a revealed preference test of rationing abstract this paper derives a revealed preference test for utility maximization under rationing and can detect for which goods rationing is binding without specifying a functional form or imposing rationing constraints prior to estimation for uk data from 1920 55 we find evidence of utility maximization under rationing with rationing binding for food and other services estimated virtual prices exceed observed food prices by 16 5 in 1947 and observed prices of other services by 10 9 in 1952

cheap children and the persistence of poverty this paper develops a theory of fertility that offers an explanation for the persistence of poverty within and across countries if educated individuals have a comparative advantage in raising educated children then parental fertility choice is shown to give rise to a poverty trap in which the poor choose high fertility rates with low investment in child quality moreover the impact of child quality choice on economic performance is amplified by the diluting effect of higher fertility on physical capital accumulation the theory proposes insights regarding the effects of inequality globalisation and life expectancy on economic growth and demographic transitions this paper develops a theory of fertility and child educational choice that offers an explanation for the persistence of poverty within and across countries the joint determination of the quality education and quantity of children in a household is studied under the key assumption that individuals productivity as teachers increases with their own human capital in contrast the minimum time cost associated with raising a child regardless of the child s quality the quantity cost is not affected by parental education as a result the price of child quantity relative to the price of child quality increases with individuals wages in particular for low wage individuals for whom the opportunity cost of time is low children of minimal quality are cheap this assumption therefore generates a comparative advantage for the poor in child quantity whereas high wage educated individuals have a comparative advantage in raising quality children consistent with the well known evidence poor households thus choose relatively high fertility rates with relatively low investment in their offspring s education and therefore their offspring are poor as well in contrast high income families choose low fertility rates with high investment in education and therefore high income persists in the dynasty evidence from the us provided by hanushek 1992 suggests that a trade off between quantity and quality of children does indeed exist hanushek argues that movements in family size could explain over half the variance in some test scores and that the elasticity of achievements with respect to the number of children in the family is 0 03 implying that the annual achievement growth of each child in a family will fall about 2 when a second child is added and about 0 5 when a sixth child is added 1

on the distributional consequences of epidemics we develop a tractable general theory for the study of the economic and demographic impact of epidemics notably its distributional consequences to this end we build up a three period overlapping generations model where altruistic parents choose optimal health expenditures for their children and themselves the survival probability of adults and children depends on such investments agents can be skilled or unskilled in this paper epidemics are modeled as one period exogenous shocks to the adults survival rates we first show that such epidemics have permanent effects on the size of population and on the level of output however the income distribution is shown to be unaltered in the long run second we show that this distribution may be significantly altered in the medium term in particular the proportion of the unskilled will necessarily increase at that term if orphans are too penalized in the access to education c 2009 elsevier b v all rights reserved

socially optimal social security and education subsidization in a dynastic model with human capital externalities fertility and endogenous growth abstract this paper considers socially optimal government policies in a dynastic family model with physical capital human capital endogenous fertility and positive spillovers from average human capital such spillovers reduce human capital investment but raise fertility from their social optimum we first characterize the social optimum with a non convex feasible set due to the quantity quality tradeoff concerning children we then show that social security and education subsidization together financed by labor income taxes can fully eliminate the efficiency losses of the spillovers and achieve the social optimum under plausible conditions however none of the policies can do so alone

social class and the spirit of capitalism one of the key social transformations that accompanied the british industrial revolution was the economic decline of the aristocracy standard theories of wealth inequality cannot explain why the aristocrats in spite of their superior wealth and education failed to be the main protagonists and beneficiaries of industrialization we discuss recent research based on a model of endogenous preferences that is consistent with the demise of aristocracy jel 010 040

hiv status and labor market participation in south africa abstract we use econometric methods based on the propensity score to estimate the causal effect of hiv status on employment outcomes in south africa relying on rich data from a national survey which included hiv testing we control for systematic differences between hiv positive and hiv negative individuals we provide the first nationally representative estimates of the impact of hiv status on employment outcomes for southern africa being hiv positive is associated with an increase of 6 to 7 percentage points in the likelihood of unemployment overall and 10 to 11 percentage points for those who are less educated this disadvantage reinforces existing inequalities in south africa

pandemics of the poor and banking stability we first develop a theoretical model that shows that the likelihood of a collapse of the banking industry of a developing country increases as the joint prevalence of large pandemics such as aids and malaria increases we also show that the optimal bank reserves increase as the prevalence increases in the empirical part of the paper we consider a large dataset of developing countries and we exhibit a causality effect from combined prevalence to deposit turnover as well as causality effect from an increase of combined prevalence to an increase in bank reserves those empirical facts therefore support our theoretical findings

gender differences in education in a dynamic household bargaining model in this paper we explore the issue of gender differences in education in the context of a two sex overlapping generations model where men and women of each generation bargain over consumpt ion number of children and investment in education of their children conditional on gender and parents are altruistic toward their children we show that the difference in the education levels of boys and girls implied by our model is smaller than the one that would result from a pure investment model also we show that as long as the time cost associated with bearing children is positive women bear the entire time cost associated with child rearing we use our model to estimate the cost to a woman of having a child the estimate we obtain using cross country data suggests that such cost amounts to about 5 of the working lifetime of a woman

the macroeconomics of targeting the case of an enduring epidemic what is the right balance among policy interventions in order to ensure economic growth over the long run when an epidemic causes heavy mortality among young adults we argue that in general policies to combat the disease and promote education must be concentrated in certain ways at first on some subgroups of society this concentration involves what we term the macroeconomics of targeting the central comparison is then between programs under which supported families enjoy the benefits of spending on health and education simultaneously dt and those under which the benefits in these two domains are sequenced st when levels of human capital are uniformly low at the outbreak dt is superior to st if the mortality rate exceeds some threshold value outside aid makes dt more attractive but dt restricts support to fewer families initially and so increases inequality a summary account of the empirical evidence is followed by an application of the framework to south africa

