supply side macro economics this paper tests new classical and keynesian explanations of output determination within an encompassing factor utilization model wherein the output decision by producers is modelled as the choice of a utilization rate for employed factors in this encompassing model the ratio of actual to normal output with the latter defined by a nested ces vintage production function with capital energy and employment as factor inputs is explained by unexpected sales a keynesian element abnormal profitability one component of which is the lucas price surprise effect and abnormal inventories results using canadian data show that the keynesian and new classical elements contribute explanatory power as does the production function based measure of normal output while each of these partial models is strongly rejected in favour of the encompassing model the highly structured factor utilization model is also seen to fit better than an unstructured var model u s data confirm the results and show that there are significant effects from abnormal demand profitability and inventory levels even if the labour and capital components of normal output are defined using hours and utilized capital rather than employment and the capital stock the results are also confirmed using alternative output and hence input concepts using a translog function instead of a ces function to define normal output and using data for several other major industrial countries this abstract was borrowed from another version of this item

variable returns to agglomeration and the effect of road traffic congestion abstract this paper investigates the links between returns to urban density productivity and road traffic congestion a generalised translog production inverse input demand function is estimated to test for the existence of variable returns to agglomeration in manufacturing construction and service industries two separate measures of urban density in which proximity is represented by straight line distance or by generalised cost are constructed and included in the translog to identify the effect of road traffic congestion the results show that for some sectors of the economy diminishing returns to urban density can set in causing the magnitude of agglomeration elasticity to fall as effective densities increase the generalised cost based measure of agglomeration produces higher elasticities because it captures both time and distance dimensions of density a comparison of spatial variance in estimates indicates that road traffic congestion plays an important role in explaining diminishing returns for the most highly urbanised locations

efficient estimation of structural hedonic systems when a product or job is not homogeneous but instead embodies several different characteristics it is difficult to use price information about the product to learn anything about the structure of the supply and demand for the embodied characteristics s rosen 1974 highlighted this problem and suggested that the estimated slope of the price characteristic relation the marginal price could be used instead of standard prices in otherwise standard estimation of the supply and demand system however recently brown and h rosen 1982 brown 1983 and mendelsohn 1985 have pointed out that this method is applicable only when the marginal price depends on variables not found in the supply and demand equations in this paper we show that since the hedonic system matches consumers with high demand for the characteristic to firms with low costs of producing it exogenous variables from the supply equation are not valid instruments in the demand equation and vice versa therefore even when the brown rosen mendelsohn brm condition holds estimation of the identified system by standard simultaneous equations techniques will produce inconsistent estimates we then show that the system can be identified despite the absence of the standard instruments and develop an efficient estimator for the identified system since cross equation constraints make estimation of hedonic systems particularly vulnerable to specification error we also consider some specification tests in this section we consider a simple model with only one characteristic the extension to several characteristics is straightforward the basic model developed by rosen can be described as follows firms with different technologies produce products which provide consumers with varying levels of some characteristic z each consumer buys one unit of the good the product is such that an amount of z from two units of the good provides less utility than the same amount of z embodied in a single unit e g acceleration in a car safety in a job consumers

the estimation of demand parameters in hedonic price models this paper shows that the econometric problem of estimating hedonic demand parameters is not a standard identification problem caused by demand supply interaction as has been often assumed estimation procedures based on this assumption lead to biased results the hedonic estimation problem is instead caused by the endogeneity of both prices and quantities when households face a nonlinear budget constraint an instrumental variables solution to this problem is suggested using instruments that exogenously shift the budget constraint

pensions and wages an hedonic price theory approach this paper examines whether a trade off exists between the level of pension benefits and wages the 1983 survey of consumer finance is used to match detailed information on pension plans to worker characteristics for a random sample of the population the pension wage tradeoff is estimated using both a contractual model of the labor market and the spot market model used in previous studies the results indicate a large negative tradeoff in the contractual model but only a negligible tradeoff in the spot market model results from estimating the underlying structural equations for pensions are also presented copyright 1992 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

evaluating the effects of childcare policies on children s cognitive development and maternal labor supply to explore the role of childcare policies in the development of early cognitive skills this paper jointly estimates a cognitive achievement production function and a dynamic discrete choice model of maternal labor supply and childcare decisions using counter actuals from the model i investigate how the designs of two childcare programs head start and childcare subsidies affect the formation of cognitive skills through maternal work and childcare decisions the results suggest large impacts on cognitive skills from expanding head start to current noneligibles and negligible impacts of subsidies on cognitive skills of current eligibles abstract from author

