forest dependence and income distribution in a subsistence economy evidence from india abstract we examine an area of northern india where forestry acts to ameliorate the incidence of poverty and destitution though it does not otherwise contribute significantly to the reduction of income inequality the poor would be doubly disadvantaged without common property access to forest products conservation measures entailing curtailment in the right to common access pose a dilemma this issue is explored here

estimation methods in portfolio selection and the effectiveness of short sales restrictions uk evidence forecasting the mean returns vector and the covariance matrix is a key feature in implementing portfolio theory the performance of the bayes stein method for forecasting these parameters for use in the markowitz model with and without short sales was compared with that of seven other estimation methods and three alternative portfolio selection techniques this paper represents the first large scale empirical investigation of the usefulness of the bayes stein approach using historical data this data was drawn from the london stock exchange in contrast to earlier studies the relative performance of bayes stein was mixed while it produced reasonable estimates of the mean returns vector there were superior methods e g overall mean for estimating the covariance matrix when short sales were permitted when short sales were prohibited actual portfolio performance was clearly improved although there was little to choose between the various estimation methods

changing patterns of uk poverty 1997 2004 it has been noted that the failure to meet the target set by the government for reducing the head count ratio of child poverty in britain is partly due to the success of government policy in generating economic growth apart from ignoring the argument that absolute poverty is not a meaningful idea this apology for the failure of government to meet poverty targets also misses wider problems embedded in recent trends in the household income distribution for example inequality measures sensitive to the distribution of income amongst the poor suggest that the experience of those who remained poor may have worsened

distributive implications of an aging society abstract the paper reviews recent research on the impact of an aging population on the distribution of income after briefly discussing the demographic conditions responsible for population aging a short account is given of demographic trends in the industrialized world in order to disentangle the many potential channels by which an aging society affects the dispersion of income several levels of aggregation are distinguished the paper differentiates between intra and intergenerational issues between direct and indirect demographic inequality effects and between the distribution of current and lifetime income it emphasizes the critical role of age related redistributive tax transfer systems like public pension schemes and health care systems sources of distributional policy conflicts are identified at both the cross section level and the lifetime level of income inequality the institutional design of intergenerational burden sharing individual disincentive reactions shifts in age income profiles related to cohort size and politico economic repercussions are shown to drive the relation between population aging and income distribution in distinct and partially opposite ways

government intervention as a bequest substitute abstract a subsequent generations model is used in order to characterize consumption allocation under the future generation s income uncertainty altruistic concerns towards future generations give rise to precautionary bequests which act as a hedge on risk it is shown that given a first order correlation between mean future income and the present generation s income government can provide a pareto improvement through a tax transfer policy with universal participation this policy acts as a substitute for precautionary bequests distributional aspects of government tax transfer policy are also discussed

the measurement of inequality and poverty a policy maker s guide to the literature abstract mathematical measures of poverty and inequality embody values that reflect the historical political social intellectual and ethical forces prevalent at the time of their formulation so that policy makers may select measures of poverty and inequality that are consistent with their values it is important to make explicit the value judgements implicit in the measures models designed to measure poverty and inequality fall into four categories absolute poverty measures absolute income measures relative poverty measures and relative inequality measures this article examines the principal models within each category and discusses the assumptions limitations and values implicit in the models

looking at the population problem through the prism of heterogeneity welfare and policy analyses upon introducing heterogeneity and dynamics into a model of the demand for children a problem of optimal population is defined and analyzed it is shown that from the perspective of social welfare better educated individuals produce too few children while less educated individuals produce too many children and all individuals invest too little in the education of their children the impact of several policy tools geared at addressing the population problem is investigated in particular how child allowances and other tax subsidy policies can be harnessed to enhance welfare and how and why early childhood education programs can mitigate the population problem

