the great recession and the bulimia of us consumers deep causes and possible ways out this paper focuses on the apparent bulimia of us consumers and its role in the recent crisis we seek to show how various characteristics of american society and the us economy are related to this phenomenon we illustrate some structural features of the us economy and public policies that may have created a difference in terms of patterns of consumption and market participation between the usa and continental europe we then present some explanations of us hyperconsumerism put forward by psychologists and sociologists thus relating this phenomenon to the decline in subjective well being and social capital documented in the usa we also discuss how the negative endogenous growth paradigm may help to account for it finally we review the debate on the us policy agenda by underlining some weaknesses in the two politically more realistic options and by outlining a third policy strategy which is possibly preferable for people s long term well being

measuring program impacts on earnings and employment do unemployment insurance wage reports from employers agree with surveys of individuals this article attempts to determine whether wage records reported by employers to state unemployment insurance ui agencies provide a valid alternative to more costly retrospective sample surveys o

credit market constraints consumption smoothing and the accumulation of durable production assets in low income countries investments in bullocks in india in this paper we formulate and estimate a finite horizon structural dynamic model of agricultural investment behavior that incorporates the major features of low income agricultural environments income uncertainty constraints on borrowing and rental markets and the use of investment assets to generate income and smooth consumption the model is fit to longitudinal indian household data on farm profits bullock stocks and pump sets the estimated structural parameters are used to assess the effects on the life cycle accumulation of bullocks agricultural profits and welfare associated with complete markets and bullock liquidity and with second best policies that provide assured sources of income to farmers and weather insurance

homework in labor economics household production and intertemporal substitution abstract we argue that estimates of intertemporal substitution elasticities obtained from standard life cycle models are subject to a downward bias because they neglect changes in work done at home over the life cycle we extend the standard life cycle model to include home production and estimate it using data from three time use surveys we find that the downward bias is large

tax distortions in sweden and the united states we calculate the welfare costs of distortionary taxation including inflation in models calibrated for the united states and sweden the welfare costs are calculated using comparative steady state as well as dynamic analysis where we take the costs of transition from the distorted to the optimal steady state into account we also calculate the welfare costs of adding stochastic fluctuations our main finding is that the total welfare costs of the distortionary taxes including the distortionary effects of inflation are about five times higher in sweden than in the united states meanwhile stochastic fluctuations in policy turn out to have a relatively small impact on welfare

can progressive taxation account for cross country variation in labor supply abstract the difference between average hours worked in the us and average hours worked in continental european countries has been increasing since the early 1970s to explain this phenomenon this paper develops an endogenous growth model with two key properties agents are heterogeneous in their rates of time preference and labor skills and the model incorporates progressive income taxes the model is calibrated to us and german data for the periods 1971 1974 and 1986 1989 our findings suggest that the degree of progressivity is a major factor in explaining the patterns of the us and german labor supply over time predictions of the model also match the distributional trends in both countries during this time period

the impact of incarceration on wage mobility and inequality a life course perspective on crime indicates that incarceration can disrupt key life transitions life course analysis ofoccupations finds that earnings mobility depends on stable employment in career jobs these two lines of research thus suggest that incarceration reduces ex inmates access to the steady jobs that usually produce earnings growth among young men consistent with this argument evidence for slow wage growth among ex inmates is provided by analysis of the national longitudinal survey of youth because incarceration is so prevalent one quarter of black non college males in the survey were interviewed between 1979 and 1998 while in prison or jail the effect of imprisonment on individual wages also increases aggregate race and ethnic wage inequality

family welfare cultures strong intergenerational correlations in various types of welfare use have fuelled a long standing debate over whether welfare receipt in one generation causes welfare participation in the next generation some claim a causal relationship in welfare receipt across generations has created a culture in which welfare use reinforces itself through the family others argue the determinants of poverty or poor health are correlated across generations so that children s welfare participation is associated with but not caused by parental welfare receipt however there is little empirical evidence to sort out these claims in this paper we investigate the existence and importance of family welfare cultures in the context of norway s disability insurance di system to overcome the challenge of correlated unobservables across generations we take advantage of random assignment of judges to di applicants whose cases are initially denied some appeal judges are systematically more lenient which leads to random variation in the probability a parent will be allowed di using this exogenous variation we find strong evidence that welfare receipt in one generation causes welfare participation in the next generation when a parent is allowed di their adult child s participation over the next five years increases by 6 percentage points this effect grows over time rising to 12 percentage points after ten years while these findings are specific to our setting they serve to highlight that welfare reforms can have long lasting effects on program participation since any original effect on the current generation could be reinforced by changing the participation behavior of their children as well the detailed nature of our data allows us to compare the intergenerational transmission with spillover effects in other networks and to explore mechanisms our findings point to a special link between parents and their children with little impact due to close neighbors di participation we find suggestive evidence that what may change as a result of a parent being allowed di is their children s beliefs about the efficacy of trying to get on to the di program or their attitudes about di participation and its stigma

