grain transport and rural credit in mozambique solving the space time problem this paper shows how credit market failures can lead to large welfare losses in grain markets by inducing increased transport for seasonal storage in locations with low credit costs the burden of these welfare losses falls primarily on rural households these conclusions are obtained from a spatial temporal model solved using a mixed complementarity formulation that easily handles interest rate differentials across space efforts to address credit market failures and to improve the efficiency of rural storage should be given priority as opposed to the creation of large formal sector grain collection centers

job search requirements for older unemployed transitions to employment early retirement and disability benefits we use a recent policy change in the netherlands to study how changes in search requirements for the older unemployed affect their transition rates to employment early retirement and sickness disability benefits the reform becoming effective on january 1 2004 requires the elderly to formally report their job search efforts to the employment office in order to avoid a temporary cut in benefits before the new law was passed unemployed individuals were allowed to stop all search activity at the moment they turned 57 5 estimating various duration models using difference in difference and regression discontinuity approaches we find that for several groups of individuals who are affected by the policy change the stricter search requirements significantly increases their entry rate into employment however we also find evidence of a higher outflow to sickness disability insurance schemes a presumably unwanted side effect of the policy change

generic advertising in an asymmetric cournot oligopoly we examine how benefits of mandated generic advertising vary with firm size in an asymmetric cournot oligopoly market generic advertising funded through a mandatory assessment changes demand but also increases firms costs the effect on a firm s profits depends upon the nature of the change in demand and the company s market share situations are identified in which generic advertising 1 disproportionately favors large small firms 2 decreases profits and 3 increases decreases social welfare our findings explain the concerns that are often raised on small firms being disadvantaged by generic advertising we discuss implications for policy and for firms advertising strategies copyright 2010 oxford university press

is the us dollar a suitable anchor for the newly proposed gcc currency responses of inflation and non oil output growth from the gulf cooperation council gcc countries to monetary policy shocks from the united states us were estimated to determine whether there is evidence to support the us dollar as the anchor for the proposed unified currency a structural vector autoregression identified with short run restrictions was employed for each country with fed funds rate as the us monetary policy instrument non oil output growth and inflation the main results suggest that for inflation the gcc countries show synchronised responses to monetary policy shocks from the us which are similar to inflation in the us and for non oil output growth there is no clear indication that us monetary policy can be as effective for the gcc countries as it is domestically consequently importing us monetary policy via a dollar peg may guarantee only stable inflation for the gcc countries not necessarily stable non oil output growth if the non oil output response is made conscientiously and there are concerns over the dollar s ability to perform its role as a store of value a basket peg with both the us dollar and the euro may be a sound alternative as confirmed by the variance decomposition analysis of our augmented svar with a proxy for the european short term interest rate

north american tomato market a spatial equilibrium perspective this paper studies the north american tomato market in a world market perspective for this purpose a spatial equilibrium model with endogenous prices is constructed and solved by quadratic mathematical programming method six scenarios involving the impacts from transportation costs tariffs and north american free trade agreement nafta were modelled the solutions illustrate their impacts on production consumption trade flows prices and net social welfare due to nafta mexico became the main tomato exporter to the usa

disability and self employment evidence for the uk this article examines the self employment decision for disabled and nondisabled workers in the uk using labour force survey lfs data it is found that self employment may provide an important means by which those with work limiting disabilities can accommodate their impairment

bridge jobs and partial retirement the job stopping process of older workers often includes some combination of postcareer bridge employment partial retirement and reverse retirement fewer than two fifths of household heads retire directly from career jobs over half partially retire at some point in their working lives and a quarter reenter the labor force after initially retiring in addition postcareer employment is frequently located outside the industry and occupation of the career job and there are important differences in postcareer labor force experiences by gender permanent income and career job pension status

interpreting the macroeconomic time series facts the effects of monetary policy existing theory and evidence on the effects of monetary policy are reviewed substantial room for disagreement among economists remains new evidence based on multivariate time series studies of several countries is presented while certain patterns in the data consistent with effective monetary policy are strikingly similar across countries others particularly the tendency of interest rate increases to predict high inflation are harder to reconcile with effective monetary policy