declining city productivity and the growth of rural regions a test of alternative explanations prior to the 1970s the u s witnessed a net flow of migrants from its nonmetropolitan to its metropolitan region since then however a dramatic reversal of this long standing tendency for people to concentrate in metropolitan places has been observed nonmetropolitan places have gained migrants largely as the result of increased outmigration from metropolitan areas an open question has been to what extent the employment profile between metropolitan and nonmetropolitan places parallels that of population this paper introduces a data series compiled from county business patterns that is used to analyze the employment trends for the first time the analysis reveals that not only is total employment growing fastest in nonmetropolitan counties but it also appears that the turnaround in employment growth preceded the reversal in the rate of population increase manufacturing which had faster nonmetropolitan growth rates even during the 195os appears to have led in the development of nonmetropolitan counties this shift of manufacturing has attracted other sectors as well as people to nonmetropolitan places part of the recent growth of nonmetropolitan counties represented nothing more than a continuation of suburbanization or spillover of people and jobs which permitted one more outward bound into adjacent nonmetropolitan counties but there is more to nonmetropolitan development than simply metropolitan spillover nonmetropolitan counties far removed from metropolitan ones are also growing faster than metropolitan counties it is shown that this rural renaissance is part of a general deconcentration

the role of labor costs in regional capital formation high labor costs in large midwestern metropolitan areas have significantly reduced their manufacturing capital stock for the period 1974 to 1978 the authors estimate that sixteen metropolitan areas in the midwest taken together had approximately 2 8 billion less capital stock than they would have had if their labor costs had been at the national average this difference is equal to 4 percent of the capital stock in these areas the results are simulated from the estimation of a labor demand equation that is derived from a generalized leontief cost function copyright 1987 by mit press

the characteristics model hedonic prices and the clientele effect in this paper the characteristics model of lancaster is reconsidered it is shown by example that equilibrium prices need not be linearly decomposable it does follow that equilibrium prices must be a convex function of characteristics however further it is shown that this fact holds independent of the form of firm competition e g perfect or monopolistic finally the predictions of the theory are discussed in the context of two empirical examples

trading off positive and negative service changes in childcare a choice experiment using a latent class modelling approach theoretically the choice of childcare mode should be influenced by the quality of the childcare attributes however such preference relations have been difficult to identify in past studies one

household strategies and rural livelihood diversification this article reviews the recent literature on diversification as a livelihood strategy of rural households in developing countries with particular reference to sub saharan africa livelihood diversification is defined as the process by which rural families construct a diverse portfolio of activities and social support capabilities in order to survive and to improve their standards of living the determinants and effects of diversification in the areas of poverty income distribution farm output and gender are examined some policy inferences are summarised the conclusion is reached that removal of constraints to and expansion of opportunities for diversification are desirable policy objectives because they give individuals and households more capabilities to improve livelihood security and to raise living standards

rural livelihood diversification in sub saharan africa a literature review abstractthis article provides a comprehensive review of the literature on the nature and evolution of rural livelihood diversification in sub saharan africa and the situation regarding smallholders it reveals mixed findings about the causes and consequences of livelihood diversification on rural smallholders adopting this strategy a lot of evidence from the literature suggests that it is relatively better off smallholders with sufficient assets who achieve successful livelihood diversification mainly by exploiting opportunities and synergies between farm and nonfarm activities because of asset constraints increase in incomes and wealth based on livelihood diversification has not yet benefitted the large majority of smallholders

multidimensional poverty in crisis lessons from zimbabwe abstractzimbabwe experienced an acute social political and economic crisis from 2001 to 2008 and is now on a recovery path this paper explores changes in poverty between 2001 2007 and 2011 2012 using an alkire foster multidimensional poverty index results indicate a large increase in poverty across multiple dimensions of household wellbeing between 2001 and 2007 the start of the crisis peak followed by a decrease in poverty between 2007 and 2011 2012 during the recovery period decomposition of the index shows significantly different trends in poverty dimensions over time with implications for short and long term social assistance policies

productivity in the united states trends and cycles productivity growth in the us has taken a sharp downturn in recent years two experts provide a new body of comparative data on productivity since 1948 by major sector and industry the book analyzes 20 industries to highlight trends and fluctuations in productivity and to provide a better context for the discussion of policy options the authors set forth the causes of productivity advances based on growth accounting for the business economy as a whole they detail interindustry regressions with particular reference to the productivity slowdown since 1966 they look at both the traditional measure of productivity labor output per hour and the more recently developed measure of total factor productivity which takes into account capital as well as labor inputs the quarterly and annual data are used to relate changes to other basic variables such as factor prices unit costs and product prices an appendix presents data for 35 industries 42 references 8 figures 30 tables