taxation and household labor supply we evaluate reforms to the u s tax system in a life cycle setup with heterogeneous married and single households and with an operative extensive margin in labor supply we restrict our model with observations on gender and skill premia labor force participation of married females across skill groups children and the structure of marital sorting we concentrate on two revenue neutral tax reforms a proportional income tax and a reform in which married individuals flle taxes separately separate flling our flndings indicate that tax reforms are accompanied by large increases in labor supply that difier across demographic groups with the bulk of the increase coming from married females under a proportional income tax reform married females account for more than 50 of the changes in hours across steady states while under separate flling reform married females account for all the change in hours

tax effects versus budget effects on labor supply this paper analyzes the effects on labor supply of parallel changes in taxes and public spending of various types a number of important recent developments in the labor supply behavior of households are highlighted by such a study of various types of budget effects rather than isolated tax effects this comes out in particular when considering cross substitution effects on labor supply of changes in public spending on goods and services or of the subsidization of goods and services provided by private markets moreover the income effects of tax changes are often mitigated or possibly even removed by the income effects of the accompanying expenditure changes

credit as insurance in agrarian economies abstract this paper examines consumption credit as an insurance mechanism in agrarian economies it explains the more rapid adoption of new technology in the green revolution by large farmers who had greater access to consumption credit the paper also demonstrates how the emergence and expansion of consumption credit markets by mitigating the need for hoarding in order to meet consumption contingencies enhances growth by encouraging investment

weak instruments diagnosis and cures in empirical econometrics what is the weak instruments wi problem and what causes it universal agreement does not exist on these questions we define weak instruments by two features i two stage least squares 2sls analysis is badly biased toward the ordinary least squares ols estimate and alternative unbiased estimators such as limited information maximum likelihood liml may not solve the problem and ii the standard first order asymptotic distribution does not give an accurate framework for inference thus a researcher may estimate bad results and not be aware of the outcome the cause of wi is often stated to be a low r or f statistic of the reduced form equation in the most commonly occurring situation of one right handside endogenous variable we find the situation is more complex with an additional factor the correlation between the stochastic disturbances of the structural equation and the reduced form that needs to be taken into account we discuss in this paper a specification test hahn and hausman 2002a for wi a caution against using no moments estimators such as liml in the wi situation and suggestions for different estimators an approach to inference of frank kleibergen 2002 for wi we end with a caution of how small biases can become large biases in the wi situation we begin with the limited information structural model under the assumptions of hausman 1983

job search requirements effort provision and labor market outcomes abstract how effective are effort targets this paper provides novel evidence on the effects of job search requirements on effort provision and labor market outcomes based on large scale register data we estimate the returns to required job search effort instrumenting individual requirements with caseworker stringency identification is ensured by the conditional random assignment of job seekers to caseworkers we find that the duration of un and non employment both decrease by 3 if the requirement increases by one monthly application when instrumenting actual applications with caseworker stringency an additionally provided monthly application decreases the length of spells by 4 in line with theory we further find that the effect of required effort decreases in the individual s voluntary effort finally the requirement level causes small negative effects on job stability reducing the duration of re employment spells by 0 3 per required application we find a zero effect on re employment wages

debt relief and debtor outcomes measuring the effects of consumer bankruptcy protection consumer bankruptcy is one of the largest social insurance programs in the united states but little is known about its impact on debtors we use 500 000 bankruptcy filings matched to administrative tax and foreclosure data to estimate the impact of chapter 13 bankruptcy protection on subsequent outcomes exploiting the random assignment of bankruptcy filings to judges we find that chapter 13 protection increases annual earnings by 5 562 decreases five year mortality by 1 2 percentage points and decreases five year foreclosure rates by 19 1 percentage points these results come primarily from the deterioration of outcomes among dismissed filers not gains by granted filers jel d14 i12 j22 j31 k35