the joint choice of retirement age and postretirement hours of work in this paper we develop and estimate the first complete and internally consistent model of the effect of social security on the labor supply of the aged we develop a simple life cycle model that captures the effect of social security on the joint choice of the date of retirement and hours of work immediately after retirement we show that in the presence of social security the budget constraint relating these choices is highly complex and nonlinear and we develop a maximum likelihood procedure for the model that yields consistent parameter estimates our procedure avoids the selectivity biases present in prior studies that have ignored the nonlinearity of the constraint or have examined only self selected subsamples that exclude nonretirees our results show that social security has a significant though relatively small effect on the age of retirement and postretirement hours of work and that the effect of social security grows with advancing age

the decline in male labor force participation comment in an article in thisjournal parsons 1980a analyzes the doubling in the rate of nonparticipation in the labor force of older men since 1946 using cross sectional data from the national longitudinal survey parnes et al 1970 in an index function model of the labor force participation decision he tests the assertion that the withdrawal of older males is attributable to the rapid expansion of alternatives to work provided by the social security disability insurance ssdi program he reports an elasticity of nonparticipation with respect to the replacement rate of ssdi benefits of 631 and concludes that the recent decline in labor force participation can be largely explained by the increased generosity of social welfare transfers particularly social security disability payments p 130 the magnitude of parsons s estimate and its impact on the public debate over disability transfer policy require careful scrutiny of its basis in section i we describe parsons s econometric model and construction of variables in section ii we provide a critique in section iii we test the robustness of parsons s elasticity estimate by presenting alternative estimates based on corrections and extensions of his basic model section iv concludes

the dynamic effects of aggregate demand and supply disturbances we interpret fluctuations in gnp and unemployment as due to two types of disturbances disturbances that have a permanent effect on output and disturbances that do not we interpret the first as supply disturbances the second as demand disturbances demand disturbances have a hump shaped mirror image effect on output and unemployment the effect of supply disturbances on output increases steadily over time peaking after two years and reaching a plateau after five years

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

atheoretical macroeconometrics a critique abstract the spurious nature of the restrictions used to identify many macroeconometric models has led some researchers to advocate a style of econometric inquiry that is less dependent on prior theoretical restrictions of the sort that were central to the approach of the cowles commission this development which we call atheoretical macroeconometrics is summarized and evaluated in the current paper it is contrasted with an updated version of the cowles commission approach we conclude that while some of the exercises of atheoretical macroeconometrics are valid those that have attracted the most attention and appear the most innovative exogeneity testing impulse response analysis and policy analysis using estimated vector autoregressions are based on incorrect analysis

sterilisation and monetary control by the gcc member countries the prevailing dollar peg of the gulf cooperation council gcc countries and the absence of any significant current and capital account restrictions led some to believe that these countries have lost monetary independence however the paper presents evidence that interest rates of the gcc countries did not converge to the interest rates of the us implying that the assets of the gcc countries are not perfect substitutes to the us assets this imperfect asset substitutability has allowed the gcc countries to manoeuvre their monetary policies and the central banks of the gcc countries have had some control over their money growth rates by sterilising the changes in international reserves results indicate that the monetary authorities of these countries used domestic credit policy to attain some domestic policy objective while engaging in sterilised foreign exchange intervention this result implies that the proposed gcc central bank should be able to maintain the monetary independence as a group and can reap the benefit of monetary efficiency of the proposed gulf monetary union

inflation dynamics and the cost channel of monetary transmission evidence from vector autoregressions indicates that the impact of interest rate shocks on macroeconomic aggregates can substantially be affected by the so called cost channel of monetary transmission in this paper we apply a structural approach to examine the relevance of the cost channel for inflation dynamics in g7 countries we augment the so called hybrid new keynesian philips curve by letting firms costs for external funds rise with the short run nominal interest rate our estimates reveal that the magnitude of this cost channel strongly varies between countries including member countries of the emu in accordance with differences in their financial systems simulations of a new keynesian model further show that the presence of the cost channel substantially affects the transmission of monetary policy shocks in particular the inflation response