a productivity growth interpretation of the labour demand shift share model graham d j and spence n 1998 a productivity growth interpretation of the labour demand shift share model reg studies 32 515 525 this paper proposes modifications to the labour demand shift share model set out in this journal by casler 1989 to allow for its implementation and to extend its use to analyses of regional labour productivity growth the paper begins by briefly outlining the theoretical basis for the shift share method provided in casler s paper and then goes on to present a specific reformulation of the model which incorporates input price and technological growth effects on labour demand these additional effects are defined as productivity components within the shift share model and the empirical and theoretical implications of the modifications made are discussed in the paper an empirical example of the results obtained through the modified labour demand shift share model is then provided for selected british regions the paper concludes by outlining potential uses of the modif

the demand for child care quality an hedonic price theory approach i use an hedonic price theory approach to estimate the demand for child care quality two complementary surveys the national child care survey 1990 nccs and the profile of child care settings study pcs allow me to derive an implicit price for staff to child ratio i use this price as an explanatory variable in a demand equation for this quality attribute direct purchase of service contracts or voucher programs by subsidizing only those providers that satisfy state regulatory requirements effectively lower the implicit price of regulated attributes such as staff to child ratio results of this study suggest that such tied subsidies have almost no influence on the demand for child care quality

estimating the demand for the characteristics of housing a hstract estimates of the demand for the characteristics contained in a differentiated product such as housing can be based on hedonic regressions however previous studies have not dealt with several potential problems in such estimation a more appropriate framework for the estimation is provided in this paper also data from a number of cities are used to eliminate the identification problem and the endogeneity of the marginal prices derived from non linear hedonic equations is considered in the estimation the results on own and cross price elasticities expenditure elasticities and the effects of socio economic vafiables accord well with expectations

adverse incorporation and microfinance among cross border traders in senegal summary this paper highlights the relevance of adverse incorporation as a neglected theoretical approach to debates on microfinance through a case study of cross border traders in senegal although women s organizations do not exclude even the poorest women traders in remote areas were unable to access credit due to particularly harsh standards of joint liability and adverse relations with donors lenders and elite women meanwhile the peer monitoring function of group microcredit schemes is challenged by the fact that traders are strikingly uncritical of defaulting borrowers findings highlight the detrimental consequences of donors misconceptions regarding women s organizations and economic activities

price quality and income in child care choice recent legislation may substantially expand federal assistance in paying for child care this paper examines the potential effects of three aspects of federal assistance reducing child care price through vouchers or grants to providers improving its quality through incentives or regulation and increasing family income through tax credits on the child care choices employed mothers make the data come from the 1985 wave of the national longitudinal survey of youth ohio state university both multinomial and universal logit models are used the results suggest that price is a critical variable in child care choice the higher the price the lower the probability a mode of care will be chosen parents do not consistently select high quality care although overall quality improvements may increase the use of family day care mothers who earn more per hour and families who have higher incomes other than the mother s earnings are more likely to select center care over other modes consequently subsidizing child care expenditures directly through vouchers and reduced fees or increasing other family income through tax credits consistently increases the use of center based programs all else equal

productivity growth in british manufacturing spatial variation in the role of scale economies technological growth and industrial structure this paper investigates the role of scale economies technological growth and industrial structure in creating spatial variation in manufacturing labour and total factor tfp productivity in britain separate estimates of a translog specification are presented for british manufacturing firms located in defined areas of the country over the period 1994 1998 the results show that tfp change due to scale economies and technological growth has been of much less important in influencing the output growth of manufacturing firms than input growth or industrial structure regarding the components of tfp technological growth has been the dominant force at play the analysis of average labour productivity identifies shifts to other factors of production and industrial structure as being the main determinants of change scale economies appear to have had a marginal role the results identify spatial patterns indicating that more favourable locational effects arise for firms in areas adjacent to large urban centre

booming sector and de industrialisation in a small open economy this paper presents a theoretical analysis of the dutch disease the phenomenon whereby a boom in one traded goods sector squeezes porfitability in other traded goods sectors both by directly bi