transitional dynamics and the distribution of wealth in a neoclassical growth model abstract the evolution of the personal distribution of wealth in a standard neoclassical growth model is studied if the economy is growing toward the steady state and preferences are such that marginal utility from consumption is infinite finite at some all positive non negative consumption level s then the average saving propensity of agents is positively negatively related to their wealth if the economy is decaying toward the steady state these relationships are reversed if wealth and average saving propensity are positively negatively related the distribution of current period wealth lorenz dominates is lorenz dominated by next period s distribution of wealth

on the allocation of time a quantitative analysis of the roles of taxes and productivities basic theory suggests that increases in labor income taxes induce people to substitute household production for market work time use surveys for 12 oecd countries during 1970 2010 however show that instead people substituted leisure for market work to understand why this happened we carefully measure the labor productivity of household production and find that it grew strongly in many countries of our sample employing a calibrated model of household production we show that strong growth in the labor productivity of household production implies that leisure absorbs the reductions in market work after labor income tax increases

wealth inequality and intergenerational links previous work has had difficulty generating household saving behaviour that makes the distribution of wealth much more concentrated than that of labour earnings and that makes the richest households hold onto large amounts of wealth even during very old age i construct a quantitative general equilibrium overlapping generations model in which parents and children are linked by accidental and voluntary bequests and by earnings ability i show that voluntary bequests can explain the emergence of large estates while accidental bequests alone cannot and that adding earnings persistence within families increases wealth concentration even more i also show that the introduction of a bequest motive generates lifetime savings profiles more consistent with the data

precautionary saving motives an assessment from uk time series of cross sections this paper gauges the strength of precautionary saving motives by estimating the coefficient of prudence from the u k family expenditure survey data set a time series of cross sections the instrumental variables estimates reveal that greater uncertainty systematically leads to larger current savings most of these impacts are large enough to be statistically consistent with widely accepted beliefs about attitudes towards risk so that precautionary saving behavior cannot be refuted moreover the households which are less likely to face liquidity constraints or to share risks are more sensitive to uncertainty finally the households for which the head works in the manufacturing industry are more inclined to self insure against uncertainty copyright 1996 by royal economic society

cross country differences in unemployment fiscal policy unions and household preferences in general equilibrium we develop a five period overlapping generations model with individuals who differ by ability and with an imperfect labour market union wage setting for the individuals of lower ability the model explains human capital formation hours worked and unemployment within one coherent framework its predictions match the differences in the unemployment rate across 12 oecd countries remarkably well a shapley decomposition of these differences reveals an almost equal role for fiscal policy variables and union preferences as to fiscal policy differences in unemployment benefits play a much more important role than tax differences differences in households taste for leisure are unimportant

incarceration length employment and earnings this paper estimates effects of increases in incarceration length on employment and earnings prospects of individuals after their release from prison i utilize a variety of research designs including controlling for observable factors and using instrumental variables for incarceration length based on randomly assigned judges with different sentencing propensities the results show no consistent evidence of adverse labor market consequences of longer incarceration length using any of the analytical methods in either the state system in florida or the federal system in california

lifetime earnings and the vietnam era draft lottery evidence from social security administrative records errata the randomly assigned risk of induction generated by the draft lottery is used to construct estimates of the effect of veteran status on civilian earnings these estimates are not biased by the fact that certain types of men are more likely than others to service in the military social security administrative records indicate that in the early 1980s long after their service in vietnam had ended the earnings of white veterans were approximately 15 percent less than the earnings of comparable nonveterans copyright 1990 by american economic association

timing constraints and the allocation of time the effects of changing shopping hours regulations in the netherlands abstract a 1996 change in shopping hours regulations in the netherlands provides an opportunity to study the effects of timing constraints on total time spent in shopping working and other activities as well as the timing of these activities we develop a simple structural model to make predictions about the effects of imposition and relaxation of a timing constraint on time use patterns and utilize time diary data from 1995 1997 1999 and 2000 to examine time use patterns by demographic group before and after the change in addition to a change in the timing of shopping we find a non negligible increase in the total time spent shopping

precautionary saving under liquidity constraints evidence from rural pakistan this paper investigates precautionary saving under liquidity constraints in pakistan using household panel data in particular while we estimates kimball s 1990 prudence parameter we deviate from dynan s 1993 framework by explicitly considering liquidity constraints as in zeldes 1989 by doing so we attempt to differentiate the standard precautionary saving caused by uncertainty from the one due to liquidity constraints furthermore endogenous liquidity constraints are considered to resolve issues of selection biases in this study we document substantial evidence of the presence of precautionary saving in pakistan more specifically the estimated prudence is significantly higher for liquidity constrained households as compared with unconstrained ones the results support the emerging view that facilitating saving may often be more important than finding better ways of lending to the poor