economic interpretations of intergenerational correlations science itself for example see galton s 1869 study of the eminence of relatives or his 1889 analysis of the heights of parents and children but extensive use of economic theory to interpret these correlations is much more recent using basic economic concepts such as supply demand investment incentives missing markets and so on theorists hope to explain how and why status is correlated across generations economic theory might provide a unified treatment of a variety of socioeconomic indicators such as earnings income occupation or wealth or it might predict how taxes subsidies and economic regulation affect intergenerational mobility and the operation of markets however while the subject matter earnings consumption wealth occupa tion is clearly interesting to economists it could nonetheless be the case that beyond basic questions of measurement economic theory has not improved our understanding of intergenerational mobility goldberger 1989 is quite explicit in this contention by emphasizing the distinction between genes and environment and by using statistical theory as its main analytical tool the paper by samuel bowles and herbert gintis in this issue implicitly concurs with goldberger we take this challenge very seriously what characterizes an economic approach to mobility while biologists and bowles and gintis distinguish endowments and investments by their source genetic versus environmental factors one focus of economic theorists is motiva

geography health and the pace of demo economic development abstract this paper investigates the impact of subsistence consumption and extrinsic and intrinsic causes of child mortality on fertility and child expenditure it offers a theory for why mankind multiplies at higher rates at geographically unfavorable tropical locations placed into a macroeconomic framework this behavior creates an indirect channel through which geography shapes economic performance it is explained why it are countries of low absolute latitude where we observe exceedingly slow if not stalled economic development and demographic transition

intergenerational trade longevity and economic growth we develop an overlapping generations model of endogenous growth in which human capital is the engine of growth and the generations are linked through material and emotional interdependencies within the family parents invest in their children to achieve both old age support care and emotional gratification and material support from children is determined through self enforcing implicit contracts we show that optimal intergenerational trade can then lead to maximization of growth opportunities our model produces a theory of the demographic transition linking longevity fertility and economic growth we also show that while population aging may raise the growth rate an increase in young age longevity is likely to produce a greater increase in the growth rate and a reduction in the fertility rate in a growth equilibrium these predictions and the model s implications concerning the behavior of private savings during the takeoff period appear consistent with empirical evidence

assessing the impact of aids on the growth path of the malawian economy abstract a modified solow growth model is used to simulate the impact of the aids epidemic on output capacity and other key macroeconomic aggregates in malawi comparing a counterfactual no aids scenario to medium and extreme aids projections suggests that average real gdp growth over the 1985 2010 period will be 0 2 0 3 1 2 1 5 percentage points lower in the medium extreme case relative to the no aids case as a result the size of the economy by the year 2010 will be reduced from a real gdp of 5 03 billion constant 1985 kwacha without aids to 4 81 4 77 3 80 3 46 billion kwacha in the medium extreme scenario

mortality decline human capital investment and economic growth abstract we examine the role of increased life expectancy in raising human capital investment during the process of economic growth we develop a continuous time overlapping generations model in which individuals make optimal schooling investment choices in the face of a constant probability of death we present analytic results followed by results from a calibrated version of the model using realistic estimates of the return to schooling mortality decline produces economically significant increases in schooling and consumption allowing schooling to vary endogenously produces a much larger response of consumption and capital to mortality decline than is observed when schooling is held fixed

growth and welfare under endogenous lifetime we study the role of endogenous healthcare choices by households to extend their expected lifetimes on economic growth and welfare in a decentralized overlapping generations economy with the realistic feature that households savings are held in annuities we characterize healthcare spending in the decentralized market equilibrium and its effects on economic growth we then identify the moral hazard effect in healthcare investments when annuity rates are conditioned on average mortality and explain the conditions under which it will lead to over investment in healthcare moreover we specify the general equilibrium effects and macroeconomic repercussions associated with this moral hazard effect calibrating our model to oecd data we find that the moral hazard effect may be substantial and implies sizeable welfare losses of approximately 1 5 at a more general level our study suggests that welfare improvements from longevity increases may be quite lower than sometimes assumed when considered in planner economies

difficult choices crossing the picket line during the 1987 national football league strike this study examines the difficult choice faced by members of a striking bargaining unit between withholding labor or crossing the picket line in violation of the prevailing behavioral norm using duration analysis we test a model of crossing behavior using data on individual football players during the 1987 national football league strike a notable finding is that nonwhite players are less willing to cross the picket line if their team union representative is also nonwhite willingness to cross the line is also influenced by teammate crossing and proxies for expected career length demand for current income and expected benefits from union demands

modeling the macroeconomic effects of aids with an application to tanzania a solow style model is developed to study the effects of the aids epidemic on the growth path of the economy and gdp per capita the model uses conjectures about the demographic effects of aids in tanzania to estimate the macroeconomic effects on the economy the findings suggest that without decisive policy action aids may reduce tanzanian gdp in the year 2010 by 15 to 25 percent in relation to a counterfactual no aids scenario per capita income levels are expected to fall by 0 to 10 percent by 2010

quadratic engel curves and consumer demand this paper presents a model of consumer demand that is consistent with the observed expenditure patterns of individual consumers in a long time series of expenditure surveys and is also able to provide a detailed welfare analysis of shifts in relative prices a nonparametric analysis of consumer expenditure patterns suggests that engel curves require quadratic terms in the logarithm of expenditure while popular models of demand such as the translog or the almost ideal demand systems do allow flexible price responses within a theoretically coherent structure they have expenditure share engel curves that are linear in the logarithm of total expenditure we derive the complete class of integrable quadratic logarithmic expenditure share systems a specification from this class is estimated on a large pooled data set of u k households models that fail to account for engel curvature are found ro generate important distortions in the patterns of welfare losses associated with a tax increase