childcare quality and pricing evidence from wisconsin childcare prices vary dramatically both between and within states we identify the effects of demographic and provider characteristics on childcare pricing but focus primarily on whether unique government provided information on childcare quality has an effect on pricing using provider level observations across three adjacent counties in southern wisconsin we find that this government provided information on childcare quality does not significantly affect pricing recognizing that information asymmetry may be the root cause of the insignificant relationship we test the relationship further within multiple subsamples and with alternative models only the lowest quality childcare providers are significantly associated with lower prices in areas that we hypothesize suffer from greater information asymmetry

is transient poverty different evidence for rural china we define transient poverty as the component of time mean consumption poverty at household level that is directly attributable to variability in consumption this can be thought of as a measure of vulnerability to falling consumption the non transient component then depends solely on mean consumption over time and we call this chronic poverty using robust semi parametric methods and household panel data for rural china we test whether transient poverty is determined by a process that is similar to chronic poverty commonly identified causes of poverty in this setting have weak explanatory power for transient poverty and some of the factors determining transient poverty do not matter to chronic poverty or even have the opposite effect successful policy responses to chronic poverty may still leave considerable transient poverty

simultaneity in the market for housing characteristics abstract the nature of simultaneity in the markets for housing characteristics is examined simultaneity is found to arise in the implicit markets for individual characteristics because of the presence of nonlinearity in the market hedonic price function for housing however this simultaneity is not the kind discussed by s rosen j political econ 82 34 55 1974 between firm supplies and household demands as a result the rosen suggestion of identifying demand with firm supply shifters is inappropriate among the alternative approaches to identification the most desirable involve use of data over two or more markets in which residence for a given household is exogenous to the choice of housing

the rise in unemployment a multi country study one of the most remarkable features of recent economic history has been the remorseless rise in unemployment throughout the industrialized countries however while the trend to higher unemployment is universal the experience of individual countries also differs widely the increase is especially marked within the european community where unemployment rates rival those reached in the interwar years by contrast in the scandinavian countries and japan unemployment is lower and has risen very much less experience in the united states lies somewhere between these extremes and in the last few years unemployment there has fallen sharply

geographical targeting for poverty alleviation an introduction to the special issue in the face of rising public deficits and shrinking public resources geographical targeting may be a viable way to allocate resources for poverty alleviation in developing countries efficiency can be increased and leakage to the non poor reduced substantially by targeting increasingly smaller areas this article and more generally the symposium on geographical targeting for poverty alleviation proposes several techniques for augmenting data to produce more detailed poverty maps it focuses on practical considerations in the design of geographically targeted poverty alleviation programs in particular it assesses the advantages and disadvantages of geographical targeting and describes how geographic information systems can be applied to improve poverty mapping

industrial output and factor input determination in an econometric model of a small open economy abstract a correct approach to the modelling of the supply structure of the manufacturing sector of a small open economy soe represents the single most important aspect of any economy model to date much of the empirical modelling of output and factor inputs in soes has been ad hoc and a serious source of model instability we comment on how these issues have been treated in regional and soe models we outline a general production function framework for the analysis of capacity output and long run factor demands in a world consisting of soes in the special case where the factors of production of each country are homothetic in world output and weakly separable from the factors in all other countries then the complex general formulation can be decomposed into a series of simpler ones such restrictions are not unrealistic we show how this approach can be implemented in practice empirical results for the irish economy are presented

the demand for quality in child care we estimate a model of demand for quality related attributes of child care group size staff child ratio and provider training the model is estimated jointly with equations for mode expenditure on and hours of care and the mother s labor supply the results show that a lower price of child care in a particular mode leads to substitution toward that mode and an increase in the use of paid child care a decrease in the price of care causes an increase in hours of care demanded and a decrease in the demand for qualityrelated attributes income effects on demand for quality are small

wage rigidity and unemployment in oecd countries real wage rigidity is often blamed for causing unemployment in the wake of adverse real shocks like changes in productivity or the terms of trade likewise nominal wage rigidity is blamed for causing unemployment in the wake of adverse nominal shocks like falls in nominal demand 1 however there has been relatively little systematic discussion of how these concepts should be defined some authors e g sachs 1979 have defined real wage rigidity as the opposite of nominal wage rigidity with the us nominally rigid and europe really rigid 2 the rigidity of european real wages has then been used to explain why europe has experienced a greater increase in unemployment since 1973 than the us but in this discussion real wage rigidity has not been measured in a way which would in fact predict how much unemployment would result from a given real shock the discussion has focused on the degree of nominal inertia in the system but the unemployment cost of real shocks does not depend primarily on the degree of nominal inertia but rather on the effect of unemployment in the phillips curve