more powerful portfolio approaches to regressing abnormal returns on firm specific variables for cross sectional studies ols regression ignores both heteroscedasticity and cross correlations of abnormal returns therefore tests of regression coefficients are weak and biased a portfolio ols pols regression accounts for correlations and ensures unbiasedness of tests but does not improve their power we propose portfolio weighted least squares pwls and portfolio constant correlation model pccm regressions to improve the power both utilize the heteroscedasticity of abnormal returns in estimating the coefficients pwls ignores the correlations while pccm uses intra and inter industry correlations simulation results show that both lead to more powerful tests of regression coefficients than pols cross sectional studies that attempt to explain event period abnormal returns on firms securities by economic and or firm specific variables generally use cross sectional ordinary least squares ols regression abnormal returns of different securities are heteroscedastic of unequal variances and contemporaneous abnormal returns may be cross correlated ols ignores both heteroscedasticity and correlations therefore it leads to inefficient and biased tests of significance of regression coefficients for these reasons sefcik and thompson 1986 suggested using generalized least squares gls regression when sufficient data are available to obtain a reliable estimate of the covariance matrix of abnormal returns and portfolio time series ols pols regression should be used when that matrix cannot be estimated reliably in pols regression a cross sectional ols is used to estimate the regression coefficients and a time series of portfolio of estimation period unsystematic returns to estimate the standard errors of those estimates the resulting coefficients estimates are unbiased and their standard errors account for correlations among abnormal returns thus unbiasedness of tests is insured however concern for the power of tests lingers on because cross sectional

efficiency with endogenous population growth in this paper we generalize the notion of pareto e ciency to make it applicable to environments with endogenous populations two di erent e ciency concepts are proposed p e ciency and a e ciency the two concepts di er in how they treat people that are not born we show how these concepts relate to the notion of pareto e ciency when fertility is

the population problem theory and evidence this study is concerned with the relationships among population growth poverty and environmental degradation with particular focus on the situation in developing countries the author rejects the concept of a general theory of fertility behavior in favor of an interpretation of these relationships which might be applicable to certain situations in the poorest parts of the indian subcontinent and sub saharan africa such situations include unacceptable risks of maternal death for poor illiterate women and a condemnation to extreme poverty in conditions of the deterioration of local resources and of the environment the author concludes that population growth rates are too high in certain specific areas and that an appropriate policy reaction to such conditions would be to try to change the options that men and women face so that their reasoned choice would be to lower their fertility

a portfolio approach to estimating the average correlation coefficient for the constant correlation model this paper presents a portfolio approach to estimating the average correlation coefficient of a group of stocks which are considered for portfolio analysis the average correlation coefficient has been shown to produce a better estimate of the future correlation matrix than individual pairwise correlations the advantage of the approach described here is that it does not require the estimation of pairwise correlations for estimating their average a major obstacle to the implementation of markowitz s 1952 mean variance portfolio selection model is the difficulty in estimating the required inputs particularly troublesome are the pairwise correlations among all stocks which are being considered for inclusion in a portfolio the sheer number of required correlation estimates makes it highly impractical to examine a large number of stocks sharpe s 1963 single index model sim was developed in response to this problem it assumes correlations with a common index to be the only source of covariation among stock returns the necessary number of estimations is much reduced since only the correlations with the index need be considered accumulated empirical evidence suggests that the sim is misspecified bernard 1987 provides evidence of significant intra industry cross sectional correlations in contemporaneous market model residuals this evidence implies that correlations with a common index will not capture the total covariation among stock returns an alternative simple structure is the constant correlation model ccm which uses the historical average correlation coefficient for the future in two related articles elton and gruber 1973 and elton gruber and urich 1978 have shown that despite its simplicity the ccm produces better forecasts of the future correlation matrix than those obtained from the sim or the full historical correlation matrix the superior performance of the ccm should make it an attractive alternative to the sim although simple portfolio selection procedures have been developed for the ccm by elton gruber and padberg 1976 1977a b the computational problem will still be large if the full correlation matrix needs to be estimated to compute the average correlation we present below a simplified but exact method of estimating the average correlation coefficient which can be applied

endogenous fertility and the henry george theorem abstract models of endogenous demographic change deal with population size as an additional object of the welfare analysis in these models the overlapping generations olg model serves as the basic framework in club theory too population size is treated as an endogenous variable in local public goods lpg models the so called henry george theorem which requires local public expenditures to be financed by a 100 tax on aggregate land rent is known as a first order condition for club efficiency the present paper establishes and exploits an isomorphism between steady states of the olg model and allocations of the lpg model the paper revisits samuelson s fallacy concerning his goldenest golden rule and it explores institutional arrangements that sustain the optimum growth of population

concepts of poverty and the poverty line abstract various approaches adopted in developed economies to distinguishing between the poor and non poor to setting a poverty line are reviewed these include the budget standard food ratio official subjective and relative poverty line methods as well as the analysis of indicators of deprivation there has been significant progress in recent years in the degree of sophistication involved and a movement away from approaches with a quasi absolute background however all the methods face formidable problems at conceptual and empirical levels and no single approach is likely to dominate