endogenous lifetime and economic growth abstract endogenous mortality is introduced in a two period overlapping generations model probability of surviving from the first period to the next depends upon health capital that is augmented through public investment high mortality societies do not grow fast since shorter lifespans discourage savings development traps are possible productivity differences across nations result in persistent differences in capital output ratios and relatively larger gaps in income and mortality high mortality also reduces returns on education where risks are undiversifiable when human capital drives economic growth countries differing in health capital do not converge to similar living standards threshold effects may also result

from malthusian stagnation to modern growth this paper investigates the historical evolution of the relationship among population growth technological change and standard of living the analysis focuses on two most important differences among the malthusian regime post malthusian regime and modern growth regime these were the behavior of income per capita and the relationship between the level of income per capita and the population growth rate the modern growth regime is characterized by steady growth in both income per capita and the level of technology in the malthusian regime technological progress and population growth was glacial by modern standards and income per capita was fairly constant in contrast to the modern growth regime the relationship between per capita income and population growth in the malthusian regime was positive post malthusian regime shared one characteristic with each of the two regimes in addition this paper developed and described an endogenous growth model consistent with the above mentioned transition process

economic status and health in childhood the origins of the gradient the well known positive association between health and income in adulthood has antecedents in childhood not only is children s health positively related to household income but the relationship between household income and children s health becomes more pronounced as children age part of the relationship can be explained by the arrival and impact of chronic conditions children from lower income households with chronic conditions have worse health than do those from higher income households the adverse health effects of lower income accumulate over children s lives part of the intergenerational transmission of socioeconomic status may work through the impact of parents income on children s health

population technology and fragmentation the european miracle revisited abstract the effects of political fragmentation on long run development seem to have changed over the course of human history technological leaders used to be empires but the industrial revolution started in the fragmented europe this paper sets up a model to help us think about this puzzle there are two sets of mechanisms at play a standard scale effect which benefits unified regions since technology is a non rivalrous good and several competition effects both negative like wasteful armies and positive incentives to invest in new technologies we apply the model to analyze the preindustrial divergence between china and europe

the gift of the dying the tragedy of aids and the welfare of future african generations this paper simulates the impact of the aids epidemic on future living standards in south africa i emphasize two competing effects on the one hand the epidemic is likely to have a detrimental impact on the human capital accumulation of orphaned children on the other hand widespread community infection lowers fertility both directly through a reduction in the willingness to engage in unprotected sexual activity and indirectly by increasing the scarcity of labor and the value of a woman s time i find that even with the most pessimistic assumptions concerning reductions in educational attainment the fertility effect dominates the aids epidemic on net enhances the future per capita consumption possibilities of the south african economy

adult mortality and consumption growth in the age of hiv aids the authors use a 13 year panel of individuals in tanzania to assess how adult mortality shocks affect both short and long run consumption growth of surviving household members using unique data which tracks individuals from 1991 to 2004 they examine consumption growth controlling for a set of initial community household and individual characteristics the effect is identified using the sample of households in 2004 which grew out of baseline households the authors find robust evidence that an affected household will see consumption drop 7 percent within the first five years after the adult death with high growth in the sample over this time period this creates a 19 percentage point growth gap with the average household there is some evidence of persistent effects of these shocks for up to 13 years but these effects are imprecisely estimated and not significantly different from zero the impact of female adult death is found to be particularly severe

mortality versus morbidity in the demographic transition abstract the link between the mortality and epidemiological transitions is used to identify the effect of the former on the fertility transition a mortality transition that is not accompanied by improving morbidity causes slower demographic and economic change in a model where children may die from infectious disease childhood health affects human capital and noninfectious disease related adult mortality when child mortality falls from lower prevalence as it did in western europe labor productivity improves fertility falls and the economy prospers when it falls mainly from better cures as it has in sub saharan africa survivors are less healthy and there is little economic growth the model can quantitatively explain sub saharan africa s experience more generally it shows that the commonly used indicator life expectancy at birth is a poor predictor of population health and economic growth unless morbidity falls with mortality

estimating demand elasticities under rationing eliminating rationing in the united kingdom following the second world war was a concern for policy makers because of potentially large fluctuations in post war prices and the impact on unrationed goods this study shows that in using virtual prices elasticities can be estimated from a free demand system consistent with observed consumer choices substitution estimates without accounting for rationing are misleading in contrast using virtual prices and estimating a free market system yield results similar to those of the pre war period results show that food rationing affected expenditure across unrationed goods rationing on other services had little effect on expenditure across unrationed goods

foreign aid fertility and human capital accumulation this paper analyses the effect of foreign aid on population growth and human capital accumulation consistent with empirical evidence from sub saharan africa the model shows that foreign aid can work against its stated goal of alleviating poverty and promoting growth humanitarian aid fosters population growth and adversely affects the recipients incentive to invest in human capital the analysis suggests that foreign aid may lock a recipient economy in a low equilibrium trap

comments by professor james tobin professor tobin was invited to reflect upon the experiment in applied econometrics at the workshop convened to discuss the experiment s results he discussed his education in econometrics and the contexts both economic and technical in which his paper of 1950 on the demand for food was written he outlined the concerns facing econometricians of that time to explain some aspects of his approach and compared these to the worries of the econometricians taking part in the experiment 1997 john wiley sons ltd

richard stone s contributions to economics richard stone published his first scientific studies in the late 1930s during world war ii he worked on various government assignments his work during this period on national income estimates and more extensive national accounts for england turned out to be of particular importance for future research in economics stone was involved in this work as early as 1940 and carried out pioneering studies in collaboration with j e meade and in contact with j m keynes most of stone s writings are rigorously technical and soberly impersonal however in an article 45 1 on the development and use of national income estimates he added some interesting personal glimpses from this period he also formulated a somewhat more personal creed than is usually found in his works it would seem worthwhile to quote an excerpt anyone who believes in the maintenance of a social economy and the avoidance of the totalitarian direction of all aspects of economic life must be concerned at the present time with the creation of an institutional framework which will permit a social economy with the essential features of free markets free choice of occupations and free choice in the spending of disposable income to function more in accordance with contemporary social ideals in the achievement of this goal and in re drafting the rules of the economic game in such a way that both laissez faire and overall physical control are rejected as a basis for economic organization national income and expenditure studies and their extension to the technique of national budgeting have i believe a great deal to offer stone then went on to discuss how the economy can be made to function more in accordance with contemporary social ideals and referred first and foremost to stabilization of economic activity equalization of income distribution and different forms of intervention in the competitive mechanism