disability insurance and unemployment insurance as substitute pathways in this article we estimate the degree of substitution between enrolment into disability insurance di and unemployment insurance ui in the netherlands starting in the 1990s many policy measures aimed at reducing di enrolment and increase labour force participation we quantify whether these policy measures have led to a reduction in hidden unemployment in di a side effect of the reforms may be increased pressure on ui therefore we simultaneously estimate reverse substitution that is hidden disability in ui to this end we employ a sample of firms in the dutch avo database from the period 1993 to 2002 using instrumental variables in a bivariate tobit specification we identify the hidden components in both respective schemes the estimation results indicate that about 3 of all dismissals took place through di which implies that about one quarter of the di enrolments observed in our sample in fact consists of hidden unemployment we find no evidence for reverse substitution of disabled perso

disability capacity for work and the business cycle an international perspective important policy issues arise from the high and growing number of people claiming disability benefits for reasons of incapacity for work in oecd countries economic conditions play an important part in explaining both the stock of disability benefit claimants and inflows to and outflows from that stock employing a variety of cross country and country specific household panel data sets as well as administrative data we find strong evidence that local variations in unemployment have an important explanatory role for disability benefit receipt with higher total enrolments lower outflows from rolls and often higher inflows into disability rolls in regions and periods of above average unemployment in understanding the nature of the cyclical fluctuations and trends in disability it is important to distinguish between work disability and health disability the former is likely to be influenced by economic conditions and welfare programmes while the latter evolves in a slower fashion with medical technology and demographic changes there is little evidence of health disability being related to the business cycle so cyclical variations are driven by work disability the rise in unemployment due to the current global economic crisis is expected to increase the number of disability insurance claimants

tied wage hours offers and the endogeneity of wages in the standard model of labor supply each worker is a price taker where the relevant price is an hourly wage rate which is fixed in the short run and which does not depend upon the number of hours supplied with this basic assumption the wage can be regarded as exogenous for the purpose of estimating a labor supply function this paper proposes and implements a pair of tests for the exogeneity of wages in a longitudinal labor supply model and for the particular failure of exogeneity associated with jobs that offer wage hour packages the first test is very simple it amounts to a test of whether hours granger cause wages at the individual level the second test involves a simultaneous estimation of labor supply and wage offer equations both tests indicate that the offered wage is related to hours worked though the offer locus is for this sample very flat the principal conclusion is that labor supply equations cannot properly be estimated in isolation from the process generating wages even when long time series are available on a sample of individuals this abstract was borrowed from another version of this item

determining global currency bloc equilibria an empirical strategy based on estimates of anchor currency choice the study presents an empirical strategy for determining global currency bloc equilibria the procedure includes first a nested logit estimation of the combined determinants of currency regime and anchor currency choice second a test for a welfare maximizing regime decision in which estimates of the relative welfare of alternative regimes are inferred from the results of the first step estimation and third taking the path dependency of regime choice into account a currency bloc equilibrium is derived in equilibrium the dollar bloc is somewhat smaller and the euro bloc larger than at present counterfactual exercises assess among others the potential for a renminbi bloc

how destructive is creative destruction effects of job loss on job mobility withdrawal and income we analyze short and long term effects of worker displacement our sample consists of male workers displaced from norwegian manufacturing plants we find that displacement increases the probability of leaving the labor force by 31 the drop out rate from the labor force is particularly high in the first years following displacement the average earnings effects for those who remain in the labor force are moderate a 3 loss relative to non displaced workers after seven years splitting displaced workers on within and between firm movers we find that the estimated earnings loss is entirely driven by between firm movers who experience a 3 6 loss transfers to other plants within multi plant firms upon displacement are quite common our results support the view that human capital is partly firm specific and partly industry specific we find no evidence suggesting that human capital is plant specific