capital accumulation income distribution and endogenous fertility in an overlapping generations general equilibrium model abstract this paper studies the intertemporal relationships among population growth income distribution inter generational social mobility skill composition of the labor force and household income in an overlapping generations general equilibrium model that aggregates household decisions regarding fertility savings and investment in human capital of children it shows that as a consequence of endogenous fertility the equilibrium path attains steady state from the second generation income tax transfer child taxation and social security taxation policies that can be devised to affect these variables are also analyzed the model provides a structural explanation for the inverse household income child quantity and negative child quality quantity relationships that are observed in developing countries it also shows that group interests may hinder the emergence of perfect capital markets with private initiatives

on the optimal selection of portfolios under limited diversification abstract we address the problem of selecting portfolios which maximize the ratio of the average excess return to the standard deviation among all those portfolios which comprise at most a pre specified number k of securities under the assumptions of constant pairwise correlations and no short selling we argue that the simple ranking procedure of elton gruber and padberg effectively solves the problem for all values of k and that as a function of k the optimal ratio increases at a decreasing rate we also clarify why further generalization or extension of our results to other situations is improbable

dynamic poverty decomposition analysis an application to the philippines summary in this paper we propose a new method of poverty decomposition our method remedies the shortcomings of existing methods and has some desirable properties such as time reversion consistency and subperiod additivity our decomposition integrates the existing methods of growth redistribution decomposition and sector based decomposition because it allows us to decompose the change in poverty into growth and redistribution components for each group e g regions or sectors in the economy our decomposition works well in cases where only partial data are available for some periods it is also flexible and can be extended to have the following six components population shift within region redistribution between region redistribution nominal growth inflation and methodological change components the empirical application of the six way decomposition to the philippines for the period 1985 2009 shows that important policies for poverty reduction may differ across regions for example the autonomous region in muslim mindanao would need growth enhancing policies whereas eastern visayas would need policies to improve the income distribution our decomposition method has a wide applicability and may complement the poverty profile approach

the old age security hypothesis revisited abstract children s altruism toward parents is allowed in a two overlapping generations model with endogenous fertility parents raise children because when retired they expect gifts from their children who are essentially a capital good individuals behavior between generations is examined by analyzing a nash equilibrium which is then compared with a social planner s optimal allocation the pay as you go public pension program is viewed as the optimal gifts from the optimal allocation when the latter is implemented the effect on fertility of the introduction of a capital market is also analyzed the validity of the old age security hypothesis is shown to depend on the parameters of utility and cost functions

cross sectional dependence and problems in inference in market based accounting research this paper provides a framework and some empirical evidence to evaluate the seriousness of problems in inference that arise in stockreturn based studies when the data are cross sectionally dependent the study is motivated on the grounds that statistical procedures designed to address such problems are often infeasible and even when they can be implemented they sometimes introduce other more serious difficulties thus researchers have frequently adopted an approach that ignores the cross sectional dependence e g ordinary least squares ols the objective of this paper is to help identify the contexts in which ignoring the dependence would lead to serious misstatement of significance levels cross sectional dependence in stock returns data is likely to exist when at least some of the returns are sampled from common time periods this would be the case in all studies of the reaction of stock prices to a

the simple analytics of contraceptive social marketing abstract contraceptive social marketing csm programs have been advocated for the dissemination of contraceptives in developing countries this paper considers csm programs from a simple economic perspective it begins with a review of the major economic models of private fertility determinants and the associated private demand for contraceptives and then adds private contraceptive supply to obtain market equilibrium next inefficiencies due to negative externalities of added children and due to imperfect information and distributional concerns are considered finally this framework is utilized to point to lacunae in our knowledge of csm programs and their impact and to suggest some promising areas for research

pay as you go public pensions with endogenous fertility abstract veall s 1986 model of public pensions is generalized to allow for endogenous fertility we show that gifts to the old which can be viewed as social security contributions are always positive in the steady state an optimal stationary allocation is sustainable if savings are zero and fertility is exogenous however the optimal allocation is in general not sustainable in particular if a government enforces a social security plan setting the pension level at the optimal gifts and individuals optimize under the pension constraint the resulting sustainable outcome is in general different from either the optimal or nash outcome

the pay as you go pension system as fertility insurance and an enforcement device a paygo system may serve as insurance against not having children and as an enforcement device for ungrateful children who are unwilling to pay their parents a pension in fact the latter was bismarck s historic motive for introducing this system it is true that the paygo system reduces the investment in human capital but if it is run on a sufficiently small scale it may nevertheless bring about a welfare improvement if on the other hand the scale of the system is so large that parents bequeath some of their pensions to their children it is overdrawn and creates unnecessarily strong disincentives for human capital investment

