investigate its properties in this paper a model of welfare participation is developed which incorporates stigma and thus establishes such a theoretical base and estimates of the parameters of the model are obtained there are two key characteristics of the model first participation in a welfare program is introduced into the utility function under the assumption that stigma represents a distaste for welfare the desire to participate is thus formulated within a traditional consumer

welfare evaluations in contingent valuation experiments with discrete responses comment in a previous issue of this journal michael hanemann developed three interpretations for compensating and equivalent variations in discrete choice models and the corresponding computational approaches hanemann then showed that one of the three interpretations is inconsistent with ordinal utility and that one of the remaining interpretations is preferable because of the statistical properties of the corresponding computational approach this note clarifies the interpretation of hanemann s preferred computational approach and offers an alternative interpretation it should strengthen the case for the preferred approach that researchers can agree on computation without necessarily agreeing on its interpretation

policy watch the food stamp program and welfare reform major changes have been proposed for the food stamp program including replacing the program with block grants to the states cashing out the benefits and reducing program funding from baseline levels this paper will explore the impacts of food stamp reform on food spending income support welfare reform agriculture and the rest of the economy a comprehensive set of scenarios is used to examine the potential economic consequences the analysis shows that the effect of cashing out the food stamp program can be as much as four times larger than the effects of program reduction alone

primary market and aftermarket competition in the bicycle component industry this study examines the bicycle component industry this industry is characterized by one dominant firm shimano inc and four or five smaller players firms in the component industry produce components for sale in two related markets the market for original equipment manufacturers oem and the component aftermarket a unique data set containing information on aftermarket prices and oem market shares is used to determine whether or not market power in the aftermarket is a function of oem market power the results indicate that concentration in the oem market is positively related to aftermarket price while an individual firm s oem market share is inversely related to aftermarket price

do means tested transfers reduce labor supply abstract it is frequently argued that recipients of means tested government transfers work less than they would in the absence of the transfer this note shows that this conclusion may not be accurate for many participants in a major housing program

orders to supply as substitutes for commitments to aftermarkets a number of recent antitrust cases in canada and other countries have involved durable goods manufacturers refusing to supply proprietary parts to independent service or ganizations earlier work suggested that the inability of manufacturers to commit to low aftermarket prices creates an inefficiency that might be removed by a judicial order to supply this paper examines this view critically with a specific model of repairs and demonstrates that under plausible conditions there is no welfare loss due to the inability to commit it goes on to show that an order to supply can create its own distortion and welfare loss if it encourages