disability retirement and unemployment substitute pathways for labour force exit an empirical test for the case of germany this paper studies the determinants of disability retirement and unemployment of older workers two labour market phenomena which the german public discussion combines under the label of early retirement the implicit assumption that these two mechanisms are exchangeable pathways into permanent retirement is tested using panel data the transition rates from employment into disability retirement and into unemploymentare estimated and compared statistical tests reject the hypothesis that disability retirement and unemployment are substitutes

do the sick retire early chronic illness asset accumulation and early retirement our objective is to determine how chronic illness affects asset accumulation and retirement previous studies have found that poor health leads to early retirement but those studies failed to look at the indirect impact of chronic illness on retirement using data from the health and retirement study we define an illness as chronic if the individual reports having asthma cancer heart disease stroke or diabetes for four or more years we first estimate how a chronic illness influences asset accumulation we then estimate how asset accumulation and current poor health influence retirement we observe that the vast majority of the chronically ill population do not report their general health to be poor nor do they report functional limitations in activities of daily living nevertheless our results indicate that chronic illness leads these people to accumulate fewer assets during their working years and consequently retire later neither researchers nor policy makers discussing the many critical issues

work or retirement exit routes for norwegian elderly this study analyses early retirement pathways for norwegian male and female workers applying a multinomial logit model to a data set covering more than 10500 employees ages 56 61 in 1989 the aim is to analyse the transition to different destinations i e disability pension unemployment benefits and out of the labour force in the period 1989 1995 both family characteristics expected income in different end states and push factors such as industry attachment and local unemployment are important for the early retirement process findings also indicate that there are several gender differences the explanatory variables have different effects on the different exit routes for males as well as for females the hypothesis that disability and unemployment are exchangeable pathways into early retirement is rejected

partial retirement as a separate mode of retirement behavior partial retirement is a quantitatively important retirement state that shows significant structural differences from behavioral functions of either full retirement or full time work alternative models of the choice of retirement state are estimated on a sample of white married males from the retirement history survey 1967 1973 findings suggest that while partial retirement appears to take several different forms the critical choice for a large number of older workers appears to be that of labor force participation first with either partial or full time employment determined conditionally among participants the model has good explanatory power and conforms to expectations of the effects of various relevant variables on labor supply decisions

a spatial equilibrium model for imperfectly competitive milk markets a generalization of takayama and judge s spatial equilibrium model that allows for any degree of market structure is presented the model is applied to the japanese dairy industry to examine interregional milk movements generated under alternative assumed degrees of market competition the results indicate that the perfect competition and monopoly equilibrium solutions result in a lower and a higher price respectively than actual price levels on the other hand the cournot nash equilibrium solutions are the most similar to actual observations and the actual interregional milk movements are best explained by imperfectly competitive behavior

how well does the is lm model fit postwar u s data postwar u s time series for money interest rates prices and gnp are characterized by a multivariate process driven by four exogenous disturbances those disturbances are identified so that they can be interpreted as the four main sources of fluctuations found in the is lm phillips curve model money supply money demand is and aggregate supply shocks the dynamic properties of the estimated model are analyzed and shown to match most of the stylized predictions of the model the estimated decomposition is also used to measure the relative importance of each shock to interpret some macroeconomic episodes and to study sources of permanent shocks to nominal variables

early claiming of social security benefits and labor supply behavior of older americans the labor supply incentives provided by the early retirement rules of the united states social security old age benefits program are of growing importance as the normal retirement age nra increases to 67 and the labor force participation of older americans starts to increase these incentives allow individuals who claim benefits before the nra but continue to work or return to the labor force to increase their future rate of benefit pay by having benefits withheld since the adjustment of the benefit rate takes place only after the nra is reached benefits received before the nra can become actuarially unfair for those who continue to work after claiming consistent with these incentives estimates from bivariate models of the monthly labor force exit and claiming hazards using data from the health and retirement study indicate that early claimers who do not withdraw from the labor force around the time they claim are increasingly likely to stay in the labor force