are the poor less well insured evidence on vulnerability to income risk in rural china the authors test how well consumption is insured against income risk in a panel of sampled households in rural china they estimate the risk insurance models by generalized method of moments treating income and household size as endogenous insurance exists for all wealth groups although the hypothesis of perfect insurance is universally rejected those in the poorest wealth decile are the least well insured with 40 percent of an income shock being passed on to current consumption by contrast consumption by the richest third of households is protected from almost 90 percent of an income shock the extent of insurance in a given wealth stratum varies little between poor and nonpoor areas

how access to irrigation influences poverty and livelihoods a case study from sri lanka abstractthis study combines a livelihoods approach with a regression approach to quantify the effectiveness of irrigation infrastructure investment on improving people s livelihood strategies using a unique dataset based on households in southern sri lanka and a natural experimental setting we estimate from a two stage income regression model to show that irrigation access has a positive effect on income through livelihood choices we also show through qualitative approaches that factors not linked to irrigation infrastructure may contribute to changes in livelihood portfolios in addition we highlight factors that result in certain households being unable to move out of poverty despite access to the improved irrigation infrastructure

livelihoods and chronic poverty in semi arid zimbabwe abstract remoteness and geographic natural physical human and social capital are contrasted with social and political exclusion in explaining persistent rural poverty we found that persistent poverty was strongly associated with the structural poverty of zimbabwe s semi arid communal areas relative urban proximity assisted income diversification and improvement in a very poor socially and politically excluded area less excluded but remote areas remained poor but not as poor as the excluded population livelihoods changed and diversified more in the nonremote area speeding poverty reduction as measured by an index of perceived change we conclude with what policy options and sequence might support the inclusion of chronically poor people

firm location and city size reduced productivity advantages as a factor in the decline of manufacturing in urban areas abstract this paper develops a model of firm location and city size that arrives at theoretical conclusions that differ from those of other authors comparative statics results suggest that changes in national wage levels and productivity levels create no determinate dis advantage for large cities relative to small ones as sites for manufacturing activity increased wage and reduced productivity premiums of large cities however result in unambiguous disadvantages statistical analysis indicates that the productivity advantages of large cities have declined in as many as eight two digit manufacturing industries that provide more than one third of metropolitan production worker employment

stabilization allocation and the 1970s oil price shocks the stabilization and allocation effects of two types of policy adopted by canada in the 1970s to shelter the domestic economy from the 1973 74 and 1979 80 oil shocks are analyzed in this paper after outlining the model estimates of the effects of alternative canadian energy pricing strategies are presented the stabilization and allocation effects of the relatively expansionary public spending policies in canada during the world industrial recession after the first oil shock are compared

hedonic prices and implicit markets estimating demand and supply functions for differentiated products in choosing the level of quality to purchase the buyer of a differentiated product also chooses a point on the marginal price schedule for that product hence in general the demand functions for product characteristics cannot be consistently estimated by ordinary least squares market equilibrium results in a matching of characteristics of demanders and suppliers this matching restricts the use of buyer and seller characteristics as instruments when estimating demand and supply functions for product characteristics the paper develops these issues a stochastic structure for hedonic equilibrium models is then proposed identification results are presented and estimation procedures are outlined

constrained output maximization and us agriculture this paper presents a framework for estimating an indirect production function and then applies it to aggregate us agriculture issues addressed include tests of standard hypotheses about the underlying technology homotheticity neutral technical change etc as well as examination of consistency in aggregation and the effects of changes in the level of aggregate expenditure on farm output since there already exist several studies empirically describing agricultural production technologies with indirect objective functions one might fairly ask whether this paper really breaks any new ground we feel that it does one reason is that existing studies e g binswanger 1974 lopez 1980 ball and chambers 1982 ray 1982 and weaver 1983 all rely on either profit or cost functions to date there appears to be only one study using an indirect production appelbaum 1979 and it is not in agriculture this seems unfortunate because there are many instances in agriculture for which an indirect productio

are workers close to cities paid higher nonagricultural wages in rural china in the present study we investigate whether workers close to cities are paid higher non agricultural wages than workers in outlying rural areas we find that workers close to urban areas not only benefit from more opportunities to engage in non agricultural activities but also from better paid jobs in addition distance exhibits a strongly nonlinear impact distance always has a negative impact on wages but the effect is more detrimental the closer the village is to the urban center we also find evidence of urban hierarchy effects workers living close to bigger cities are paid higher wages finally we provide evidence on the transmission channels at work