from malthus to modern growth can epidemics explain the three regimes we model demographic and economic long run development in a setting where mortality is endogenous and subject to epidemic shocks the model replicates the full transition from malthusian stagnation to modern growth consistent with the historical facts the economy also passes an intermediate post malthusian phase where growth rates of both population and per capita income increase simultaneously as mortality rates fall and become less volatile the escape from the malthusian trap is the result of a series of mild epidemic shocks making it inevitable at some stage but its timing random calibrations show that it can differ by thousands of generations absent differences in exogenous parameters

gender poverty and demography an overview much has been written on gender inequality and how it affects fertility and mortality outcomes as well as economic outcomes what is not well understood is the role of gender inequality embedded in the behavior of the family the market and society in mediating the impact of demographic processes on economic outcomes this article reviews the empirical evidence on the possible economic impacts of gender inequalities that work by exacerbating demographic stresses associated with different demographic scenarios and reducing the prospects of gains when demographic conditions improve it defines four demographic scenarios and discusses which public policies are more effective in each scenario in reducing the constraints that gender inequality imposes on poverty reduction

infectious disease and preventive behavior in an overlapping generations model abstract this paper incorporates prevalence of disease and agent s preventive behavior i e health investment into a small open overlapping generations model and investigates the dynamic behaviors of the competitive equilibrium allocation using the model it is shown that agents prevalence elastic behaviors which are supported from empirical studies can be obtained and that such agents behaviors cause the cyclicity of the spread of disease we also show that although the agents preventive behavior in a competitive equilibrium may be insufficient because of the existence of external effects a one shot medical aid from foreign countries does not necessarily improve the agents welfare in the pareto sense

aids and economic growth a human capital approach abstract using a model that combines growth and health capital equations this study analyses the impact of hiv aids on economic growth the econometric results indicate that the epidemic s effects have been substantial in africa the marginal impact on income per capita of a 1 increase in hiv prevalence rate is minus 0 59 even in countries with lower hiv prevalence rates the marginal impacts are non trivial hence while the human and social costs of the hiv aids epidemic are major causes for concern these results indicate that the macroeconomic affects of the hiv aids epidemic are important

aids mortality and its effect on the labor market evidence from south africa abstract this paper investigates how hiv aids has impacted the labor market in south africa focusing on its effect on wages and employment this is done by matching individual level data with group specific cumulative aids mortality rates exploiting the panel nature of the data i remove individuals whose productivity is most likely impacted by hiv aids and find evidence that cumulative aids mortality has led to reductions in wages of between 3 and 6 for the african population group black south africans furthermore i also find evidence that the epidemic has lowered employment in south africa this result is concentrated among those with the lowest levels of education and employment although not large in magnitude these effects are widespread across a significant portion of the population contributing to a substantial loss of income throughout the south african economy

the inheritance of inequality how level is the intergenerational playing field what are the causal mechanisms that underlie the intergenerational transmission of economic status are these mechanisms amenable to public policies in a way that would make the attainment of economic success more fair these are the questions we will try to answer

is migration a good substitute for education subsidies assuming a given educational policy the recent brain drain literature reveals that skilled migration can boost the average level of schooling in developing countries this paper introduces educational subsidies determined by governments concerned by the number of skilled workers remaining in the country the theoretical analysis shows that developing countries can benefit from skilled emigration when educational subsidies entail high fiscal distortions however when taxes are not too distortionary it is desirable to impede emigration and subsidize education the authors investigate the empirical relationship between educational subsidies and migration prospects obtaining a negative relationship for 105 countries based on this result the analysis revisits the country specific effects of skilled migration upon human capital the findings show that the endogeneity of public subsidies reduces the number of winners and increases the magnitude of the losses

malthus revisited fertility decision making based on quasi linear preferences abstract malthus 1798 population hypothesis is inconsistent with the demographic transitions and the massive income expansion observed among industrialised countries the current study shows that eliminating the income effect on the demand for children from malthus theory makes consistent with industrial development

the demographic transition and the emergence of sustained economic growth the demographic transition that swept the world in the course of the last century has been identified as one of the prime forces in the transition from stagnation to growth the unprecedented increase in population growth during the early stages of industrialization was ultimately reversed and the demographic transition brought about a significant reduction in fertility rates and population growth in various regions of the world enabling economies to convert a larger share of the fruits of factor accumulation and technological progress into growth of income per capita this paper examines various mechanisms that have been proposed as possible triggers for the demographic transition assessing their empirical validity and their potential role in the transition from stagnation to growth jel o11 o14 o33 o40 j11 j13

aggregate income shocks and infant mortality in the developing world health and income are strongly correlated both within and across countries yet the extent to which improvements in income have a causal effect on health status remains controversial the authors investigate whether short term fluctuations in aggregate income affect infant mortality using an unusually large data set of 1 7 million births in 59 developing countries the authors show a large negative association between per capita gdp and infant mortality female infant mortality is more sensitive than male infant mortality to negative economic shocks suggesting that policies that protect the health status of female infants may be especially important during economic downturns