an alternative explanation of the price puzzle abstract this paper proposes an explanation for the frequent appearance of a price puzzle in vars designed for monetary policy analysis it assumes that the data are generated by a model in which output and output gap are not equivalent while an econometrician follows the common practice of including only output in the var the omission of the output gap is shown to spuriously produce a price puzzle and several other incorrect conclusions in a class of commonly used models this can happen even if the model admits a triangular identification and if the forecasts produced by the misspecified var are optimal when the model is tested on us data all predictions are supported a commodity price index is not needed to solve the puzzle

the price puzzle reconsidered abstract a large literature has employed structural vector autoregressive svar models to investigate the empirical effects of u s monetary policy many of these models regularly produce a price puzzle a rise in the aggregate price level in response to a contractionary innovation to monetary policy unless commodity prices are included conventional wisdom maintains that commodity prices resolve the price puzzle because they contain information that helps the federal reserve forecast inflation i examine a number of plausible alternative indicator variables and find little correlation between an ability to forecast inflation and an ability to resolve the price puzzle additionally a sub sample investigation reveals that evidence of a price puzzle is associated primarily with the 1959 1979 sample period and that most indicators including commodity prices cannot resolve the puzzle over this period

are unemployment and out of the labor force behaviorally distinct labor force states abstract this paper uses the j test developed by mackinnon et al 1983 and us gross change data for six age sex demographic groups to test the hypothesis that unemployment and out of the labor force are behaviorally meaningless distinctions results obtained with these data and test confirm those obtained by flinn and heckman 1983 we found that for young ages 16 19 and young adult ages 20 24 males and females the two states are distinct whereas for prime age males and females ages 25 44 this distinction is meaningless

new evidence on whether unemployment and out of the labor force are distinct states this paper focuses on the question of whether people who are out of the labor force olf should be included in unemployment measures if people who are olf can obtain jobs as often as the people who are unemployed then there is no real distinction between the two states of nonemployment surprisingly there has been very little effort surrounding this issue in the past clark and summers 1982 conclude that for teenagers unemployment and olf are not distinct states while flinn and heckman 1982a find the opposite for white male high school graduates the methodology adopted in this paper enables one to use incomplete transition data on unemployment and olf and to obtain estimates of the full transition matrix between three labor force states that are not possible with standard methods new evidence for high school graduates is presented by gender and it is found that while for young women the two states are distinct for young men they are not

when minority labor migrants meet the welfare state life cycle employment of minority labor migrants who entered norway in the early 1970s diverges from that of natives immigrant employment was nearly complete during early years but declined to 50 by the year 2000 compared to 87 for a native comparison group we find that immigrant employment is particularly sensitive to the business cycle and that economic downturns of the 1980s and 1990s accelerated their labor market exit we trace part of the decline to migrants being overrepresented in shrinking industries but we also identify welfare disincentives that contribute to poor life cycle employment performance of immigrants with many dependent family members

on the optimality of a gcc monetary union structural var common trends and common cycles evidence this paper examines the suitability of the proposed monetary union among the members of the gulf cooperation council gcc to do so we identify the underlying structural shocks that these economies are subject to and assess the extent to which the shocks are symmetric additionally we test for common trends and common business cycles among the gcc economies we find that while the transitory demand shocks are typically symmetric the permanent supply shocks are asymmetric furthermore we do not find synchronous long run and short run movements in output despite the progress that has been made in terms of integration our findings indicate that the conditions for forming a gcc monetary union have not as yet been met