measuring the intensity of poverty among subpopulations applications to the united states this paper proposes an approach to measuring the intensity of poverty within a group relative to that of the population to which the group belongs a poverty intensity index is presented which is easy to interpret and satisfies a number of desirable properties the intensity of poverty among racial and residential groups in various geographical locations is measured using 1980 united states census data

measuring welfare poverty and inequality a class of poverty measures is identified the members of which satisfy strong monotonicity and transfer conditions these measures are closely related to indices of income inequality based on the notion of a mean equivalent income a restriction on the class of admissible measures allows poverty to be interpreted in terms of the loss in mean equivalent income resulting from the fact that some people are poor copyright 1987 by royal economic society

aggregate poverty measures the way poverty is measured is important for an understanding of what has happened to poverty as well as for anti poverty policy evaluation sen s 1976 pathfinding work has motivated many researchers to focus on the way poverty should be measured a poverty measure argued by sen should satisfy certain properties or axioms and the desirability of a poverty measure should be evaluated by these axioms during the last two decades many researchers have adopted the axiomatic approach pioneered by sen to propose additional axioms and develop alternative poverty measures the objective of this survey is to provide a clarification on the extensive literature of aggregate poverty measures in this survey we first examine the desirability of each axiom the properties of each poverty measure and the interrelationships among axioms the desirability of an axiom cannot be evaluated in isolation and some combination of axioms may make it impossible to devise a satisfactory poverty measure some axioms can be implied by other axioms combined and so are not independent some others are ad hoc and are disqualified as axioms for poverty measurement based on the interactions among axioms we identify the core axioms which together have a strong implication on the functional form of a poverty measure we then review poverty measures that have appeared in the literature evaluating the interrelationships among different measures and examining the properties of each measure the axioms each measure satisfies violates are also summarized in a tabular form several good poverty measures which have not been documented by previous surveys are also included

technological change and the distribution of schooling evidence from green revolution india abstract in this paper we develop a two strata general equilibrium model of human capital acquisition with endogenous school construction that permits an assessment of the relative impacts of technological change and school availability on schooling investments in landless and landed households and illuminates how these choices interact through the adult and child labor markets the implications of the model are tested using a unique household level panel data set which constitutes a representative sample of rural india during the peak period of agricultural innovation associated with the green revolution 1968 1982 the empirical results indicate that the operation of the market for child labor worsens the distributional impact of agricultural productivity on school investment across landless and landed households as landless child labor is used to replace landed child labor lost due to increased child school attendance in landed households the results also suggest however that the allocation of school construction diminishes the adverse impact of technical change on the gap between landless and landed schooling investment

economic consequences of an aging population pip europe and japan are experiencing the aging of their populations aging implies a restructuring of the economy political issues which arise in an aging society include 1 a voting majority for the interests of the elderly 2 a voting majority of females 3 the domination of the decision power in corporate and similar ruling bodies and 4 unemployment or a long wait for promotion for younger people economic issues of an aging society include 1 population aging often occurs under reduced rates of growth of per capita national income 2 the relative economic status of the elderly very much depends on the currently existing tax transfer systems and 3 the income of families whose head is over age 65 has generally been more unequally distributed than the income for younger families issues concerning the labor supply of the elderly include 1 the availability of pension income and health limitations strongly influence decisions to retire and 2 older workers become disheartened and choose early retirement when facing bad reemployment prospects in general population aging is likely to have its most substantive effect on the overall level of productivity in an economy where technical knowledge is changing rapidly and strong competition necessitates a high degree of adaptability of the labor force

a note on a troublesome axiom for poverty indices in a recent article in this journal clark hemming and ulph i98i henceforth chu review the recent literature on welfare indices for the measurement of poverty and propose two new such indices the axiomatic approach to the measurement of poverty which was initiated by sen 1976 has been from the very beginning plagued with difficulties with the transfer axiom and chu s paper is not altogether immune we show that one of their two indices does not satisfy the axiom and we take this opportunity to complement their review with a few remarks in particular we show that the index proposed by kakwani ig80a has the same defect let y be a non negative income vector and z the poverty line the number of people with income no larger than the poverty line is q and the total population n assuming y y2 n y gi z yi i i q are the income gaps following chu the reader is referred to their paper for the motivation let us define the equally distributed equivalent income gap as