life and work of john richard nicholas stone 1913 1991 sir richard stone knighted in 1978 and nobel laureate in economics in 1984 was one of the pioneering architects of national income and social accounts and one of the few economists of his generation to have faced the challenge of economics as a science by combining theory and measurement within a cohesive framework he was awarded the nobel prize in economics for his fundamental contributions to the development of national accounts but made equally significant contributions to the empirical analysis of consumer behaviour his work on the growth project was also instrumental in the development of appropriate econometric methodology for the construction and the analysis of large disaggregated macroeconometric models this paper provides an analysis of stone s many contributions

applied general equilibrium models of taxation and international trade an introduction and survey we wish to acknowledge the help of three referees and of john pencavel on several earlier drafts as well as the assistance of the modelers whose work is referred to in the paper they corrected our lack of understanding of their work and provided many other helpful comments excellent research and bibliographical assistance have been provided by debbie fretz radwan shaban and janet stotsky helpful comments have been made by charles ballard michael boskin lans bovenberg sylvester damus harvey galper glenn harrison gordon lenjosek jack mutti serena ng t n srinivasan charles stuart and eric toder the authors also acknowledgefinancial support from the national bureau of economic research the national science foundation international business machines and the social sciences and humanities research council ottawa canada

the long run economic costs of aids a model with an application to south africa primarily a disease of young adults acquired immuno deficiency syndrome aids imposes economic costs that could be devastatingly high in the long run by undermining the transmission of human capital the main driver of long run economic growth across generations aids makes it harder for victims children to obtain an education and deprives them of the love nurturing and life skills that parents provide these children will in turn find it difficult to educate their children and so on an overlapping generations model is used to show that an otherwise growing economy could decline to a low level subsistence equilibrium if hit with an aids type increase in premature adult mortality calibrating the model for south africa where the hiv prevalence rate is over 20 percent simulations reveal that the economy could shrink to half its current size in about four generations in the absence of intervention programs to combat the disease and to support needy families could avert such a collapse but they imply a fiscal burden of about 4 percent of gross domestic product gdp

optimal tax subsidy combinations for the flu season this paper uses a dynamic susceptible infected recovered sir epidemic model to identify optimal vaccination policy mixes for the flu season it begins with the solution to the relevant optimal control problem and then gives the derivation of a perfect foresight equilibrium outcome for vaccination behavior in an unregulated market both the optimal and market outcomes are characterized by switching curves in s i state space exact expressions for these are derived the final section discusses taxes and subsidies that can be used to attain the optimal outcome

das human kapital a theory of the demise of the class structure this paper suggests that the demise of the capitalists workers class structure was a socio economic transformation orchestrated by the capitalists in reaction to the increasing importance of human capital in sustaining their profit rates physical capital accumulation in the process of industrialization enhanced the importance of human capital in production and generated incentives for capitalists to support the provision of public education for the masses triggering the demise of the existing class structure the implications of the theory are consistent with the voting patterns on england s education reform of 1902

aids crisis and growth abstract we investigate an olg economy where an aids epidemic influences human capital accumulation and growth through the creation of large numbers of orphans we study how intra family allocations regarding school and work time of children are adjusted in the face of aids within a family and how in turn these adjustments influence accumulation of physical and human capital we compute the aggregate effects of an aids epidemic on human and physical capital accumulation and growth we find that growth effects of an aids epidemic are large some policies such as subsidization of aids medication have relatively small effects

malthus in sweden this paper presents some new and unique cross county data from 19th century sweden over birth death and marriage rates grain prices and harvests local grain prices correlate negatively with local harvests suggesting imperfectly integrated food markets the so called positive and preventive checks are also present good local harvests are associated with high birth and marriage rates and low death rates we also find that the fertility and marriage effects from changes in prices but not harvests are greater in counties that rely more on manufacturing consistent with an open economy model of fertility choice where agents earn income from both agriculture and manufacturing

fecundity fertility and the formation of human capital exploiting a genealogy of english individuals living in the 16th to the 19th centuries this study shows that lower parental reproductive capacity positively affected the socio economic achievements of offspring using the time interval between the date of marriage and the first birth as a measure of reproductive capacity we find that parental fecundity positively affected the number of siblings and that children of parents with lower fecundity were more likely to become literate and employed in skilled and high income professions this suggests there was a trade off between child quantity and quality in england during the industrial revolution supporting leading theories of the origins of modern economic growth

the impact of aids on income and human capital this paper studies the impact of hiv aids on per capita income and education it explores two channels on how hiv aids affects income that have not been sufficiently stressed by previous literature the reduction of the incentives to stay in school due to shorter expected longevity and the reduction in productivity of experienced workers in the model individuals live for three periods may get infected in the second period and with some probability die of aids before reaching the third period of their lives parents care for the welfare of the future generations so that they will maximize lifetime utility of their dynasty the simulations predict that the most affected countries in sub saharan africa in the future will be on average 30 poorer than they would be without aids schooling will decline in some cases by 40 these figures are dramatically reduced with widespread medical treatment as it increases the survival probability and productivity of infected individuals

does prime age mortality reduce per capita household income evidence from rural zambia summary this paper evaluates the impact of prime age mortality on per adult equivalent incomes of surviving household members in rural zambia the analysis uses difference in difference matching techniques and controls for spillover effects by excluding households from the control group if members departed or joined for reasons related to prime age mortality the latter is required because per adult equivalent incomes of non afflicted households may be indirectly affected e g by hosting orphans we find evidence of negative spillover effects on non afflicted households however the death of a prime age member has no significant short run effect on per adult equivalent income of afflicted households

the child is father of the man implications for the demographic transition we propose a new theory of the demographic transition based on the evidence from natural sciences that physical development during childhood affects adult life expectancy positively this theory is embodied in a continuous time olg framework where fertility longevity and education all result from individual decisions we conclude that a sustained improvement in physical development is at the basis of the observed demographic transition in today s developed countries and may be an important factor in explaining the slow transition from the malthusian towards the modern era the dynamics of the proposed model reproduce the key features of the demographic transition including sustained improvements in child physical development permanent increase in life expectancy a hump shaped evolution of both population growth and fertility and late increases in secondary educational attainments