habit prisoner s dilemma and americans welfare cost of working much more than europeans europeans work much less than americans some studies claim this is due to high taxes in europe which would benefit by adopting us tax rates and work time others find that taxes have little or no impact on work time i examine the hypothesis that americans would benefit by reducing work time to europe s level empirical and experimental studies show utility falls as other people s income rises due to its historical experience europe is able to internalize this and other negative externalities by restricting work time through minimum vacation time and maximum weekly work hours while the us is not resulting in a prisoner s dilemma overworking trap equilibrium a simple model and work time data are used to derive the us welfare gain from reducing work time to europe s level findings are i parameter values are consistent with experimental results on the relative impact of own and other people s income ii the welfare gain s present value is about 120 percent of annual welfare and iii even if europe s policy reduces work time excessively it does remain beneficial as long as the reduction is less than twice the optimal one

juvenile incarceration human capital and future crime evidence from randomly assigned judges over 130 000 juveniles are detained in the united states each year with 70 000 in detention on any given day yet little is known about whether such a penalty deters future crime or interrupts social and human capital formation in a way that increases the likelihood of later criminal behavior this article uses the incarceration tendency of randomly assigned judges as an instrumental variable to estimate causal effects of juvenile incarceration on high school completion and adult recidivism estimates based on over 35 000 juvenile offenders over a 10 year period from a large urban county in the united states suggest that juvenile incarceration results in substantially lower high school completion rates and higher adult incarceration rates including for violent crimes in an attempt to understand the large effects we found that incarceration for this population could be very disruptive greatly reducing the likelihood of ever returning to school and for those who do return significantly increasing the likelihood of being classified as having an emotional or behavioral disorder jel codes k140 i210

split sample instrumental variables estimates of the return to schooling this article reevaluates recent instrumental variables iv estimates of the returns to schooling in light of the fact that two stage least squares is biased in the same direction as ordinary least squares ols even in very large samples we propose a split sample instrumental variables ssiv estimator that is not biased toward ols ssiv uses one half of a sample to estimate parameters of the first stage equation estimated first stage parameters are then used to construct fitted values and second stage parameter estimates in the other half sample ssiv is biased toward 0 but this bias can be corrected the splt sample estimators confirm and reinforce some previous findings on the returns to schooling but fail to confirm others

structural transformation marketization and household production around the world we provide evidence on household and market production in 36 countries since 1960 on average the household sector accounts for almost half of total hours worked as gdp per capita increases the employment share of household production in total hours worked initially declines and then hardly changes while the employment shares of market goods and services decrease and increase estimating the value added of household production yields similar patterns labor productivity of household production is lower than and positively correlated with that in the market these findings can be used as an input into quantitative work involving household production

household formation female labor supply and savings in this paper we aim to quantify the impact of changing family structures on labor supply and savings in western societies our dynamic general equilibrium model features both genders and it takes into account changes in marital status as a stochastic process the numerical results indicate that changes in household formation can partly explain the reallocation of male and female labor supply observed during the last decades in germany we also find a negative impact on capital accumulation and we show that a combination of higher marital risk and a narrowing gender wage gap can explain the changes in hours ratios between single and married men and women

exclusion and reintegration in a social dilemma using a social dilemma game we study the cooperative behavior of individuals who reintegrate their group after being excluded by their peers we manipulate the length of exclusion and whether this length is imposed exogenously or results from a vote we show that people are willing to exclude the least cooperators and they punish more and more severely chronic defections in return a longer exclusion has a higher disciplining effect on cooperation after reintegration but only when the length of exclusion is not chosen by group members its relative disciplining effect is smaller when the length of exclusion results from a vote in this environment a quicker reintegration also limits retaliation the difference in the impact of long vs short exclusion on retaliation is larger when the length of exclusion is chosen by group members than when it is exogenous post reintegration cooperation and forgiveness depend not only on the length of exclusion but also on the perceived intentions of others when they punish

the degree of precautionary saving a reexamination abstract extending dynan s methodology dynan k 1993 how prudent are consumers journal of political economy 101 1104 1113 we show that a significant fraction of the prudence parameter puzzle can be explained by a downward omitted variable bias further the estimated prudence is substantially higher for liquidity constrained households