the importance of lifetime jobs in the u s economy though the u s labor market is justly notorious for high turnover and consequent high unemployment it also provides stable near lifetime employment to an important fraction of the labor force this paper investigates patterns of job duration by age race and sex with the following major conclusions 1 the typical worker today is holding a job which has lasted or will last about eight years over a quarter of all workers are holding jobs which will last twenty years or more sixty percent hold jobs which will last five years or more 2 the jobs held by middle aged workers with more than ten years of tenure are extremely stable over the span of a decade only twenty to thirty percent come to an end 3 among workers aged thirty and above about forty percent are currently working in jobs which eventually will last twenty years or more three quarters are in jobs which will last five years or more 4 the duration of employment among blacks is just as long as among whites even though the jobs held by blacks are worse in almost every other dimension they are no more unstable than those held by whites 5 women s jobs are substantially shorter than men s on the average only about a quarter of all women over the age of thirty are employed in jobs which will last over twenty years whereas over half of men over thirty are holding these near lifetime jobs this abstract was borrowed from another version of this item

job search requirements for unemployed at the end of working life effects on unemployment dynamics and self employment probabilities this paper investigates the extent to which job search requirements in unemployment insurance u i increase the probability of self employment as a retirement route for causal identification we apply a difference in differences approach using a dutch 2004 policy reform that introduced job search requirements in u i for persons aged 57 5 and older unemployment dynamics and self employment probabilities are studied using a dynamic multinomial logit model with unobserved heterogeneity the results suggest that job search requirements stimulated people to exit unemployment and discouraged older workers to enter unemployment the probability of self employment as an exit route to retirement increased relative to u i but not relative to paid employment

persistence in health limitations a european comparative analysis this paper investigates the persistence in health limitations for individuals within the member states of the european union we use the full eight waves of data available in the european community household panel echp to explore the relative contributions of state dependence unobserved heterogeneity and socioeconomic characteristics in particular income education and activity status and how these vary across countries we focus on binary measures of health limitations constructed from the answers to the question are you hampered in your daily activities by any physical or mental health problem illness or disability dynamic non linear panel data models are specified and estimated using both pooled and random effects probit and logit models together with complementary log log models the random effects probit specifications are preferred results reveal high state dependence of health limitations which remains after controlling for measures of socioeconomic status there is heterogeneity in the socioeconomic gradient across countries

the procompetitive effect of demand enhancing check off programs this article explores demand enhancing check off programs and how such programs may influence both private programs as well as industry market structure under duopoly a firm may increase its sales through privately funding product quality improvements however such endogenous sunk costs may also be used to exclude a rival industry funded check off programs affect firms strategies and can be procompetitive the rationale lies not only in how the check off enhancement is perceived by consumers but also in the way the check off s crowding out effect reduces the ability of a firm to use its private expenditures to bar a rival s market access

evolving dairy markets in asia recent findings and implications abstract this paper is an overview of important findings regarding the ongoing evolution of asian dairy markets based on a series of new economic investigations these investigations provide systematic empirical foundations to assess asian dairy markets with their new consumption patterns changing industries and trade prospects under different domestic and trade policy regimes with four case studies china india japan and korea a prospective analysis of future regional patterns of consumption and a policy analysis of trade liberalization of asian dairy markets the overview distills the findings of these new investigations and integrates them in the earlier economic literature it draws policy implications and identifies lessons for countries outside of asia especially for emerging exporters in latin america

screening disability insurance applications this paper investigates the effects of stricter screening of disability insurance applications a large scale experiment was setup where in two of the 26 dutch regions case workers of the disability insurance administration were instructed to screen applications more stringently the empirical results show that stricter screening reduces long term sickness absenteeism and disability insurance applications we find evidence for direct effects of stricter screening on work resumption during the period of sickness absence and for self screening by potential disability insurance applicants stricter screening seems to improve targeting efficiency without inducing negative spillover effects to the inflow into unemployment insurance the costs of stricter screening are only a small fraction of the monetary benefits

labor market behavior of older men abstract a three way qualitative choice model is employed to evaluate the response of men aged 62 64 to changes in expected income flows in alternative work and public transfer program options in the united states workers in this age group have three available options working accepting public early retirement benefits and private pensions or seeking and accepting public disability benefits we estimate the change in response to two income flows expected nontransfer largely labor market income and expected transfer income using the estimated responses we simulate the pattern of altered choices from two changes in the public transfer system a 20 percent decrease in benefits for early retirement and an earnings related income supplement while the reduction in early retirement benefits results in a small percentage decrease in the number of retirees the earnings supplement has a substantial positive effect on the number of older men choosing to continue working and results in both a rise in government expenditures and in family income