agricultural output and productivity in the former soviet republics the paper reviews agricultural development in the fifteen former soviet republics over the period 1965 1997 production functions are estimated and productivity differences and changes calculated large differences were found in terms of productivity and growth between the republics the differences grew after 1990 reflecting variation in reform policies

explaining african economic performance africa has had slow growth and a massive exodus of capital in many respects it has been the most capital hostile region we review and interpret the aggregate level and microeconomic literatures to identify the key explanations for this performance there is a reasonable correspondence of the two sets of evidence pointing to four factors as being important these are a lack of openness to international trade a high risk environment a low level of social capital and poor infrastructure these problems are to a substantial extent attributable to government behaviour and the paper includes a review of the political economy literature which addresses that behaviour

hiv aids and development a reappraisal of the productivity and factor accumulation effects besides the dreadful direct effects enduring epidemics like hiv aids induce much more subtle effects in the economy principally via labor productivity and factor accumulation concerning the former the impact of morbidity on effective labor has been recognized and accounted for since the early work of over 1992 and cuddington and hancock 1994 the impact of mortality shocks on savings and therefore on factor accumulation has also been documented in this early literature with an emphasis on the detrimental role of the induced health expenditures recently asiedu jin and kanyama 2015 show that hiv aids has a negative but diminishing effect on foreign direct investment fdi and this adverse effect occurs even when the prevalent hiv rate is low in contrast the consequences of hiv aids on human capital accumulation have been more rarely treated in particular its impact on schooling time n generally omitted in the macroeconomic literature ferreira pessoa and dos santos 2011 is an exception the inherent mechanism is known as the ben porath mechanism ben porath 1967 a downward trend in life expectancy following mortality shocks reduces the profitability of schooling leading to a decline of human capital accumulation in the medium and long run boucekkine de la croix and licandro 2002 have proposed a theory of endogenous growth based on the ben porath mechanism notice also that the same essential argument that shorter time horizons discourage investment can be applied to physical capital accumulation the latter may collapse not only because of the massive increase in health expenditures undermining savings as in the early literature but also via this indirect mechanism both channels are taken into account by freire 2004 in her analysis of saving behavior in south africa after the outbreak of the hiv aids crisis

population and income is there a puzzle abstract this note presents wide evidence on the relationship between population and income for 125 countries for which data was available for the period 1950 2000 the main result is that there is a weak but negative relationship between population growth and per capita gdp as income increases population expands at a slower rate this relationship appears to be stronger for african countries and for asian countries before 1970

malthus to solow a unified growth theory is developed that accounts for the roughly constant living standards displayed by world economies prior to 1800 as well as the growing living standards exhibited by modern industrial economies our theory also explains the industrial revolution which is the transition from an era when per capita incomes are stagnant to one with sustained growth the authors use a standard growth model with several technologies the first denoted the malthus technology requires land labor and reproducible capital as inputs the second denoted the solow technology does not require land the authors show that in the early stages of development only the malthus technology is used and due to population growth living standards are stagnant despite technological progress eventually technological progress causes the solow technology to become profitable and both technologies are employed at this point living standards improve since population growth has less influence on per capita income growth in the limit the economy behaves like a standard solow growth model excerpt

population technology and growth from malthusian stagnation to the demographic transition and beyond this paper develops a unied growth model that captures the historical evolution of population technology and output it encompasses theendogenous transitionbetween three regimes that have characterized economic development the economy evolves from amalthusianregime wheretechnologicalprogressis slow andpopulationgrowthprevents anysustainedriseinincomepercapita intoapost malthusianregime wheretechnological progress rises and population growth absorbs only part of output growth ultimately a demographic transition reverses the positive relationship between income and population growth andtheeconomyentersamoderngrowthregimewithreducedpopulationgrowth

the determinants of strike incidence and severity a micro level study this paper investigates the determinants of strike incidence and severity during labor contract negotiations the author develops a model that considers the forces influencing both unions willingness to strike and employers willingness to take a strike and estimates it using data describing 1 050 negotiations in u s manufacturing during the 1971 80 period the results indicate that strike incidence is influenced by the gender composition of the labor force demand fluctuations in the product market location in a right to work state the number of workers in the bargaining unit union density in the industry and the extent to which wages kept pace with inflation over the prior contract period on the other hand neither the local unemployment rate when negotiations began nor the inflation rate over the term of the expiring contract influenced strike incidence or severity in this sample

the neolithic revolution from a price theoretic perspective article i nfo the adoption of agriculture during the neolithic period triggered the first demographic explosion in history when fertility returned to its original level agriculturalists were more numerous more poorly nourished and worked longer hours than their hunter gatherer ancestors we develop a dynamic price theoretic model that rationalizes these events in the short run people are lured into agriculture by the increased labor productivity of both adults and children in the long run the growth in population overrides the productivity gains and the later generations of agriculturalists end up being worse off than the hunter gatherers counter intuitively the increase in the labor productivity of children causes the long run reduction in welfare in the long run the increase in adult labor productivity only contributes to population growth 2010 elsevier b v all rights reserved

the effect of life expectancy on fertility saving schooling and economic growth theory and evidence we construct a simple growth model where agents with uncertain survival choose schooling time life cycle consumption and the number of children we show that rising longevity reduces fertility but raises saving schooling time and the growth rate at a diminishing rate cross section analyses using data from 76 countries support these propositions life expectancy has a significant positive effect on the saving rate secondary school enrollment and growth but a significant negative effect on fertility through sensitivity analyses the effect on the saving rate is inconclusive while the effects on the other variables are robust and consistent these estimated effects are decreasing in life expectancy