nonmarket institutions for credit and risk sharing in low income countries the design credit and risk institutions in low income countries provides one of the most exciting testing grounds for theories of contracting with imperfect information and limited enforcement this paper reviews some of the recent literature with a special focus on nonmarket institutions that cope with risk and provide credit this literature attempts to bring together insights from economic theory especially information economics contract theory and mechanism design theory however it is also applied being motivated by the circumstance of the poor countries that their authors have visited and studied

differences in hours worked in the oecd institutions or fiscal policies we study the determinants of the level and the evolution of per capita hours worked in a panel of oecd countries since the 1970s following pesaran 2006 our empirical strategy allows for the possibility of cross sectionally correlated error terms due to unobserved common factors which are potentially nonstationary we find that much of the variation in per capita hours worked across countries and over time can be explained by differences in the level and structure of taxes and government expenditures differences in the evolution of labor and product market institutions have much less of a role to play our results show that a careful treatment of the time series properties of the data is crucial

effective tax rates in macroeconomics cross country estimates of tax rates on factor incomes and consumption abstract this paper proposes a method for computing tax rates using national accounts and revenue statistics using this method we construct time series of tax rates for large industrial countries the method identifies the revenue raised by different taxes at the general government level and defines aggregate measures of the corresponding tax bases this method yields estimates of effective tax rates on factor incomes and consumption consistent with the tax distortions faced by a representative agent in a general equilibrium framework these tax rates compare favorably with existing estimates of marginal tax rates and highlight important international differences in tax policy

who is credit constrained in the u s economy an important assumption of the life cycle model of consumption is the postulate of perfect capital markets this hypothesis has recently been challenged by substantial empirical evidence hall and mishkin 1982 using the panel study of income dynamics estimate that 20 percent of united states families are liquidity constrained mariger 1986 derives a life cycle model with endogenous liquidity constraints and using a cross section estimates this fraction to be 19 4 percent hubbard and judd 1986 simulate a model with a constraint on net worth which shows that with reasonable assumptions about preferences 19 0 percent of united states consumers are liquidity constrained the emerging consensus points therefore to a fraction of approximately 20 percent of the population behaving in a manner that is inconsistent with the pure life cycle model in addition hayashi 1985 and zeldes 1989 investigate the correlation among consumption wealth and income for various population groups and infer that liquidity constraints are more important for younger families with low levels of wealth and saving the main limitation of these studies is that in their data sets constrained consumers are not observable and have to be identified via indirect evidence thus there is as yet little firm evidence about the characteristics of the consumers who are likely to be credit constrained this paper adopts an approach that differs from previous tests for liquidity constraints because it makes use of data where constrained consumers are observable and explicitly links their existence to credit market imperfections and personal characteristics the data drawn from the 1983 survey of consumer finances scf and described in section ii provide information on individuals whose request for credit has been rejected by financial intermediaries in section iii a model is developed in which consumers and lenders behavior jointly determines the probability that a consumer is rationed in the credit market this probability is then

retirement home production and labor supply elasticities a standard life cycle model with home production implies a tight relationship between key preference parameters and the changes in time allocated to home production and leisure at retirement we derive this relationship and use data from the atus to explore its quantitative implications the key finding is that the intertemporal elasticity of substitution for leisure and the elasticity of substitution between time and goods in home production are approximately equal in contrast to what is commonly assumed

do state minimum wages affect the incarceration rate because of historically unprecedented increases in the prison population since the late 1970s the united states has the highest incarceration rate in the world using becker s 1968 framework on crime this study investigates the causal relationship between incarceration rates and state minimum wages our identification strategy consists of a state level fixed effects model and autor and dorn s 2013 two stage least squares 2sls approach using the historical local industry structure we predict the change in employment shares of manual task intensive occupations and use those as an instrument for state minimum wages the fixed effects and 2sls estimates suggest that a one dollar increase in state minimum wage leads to approximately 12 25 fewer incarcerations per 100 000 state residents estimates of the heterogeneous impacts by race and gender indicate that the aggregate impact of state minimum wages is entirely driven by men