the early retirement plans of women and men an empirical application this paper deals with the factors that influence plans to retire from the labour force we use a theoretical model to explain the empirical findings from a bivariate probit model relating economic demographic and social characteristics to retirement plans for over 7000 women and men between the ages of 40 and 64 the results of the analysis concerning retirement intentions suggest that personal economic and household characteristics are more important determinants of retirement plans for women than men

social security unanticipated benefit increases and the timing of retirement between 1969 and 1972 real u s social security retirement benefits rose by 20 the rise was unanticipated and followed over 15 years of relatively constant real benefits this paper proposes a model of retirement behaviour in which workers respond differently although in a theoretically consistent manner to the anticipated and unanticipated components of the social security benefit they can receive upon retirement the retirement age decision in the presence of unanticipated benefit changes is shown to be a special case of utility maximization under a nonlinear budget constraint the model is estimated using the longitudinal retirement history survey between 1969 and 1973 real social security benefits for u s workers with fixed earnings histories were raised by more than 20 these increases were the first significant increases in social security since the early 1950 s at the same time that retirement benefits were rising the trend toward early retirement among older american men accelerated in the period from 1965 to 1970 the labour force participation rate of men aged 55 to 64 fell 1 6 percentage points from 84x6 to 83 0 but in the five years after 1970 the rate fell an additional 7 4 points to 75 6 the participation rate of men over 65 fell by 1 1 points in the five years after 1965 but by 5 2 points during the mid 1970 s 1 not surprisingly a large share of this labour force decline has been attributed to the effects of the social security increases enacted in 1969 and 1972 the purpose of this paper is to determine the precise effect of the unanticipated benefit increases on the timing of retirement the effect of social security on the age at retirement has been the subject of lively debate in recent years the literature has been reviewed in two recent papers by mitchell and fields 1982 and hurd 1983 who reach nearly opposite conclusions about the lessons that can be drawn from past empirical research mitchell and fields find that no definite judgment can be reached about the effects of social security on retirement while hurd argues that more careful studies have all found a significant and meaningful effect of social security on early retirement certainly the earlier studies by boskin 1977 and boskin and hurd 1978 found very large social security effects with boskin concluding that the social security system has been the major factor in the explosion in earlier retirement boskin 1977 p 1 very recent studies by burkhauser and quinn 1983 burtless and moffitt 1984 diamond and hausman 1984 fields and mitchell 1984 and hausman and wise 1985 have found smaller social security effects however none of them dealt explicitly with the rapid rise in real benefits during the early 1970 s the approach taken in this paper differs significantly from that in the earlier research just cited the proposed econometric model takes full account of the nonlinear relationship between goods consumption and the age at retirement introduced by social security

estimation of time varying price elasticity in 1970 1997 japanese raw milk supply by structural time series model the price elasticity of raw milk supply in japan is estimated over time by a structural time series model in state space form and the changes in elasticity are tested by the diagnosing test of de john and penzer in 1998 the supply function is modeled with a local linear trend and a strictly exogenous autoregressive distributed lag price the seasonality in the data is adjusted by a structural time series model in the 1970 1997 period there were major dairy policy changes in japan a production adjustment related penalties and two tier pricing hokkaido is the region that mainly provides the supply of raw milk for milk products while tofuken is the region that mainly produces drinking milk the estimated price elasticity in hokkaido became stable after imposition of the production adjustment on the other hand price elasticity in tofuken became stable after the inflation of the mid 1970s price elasticity is estimated to be more inelastic as well as more likely to converge in inelasticity in hokkaido than in tofuken we discuss the relationship between changes in dairy policy and changes in price elasticity