some macroeconomics for the 21st century this note describes a numerical simulation of a model of economic growth a simplified version of robert tamura s 1996 model of world income dynamics based on technology diffusion the model makes predictions for trends in average world income growth and about the evolution of the relative income distribution that accord well with observation the model is used to forecast the course of world income growth and income inequality over the century to come

fiscal implications of aids in south africa abstract the number of people living with hiv is alarmingly large in addition to the incomprehensible human suffering of those directly affected aids also has large negative economic effects in this paper i study the fiscal implications of the hiv aids epidemic in south africa in a standard neo classical growth model i find that an antiretroviral program is to a large extent self financing improvement in dependency ratios and health care cost savings would pay for rand 144 billion of a full epidemiological intervention the indirect effect through the changing demographic structure will be more important than the direct health care cost saving effect i also explore different taxation policies the households would be willing to sacrifice an amount equal to 12 of gdp in the first period to be subject to an optimal ramsey fiscal policy rather than an alternative fixed debt to gdp policy the optimal policy implies an increase in government debt during the peak of the epidemic

on the transmission of world agricultural prices two questions are asked about the relationship between domestic prices and world prices of agricultural commodities are variations in world prices transmitted to domestic prices domestic prices are regressed on world prices in various forms taking into account the possible effects of exchange rates and inflation the empirical analysis is based on data from the food and agriculture organization of the united nations for 58 countries from 1968 78 and for the countries of the european community from 1961 85 the results show that most of the variations in world prices are transmitted and that they constitute the dominant component in the variations of domestic prices

health education and life cycle savings in the development process this paper studies investment in health and human capital in a life cycle model health investment enhances survival to old age by improving health from its endowed level the model predicts two distinctive phases of development when income is low enough the economy has no health investment and little savings leading to slow growth when income grows health investment will become positive and the saving rate will rise leading to higher life expectancy and faster growth a health subsidy can move the economy from the first phase to the next subsidies on health and human capital investments can improve welfare

a population macroeconomic growth model for currently developing countries abstract this paper constructs a theoretical model that predicts as observed in some currently developing countries that the average school enrollment ratio may fall even when the average fertility rate declines unlike existing models the current analysis indicates that economic growth may slow down when a fertility transition starts asymmetric behavior with respect to fertility and education between households stemming from income inequality plays an important role in generating this result we examine the implications of an education subsidy policy contrary to intuition in some circumstances this policy may decrease the average school enrollment ratio and future economic growth

growth and enduring epidemic diseases abstract this paper analyzes the interplay of human capital formation and economic growth when there is premature adult mortality failing adequate insurance arrangements a long wave of such mortality can so undermine human capital formation as to induce an economic collapse in nuclear family structures random matching of partners is superior to assortative mating only if the shock is not too big and initial levels of human capital are not too low full pooling of mortality risks with equal treatment of all children in extended families may fend off a general collapse depending on the initial conditions and the size and duration of the shock to avoid undesirable effects on expectations awareness campaigns should be complemented by policies that credibly promise to reduce future mortality if mortality depends on the general level of human capital indeterminacy can arise in the form of more than one rational expectations path

the transition to a market economy pitfalls of partial reform we present a theory of a partial economic reform of a planned economy similar to the one that took place in russia since 1988 and in china earlier in such a reform some markets are liberalized in the sense that producers can sell output to whomever they want including private firms at free prices but at the same time must sell to state firms at state prices we show that such a reform can result in a substantial diversion of subsidized inputs away from state firms and toward private firms even when state firms value these inputs more the result may be a reduction of total output the simple analysis sheds light on many consequences of the soviet reform such as breakdown of coordination of production increased state policing of delivery quotas prohibitions of trading cooperatives and opposition to privatization the model also explains why partial reform failed in russia but worked in china

non parametric tests of consumer behaviour the neoclassical model of consumer behaviour postulates that a consumer s choice behaviour can be described as deriving from utility maximization subject to a budget constraint one is then naturally led to ask what this model implies about observed behaviour this question has been addressed from two quite distinct approaches the first approach originating in the work of slutsky 1915 and antonelli 1886 derives necessary and sufficient conditions involving the derivatives of the demand functions the second approach originating in the work of samuelson 1938 1947 1948 derives algebraic conditions on the demand functions implied by maximizing behaviour

public saving and policy coordination in aging economies in the coming decades the share of people of working age will fall significantly in most developed countries according to optimal taxation theory public debts should be reduced before the baby boom generation retires i find that if debts are instead maintained at current levels welfare may be reduced substantially in countries with a large public sector and or a large demographic change since population aging will be less dramatic in the united states than in europe and japan capital will move from europe and japan to the united states these capital movements will facilitate the us demographic transition but aggravate the transition in most european countries

impacts of economic reform in poland incidence and welfare changes within a consistent framework the costs of shortages and rationing are not captured by standard consumer price indices thus the change in real gdp per capita is an overestimate of welfare losses in transition economics in this study virtual prices are used to calculate new cost of living indices clis the results for polant show that from 1987 to 1992 the cli ignoring the rationing effects is biased upward from 1 53 to 3 71 percentage points per year compared to the estimates of welfare loss that neglect the rationing effects during the prereform period the estimated welfare losses that reflect the rationing are reduced by 50 using hausman virtual prices and by 75 using external proxy virtual prices

economic development and the escape from high mortality summary this paper studies the characteristic features of the escape from high mortality as recorded from the historical experience of northwestern europe and from the current experience of less developed countries the paper documents stylized facts of mortality change and measures the contribution of economic development represented by income per capita to the mortality decline during the second half of the 20th century the paper argues that improvements in economic conditions since the 18th century are an important factor behind the decline in death rates in developed countries and in the subsequent reduction of death rates in less developed countries we show that economic development lowers mortality through differential effects in infectious disease mortality and that quantitatively income growth is able to account for between one third and one half of the recent mortality decline