explaining the decline in the u s employment to population ratio a review of the evidence this paper first documents trends in employment rates and then reviews what is known about the various factors that have been proposed to explain the decline in the overall employment to population ratio between 1999 and 2018 population aging has had a large effect on the overall employment rate over this period but within age group declines in employment among young and prime age adults also have played a central role among the factors with effects that we can quantify based on existing evidence labor demand factors in particular increased import competition from china and the penetration of robots into the labor market are the most important drivers of observed within group declines in employment labor supply factors most notably increased participation in disability insurance programs have played a less important but not inconsequential role increases in the real value of state minimum wages and in the share of individuals with prison records also have contributed modestly to the decline in the aggregate employment rate in addition to the factors whose effects we roughly quantify we identify a set of potentially important factors about which the evidence does not yet allow us to draw clear conclusions these include the challenges associated with arranging child care improvements in leisure technology changing social norms increased use of opioids the growth in occupational licensing and declining labor market fluidity our evidence driven ranking of factors should be useful for guiding future discussions about the sources of decline in the aggregate employment to population ratio and consequently the likely efficacy of alternative policy approaches to increasing employment rates

divergent paths a new perspective on earnings differences between black and white men since 1940 we present new evidence on the evolution of black white earnings differences among all men including both workers and nonworkers we study two measures i the level earnings gap the racial earnings difference at a given quantile and ii the earnings rank gap the difference between a black man s percentile in the black earnings distribution and the position he would hold in the white earnings distribution after narrowing from 1940 to the mid 1970s the median black white level earnings gap has since grown as large as it was in 1950 at the same time the median black man s relative position in the earnings distribution has remained essentially constant since 1940 so that the improvement then worsening of median relative earnings have come mainly from the stretching and narrowing of the overall earnings distribution black men at higher percentiles have experienced significant advances in relative earnings since 1940 due mainly to strong positional gains among those with college educations large relative schooling gains by blacks at the median and below have been more than counteracted by rising return to skill in the labor market which has increasingly penalized remaining racial differences in schooling at the bottom of the distribution

risk pooling precautionary saving and consumption growth in this paper we model the evolution of income risk and consumption growth we decompose the time series innovation of the income process into its common and cohort specific components from these we compute conditional variances which are used as separate risk terms in a consumption growth equation using a long series of british household data we exploit the time series variation to identify precautionary saving effects and find strong evidence of their importance specifically after allowing for demographic and labour market status there is an independent role for income risk in explaining consumption growth rather than the component that is common across cohorts however it is the cohort specific element that is important in determining changes in consumption growth this result points to a failure of between cohort insurance mechanisms

consumption insurance an evaluation of risk bearing systems in low income economies the hypothesis of full risk sharing can be taken to data from low income countries and evaluate formal and informal financial systems in many contexts idiosyncratic risks are high so credit insurance arrangements could be beneficial statistical tests reveal that households in southern india take advantage of these possibilities villages in cote d ivoire and countries in thailand do not do as well the paper includes an empirical description of the devices used to smooth consumption and a theoretical discussion of private information and incentives on ideal operating systems the full information and mechanism design frameworks provide benchmarks for policy analysis

labour market discrimination against former juvenile delinquents evidence from a field experiment in view of policy action to integrate ex offenders into society it is important to identify the underlying mechanisms of the negative relationship between criminal record on the one hand and later employment and earnings on the other hand in this study we identify hiring discrimination against former juvenile delinquents in a direct way to this end we conduct a field experiment in the belgian labour market we find that labour market discrimination is indeed a major barrier in the transition to work for former juvenile delinquents labour market entrants disclosing a history of juvenile delinquency get about 22 less callback compared to their counterparts without a criminal record this discrimination is heterogeneous by the occupation for which one applies

the effect of liquidity constraints on consumption a cross sectional analysis this paper examines the effect of liquidity constraints on consumption expenditures using a single year cross section data set a reduced form equation for consumption is estimated on high saving households by the tobit procedure to account for the selectivity bias since high saving households are not likely to be liquidity constrained the estimated equation is an appropriate description of how desired consumption that would be forthcoming without liquidity constraints is related to the variables available in the cross section data when the reduced form equation is used to predict desired consumption the gap between desired consumption and measured consumption is most evident for young households

patents and cumulative innovation causal evidence from the courts cumulative innovation is central to economic growth do patent rights facilitate or impede such follow on innovation this paper studies the effect of removing patent protection through court invalidation on the subsequent research related to the focal patent as measured by later citations we exploit random allocation of judges at the u s court of appeal for the federal circuit to control for the endogeneity of patent invalidation we find that patent invalidation leads to a 50 percent increase in subsequent citations to the focal patent on average but the impact is highly heterogeneous patent rights appear to block follow on innovation only in the technology fields of computers electronics and medical instruments moreover the effect is entirely driven by invalidation of patents owned by large patentees that triggers entry of small innovators suggesting that patents may impede the democratization of innovation