slavery and other property rights the institution of slavery is found mostly at intermediate stages of agricultural development and less often among hunter gatherers and advanced agrarian societies we explain this pattern in a growth model with land and labor as inputs in production and an endogenously determined property rights institution the economy endogenously transits from an egalitarian state with equal property rights to a despotic slave society where the elite own both people and land thereafter it endogenously transits into a free labor society where the elite own the land but people are free

life expectancy schooling time retirement and growth i analyze how changes in life expectancy affect retirement age education time and growth rates of economies i set up a continuous time overlapping generations model of endogenous growth with externalities in human capital production i find that increases in life expectancy give rise to first higher retirement ages and second higher education spans a threshold level for life expectancy exists such that per capita growth rates follow an inverted u pattern i introduction in this article i analyze how changes in life expectancy may affect optimal education time retirement age and the growth rates of economies to this end i set up a continuous time overlapping generations growth model with human capital accumulation that i solve numerically the issue of the effects of the reduction in mortality rates and the resulting increases in life expectancy on economic growth rates has been recently addressed in the literature through both empirical and theoretical studies along these lines i focus on human capital acquisition and its transmission across generations as the force driving the growth rate concerning empirical studies the hypothesis that the reduction in mortality rates has caused higher levels of investment in human capital and therefore augmented growth rates is partially supported for various economies thus kalemli ozcan et al 2000 show an increase in life expectancy at birth along with an increase in average numbers of years of schooling in england they claim that after averaging across lower income countries there is apparently a connection between increases in life expectancy at birth and increases in gross secondary school enrollment that is positively connected with higher growth rates observed preliminary data from latin american and caribbean countries show that gross domestic product gdp growth is statistically associated with life expectancy for instance estimates based on data from mexico suggest that for any additional year of life expectancy there will be an additional 1 increase in gdp 15 years later see world health organization 1999 box 1 2 9 along the same lines rodriguez and sachs 1999 also find a positive effect of life expectancy on gdp growth for the case of venezuela barro and sala i martin 1995 estimate for a sample of 97 countries that a 13 year increment in life expectancy would increase the per capita growth rate by 1 4 per year they also find however some exceptions where increments in life expectancy have not resulted in higher growth even though all of them exhibited higher schooling levels in the period 1960 85 malmberg 1994 gives another exception higher growth was achieved when middle aged persons were numerous whereas increases in dependent age groups led to lower per capita growth in sweden finally some other studies find mixed evidence so that increments in life expectancy result in higher growth rates for low levels of life expectancy but in lower growth rates for high levels of life expectancy see zhang et al 2003 and references therein a common result in most theoretical studies that include some sort of human capital is that an increase in life expectancy lengthens the period needed to recover investment in human capital which translates into higher returns to individual education or human capital investment this augmented return will give rise to higher levels of investment in human capital which in turn will raise growth rates ehrlich and lui 1991 show in a three overlapping generations model how improvements in longevity lower fertility thus raising educational investment and long term growth meltzer 1995 finds that mortality reductions may favor economic growth by increasing educational investment kalemli ozcan et al 2000 show in an overlapping generations model a la blanchard that if mortality drops life expectancy increases so that an augmented life horizon to enjoy the return to human capital investment gives rise to higher schooling human capital investment although growth is not affected because the growth rate in their model is identically equal to zero

strategic bargaining models and interpretation of strike data attrition screening and signalling models of strategic bargaining are characterized in terms of their predictions about the incidence mean duration and settlement rates of strikes and the terms of wage settlements these predictions are compared with the general features observed in empirical studies of strikes in canada and the united states conclusions are drawn about the types of models capable of generating these features and about the conformity of the models to the evidence methods are described for computing the numerical examples used to illustrate the models

vintage human capital demographic trends and endogenous growth we study how economic growth is affected by demographics in an overlapping generations model with a realistic survival law individuals optimally chose the dates at which they leave school to enter the labor market and at which they retire endogenous growth arises thanks to the accumulation of generation specific human capital favorable shifts in the survival probabilities always induce longer schooling and later retirement but have an ambiguous effect on growth the relationship between the growth of population and per capita growth is hump shaped increases in longevity can be responsible for a switch from a no growth regime to a sustained growth regime and for a positive relationship between fertility and growth to vanish

when higher incomes reduce welfare queues labor supply and macro equilibrium in socialist economies starting from a micro model of consumer behavior under rationing by queuing that utilizes gary becker s allocation of time framework we develop a simple macroeconomic model of a socialist economy the length of the queue is the key endogenous variable that equilibrates aggregate supply and aggregate demand comparative statics analysis shows that an increase in wages over money prices brings about longer queues that reduce labor supply output and welfare when shortages grow beyond a certain critical level queues fail to sustain aggregate equilibrium in the economy

hiv testing subjective beliefs and economic behavior this paper examines the effects of learning hiv status on economic behavior among rural malawians according to economic life cycle models if learning hiv results is informative about additional years of life being diagnosed hiv positive or negative should predict changes in consumption investment and savings behavior with important micro and macro economic implications using an experiment that randomly assigned incentives to learn hiv results i find that while learning hiv results had short term effects on subjective belief of hiv infection these differences did not persist after two years consistent with this there were relatively few differences two years later in savings income expenditures and employment between those who learned and did not learn their status

the long run economic costs of aids primarily a disease of young adults aids imposes economic costs that could be devastatingly high in the long run by undermining the transmission of human capital the main driver of long run economic growth across generations aids makes it harder for victims children to obtain an education and deprives them of the love nurturing and life skills that parents provide these children will in turn find it difficult to educate their children and so on an overlapping generations model is used to show that an otherwise growing economy could decline to a low level subsistence equilibrium if hit with an aids type increase in premature adult mortality calibrating the model for south africa where the hiv prevalence rate is over 20 percent simulations reveal that the economy could shrink to half its current size in about four generations in the absence of intervention programs to combat the disease and to support needy families could avert such a collapse but they imply a fiscal burden of about 4 percent o