why do europeans work so little market work per person is roughly 10 higher in the united states than in sweden however if we include the work carried out in home production the total amount of work only differs by 1 i set up a model and show that differences in policy mainly taxes can account for the discrepancy in both labor supply and home production between sweden and the united states these results are independent of the elasticity of labor supply

impactos das distorcoes tributarias sobre a determinacao da oferta de trabalho usando um modelo de crescimento neoclassico prescott 2004 e ohanian et alii 2008 explicam com sucesso as diferencas de horas trabalhadas entre paises da ocde aplicamos este mesmo modelo para o caso brasileiro entre 1988 e 1998 nossa principal conclusao e que esta metodologia falha em explicar a experiencia brasileira o modelo preve como consequencia do aumento de impostos verificado no periodo uma queda substancial no numero de horas trabalhadas entretanto os dados mostram apenas uma leve queda utilizamos ainda especificacoes alternativas para a preferencia do agente representativo as quais tornam a oferta de trabalho menos sensivel a impostos entretanto o ajuste aos dados e satisfatorio apenas para par metros bastante distantes daqueles utilizados pela literatura internacional sugerimos que a presenca significativa de um setor informal pode explicar a especificidade brasileira

the effect of arrests on the employment and earnings of young men many young men commit crime and many are arrested i estimate the effect of arrests on the employment and earnings of arrestees using a large longitudinal data set constructed by merging police records with ui earnings data i find that the effects of arrests are moderate in magnitude and rather short lived

consumer bankruptcy and financial health this paper estimates the effect of chapter 13 bankruptcy protection on financial health using a new data set linking bankruptcy filings to credit bureau records our empirical strategy uses the leniency of randomly assigned judges as an instrument for chapter 13 protection we find that chapter 13 protection decreases an index measuring adverse financial events such as civil judgments and repossessions by 0 323 standard deviations and increases the probability of being a homeowner by 13 2 percentage points chapter 13 protection has little impact on open unsecured debt but decreases the amount of debt in collections by 1 333

human decisions and machine predictions presented on october 24 2016 at 10 00 a m in the klaus advanced computing building room 1116

the transition from school to jail youth crime and high school completion among black males abstract in this paper we study the relationship among schooling youth employment and youth crime the framework a multinomial discrete choice vector autoregression provides a comprehensive analysis of the dynamic interactions among a youth s schooling work and crime decisions and arrest and incarceration outcomes we allow for observable initial conditions unobserved heterogeneity measurement error and missing data we use data from the nlsy97 on black male youths starting from age 14 the estimates indicate important roles both for heterogeneity in initial conditions and for stochastic events that arise during one s youth in determining outcomes as young adults

how do patents affect follow on innovation evidence from the human genome we investigate whether patents on human genes have affected follow on scientific research and product development using administrative data on successful and unsuccessful patent applications submitted to the us patent and trademark office we link the exact gene sequences claimed in each application with data measuring follow on scientific research and commercial investments using this data we document novel evidence of selection into patenting patented genes appear more valuable prior to being patented than non patented genes this evidence of selection motivates two quasi experimental approaches both of which suggest that on average gene patents have had no quantitatively important effect on follow on innovation

local labor markets and criminal recidivism abstract this paper estimates the impact of local labor market conditions on criminal recidivism using administrative prison records on four million offenders released from 43 states between 2000 and 2013 exploiting the timing of each offender s release from prison i find that being released to a county with higher low skilled wages significantly decreases the risk of recidivism the impact of higher wages on recidivism is larger for both black offenders and first time offenders and in sectors that report being more willing to hire ex offenders these results are robust to individual and county level controls such as policing and corrections activity and do not appear to be driven by changes in the composition of released offenders during good or bad economic times

does disability insurance receipt discourage work using examiner assignment to estimate causal effects of ssdi receipt abstract we present the first causal estimates of the effect of social security disability insurance benefit receipt on labor supply using all program applicants we use administrative data to matc

mechanism experiments and policy evaluations randomized controlled trials are increasingly used to evaluate policies how can we make these experiments as useful as possible for policy purposes we argue greater use should be made of experiments that identify the behavioral mechanisms that are central to clearly specified policy questions what we call mechanism experiments these types of experiments can be of great policy value even if the intervention that is tested or its setting does not correspond exactly to any realistic policy option

estimating labour supply elasticities based on cross country micro data a bridge between micro and macro estimates the nordic model relies on high tax rates to finance an extensive welfare state if labour supply elasticities are large the burden of financing the model can be large even if arguably the practice of providing subsidised goods that support labour supply is likely to mitigate these effects we utilise repeated cross sections of micro data from several countries including the four major nordic countries available from the luxembourg income study lis to estimate labour supply elasticities both at the intensive and extensive margins the data span over four decades and include a large number of tax reform episodes with tax rate variation arising both from cross sectional and country level differences using these data we investigate whether micro and macro estimates differ in a systematic way the results do not provide strong support for the view that elasticities at the macro level would be higher than the corresponding micro elasticities

crime and economic incentives we explore the role that economic incentives particularly changes in wages at the bottom end of the wage distribution play in determining crime rates we use data on the police force areas of england and wales between 1975 and 1996 and find relative falls in the wages of low wage workers lead to increases in crime we carry out a number of experiments with different wage measures including a wage measure that accounts for the effects of changes in the composition of employment these reinforce the picture of a strong association between the low wage labor market and crime the result that incentives play a central role is reinforced further by the strong impact on crime of deterrence measures and of a measure of the returns to crime

decreasing relative risk aversion and tests of risk sharing the relative risk aversion rra coefficient of a household whose consumption is close to the subsistence level may be very high for example if consumption is exactly at the subsistence level the household may not be willing to bear any risk if this is the case then the rra coefficient must be a decreasing function of wealth for poor households therefore we should allow the possibility of decreasing rra drra in testing the full risk sharing hypothesis however existing tests in the empirical literature are derived using preferences that exhibit either increasing or constant rra even when they are applied to data containing low income households we therefore use a hyperbolic absolute risk aversion hara utility which implies increasing constant and decreasing rra as special cases to test full risk sharing hypothesis using the international food policy research institute ifpri and the international crops research institute of the semi arid tropics icrisat household level data sets we find evidence in support of the drra hypothesis along with evidence favoring full risk sharing hypothesis at the village level and evidence against the hypothesis at the inter village level when rra is restricted to be constant we replicate the previous results in the literature reject the full risk sharing hypothesis at both levels our tests however reject this restriction and favor drra in almost all cases these results suggest that it is important to allow for drra in testing the full risk sharing hypothesis when data containing low income households are investigated this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this this abstract was borrowed from another version of this item

how prudent are consumers using data from the consumer expenditure survey this paper presents a simple test that provides an explicit estimate of the parameter in the utility function that reflects the strength of the precautionary saving motive the coefficient of relative prudence the test yields a fairly precise estimate of a small precautionary motive in fact the estimate is too small to be consistent with widely accepted beliefs about risk aversion the presence of liquidity constrained households does not appear to explain this finding and there is some evidence that self selection of households into risky environments also cannot explain the results

do we punish high income criminals too heavily many critics believe that since high income criminals can afford to purchase better legal services they are less severely punished than poor criminals who commit equivalent crimes others are concerned that the penalties imposed on criminals are too small this paper shows that ignoring the effect conviction has on later earnings dramatically underestimates the total monetary penalty paid by those convicted and that the penalty structure is extremely progressive where evidence on the probability of conviction is available it shows that the highest income criminals face the highest expected penalties

should day care be subsidized in the presence of distortionary taxes on labor can subsidies on childcare flnanced by a further increase in taxes raise welfare by encouraging women with small children to work we approach this question in two difierent ways first we consider a set of stylized models where we prove analytically that under some conditions the ramsey optimal policy consists in making childcare expenses tax deductible then we construct a calibrated stochastic dynamic life cycle model of household decision making designed to capture some facts about labor supply in germany we flnd that the welfare gains associated with subsidizing childcare are considerable and that the maximum gains are realized when childcare is subsidized to an even greater extent than what tax deductibility implies

optimal taxation with home production abstract optimal taxes for europe and the u s are derived in a realistically calibrated model in which agents buy consumption goods and services and use home capital and labor to produce household services the optimal tax rate on services is substantially lower than the tax rate on goods specifically the planner cannot tax home production directly and instead lowers the tax rate on market services to increase the relative price of home production the optimal tax rate on the return to home capital is strictly positive and the welfare gains from switching to optimal taxes are large