can falling supply explain the rising return to college for younger men a cohort based analysis although the college high school wage gap for younger u s men has doubled over the past 30 years the gap for older men has remained nearly constant in the united kingdom and canada the college high school wage gap also increased for younger relative to older men using a model with imperfect substitution between similarly educated workers in different age groups we argue that these shifts reflect changes in the relative supply of highly educated workers across age groups the driving force behind these changes is the slowdown in the rate of growth of educational attainment that began with cohorts born in the early 1950s in all three countries

wealth distribution in life cycle economies abstract this paper compares the age wealth distribution produced in life cycle economies to the corresponding distribution in the us economy the idea is to calibrate the model economies to match features of the us earnings distribution and then examine the wealth distribution implications of the model economies the findings are that the calibrated model economies with earnings and lifetime uncertainty can replicate measures of both aggregate wealth and transfer wealth in the us furthermore the model economies produce the us wealth gini and a significant fraction of the wealth inequality within age groups however the model economies produce less than half the fraction of wealth held by the top 1 percent of us households

consumer demand and the life cycle allocation of household expenditures the purpose of this paper is to estimate the parameters of household preferences that determine the allocation of goods within the period and over the life cycle using micro data in doing so the authors are able to identify important effects of demographics labor market status and other household characteristics on the intertemporal allocation of expenditure they test the validity of the life cycle model using excess sensitivity tests and find that controlling for demographics and labor market status variables can largely explain the excess sensitivity of consumption to anticipated changes in income

the amenity value of english nature a hedonic price approach using a hedonic property price approach we estimate the amenity value associated with proximity to habitats designated areas domestic gardens and other natural amenities in england there is a long tradition of studies looking at the effect of environmental amenities and disamenities on property prices but to our knowledge this is the first nationwide study of the value of proximity to a large number of natural amenities in england we analysed 1 million housing transactions over 1996 2008 and considered a large number of environmental characteristics results reveal that the effects of many of these environmental variables are highly statistically significant and are quite large in economic magnitude gardens green space and areas of water within the census ward all attract a considerable positive price premium there is also a strong positive effect from freshwater and flood plain locations broadleaved woodland coniferous woodland and enclosed farmland increasing distance to natural amenities such as rivers national parks and national trust sites is unambiguously associated with a fall in house prices our preferred regression specifications control for unobserved labour market and other geographical factors using travel to work area fixed effects and the estimates are fairly insensitive to changes in specification and sample this provides some reassurance that the hedonic price results provide a useful representation of the values attached to proximity to environmental amenities in england overall we conclude that the housing market in england reveals substantial amenity value attached to a number of habitats designations private gardens and local environmental amenities

borrowing constraints college enrollment and delayed entry in this article i propose and estimate a dynamic model of education borrowing and work decisions of high school graduates i examine the effect of relaxing borrowing constraints on educational attainment by simulating increases in the amount students are permitted to borrow from government sponsored loan programs my results indicate that borrowing constraints have a small impact on attainment the removal of education related borrowing constraints raises bachelor s degree completion by 2 4 percentage points tuition subsidies are necessary to obtain larger increases i find that higher subsidies for average ability students are the most cost effective targeted tuition subsidies

critical natural capital a socio cultural perspective abstract critical natural capital cnc is commonly defined as that part of the natural environment which performs important and irreplaceable functions so far the challenge to determine the criticality of natural capital nc has mainly been taken up by the natural sciences and the critical functions of nature mainly associated with its life support and ecological services little attention has been paid to the socio cultural functions of nc and to their values for the health and well being of human societies the aim of this paper is to encourage a more complete accounting of the critical functions of nc and its associated values by highlighting the importance of the information functions health recreation amenity education heritage etc for the quality and sustainability of human life it is argued that despite their immaterial and often intangible nature these functions provide many socio economic benefits which might be assessed through both qualitative and quantitative valuation methodologies integration of ecology sociology and economics is essential to operationalize the concept of cnc as a tool for more balanced environmental planning and decision making

the effectiveness of government debt and transfers as insurance abstract government debt and redistributive taxation can help people to smooth consumption when facing uninsurable individual specific risk i examine the effects that variations in public debt and transfers have on risk sharing efficiency and the distribution of resources i find that risk sharing can be improved significantly by both debt and transfers but that debt has adverse effects on equity when used in isolation debt will enhance welfare if transfers are lower than optimal however the beneficial effects of public debt vanish if transfers are used optimally

on the distributional effects of reducing capital taxes this article asks whether household heterogeneity and market incompleteness have quantitatively important implications for the welfare effects of tax changes we compare a representative agent economy to an economy in which households face idiosyncratic uninsurable income risk the income process is consistent with empirical estimates and implies a realistic wealth distribution we find that capital tax cuts imply large welfare gains in the representative agent economy however when households are heterogeneous substantial redistribution during transition means that only a minority will support capital tax cuts whereas most households can expect large welfare losses

is the united states still a land of opportunity recent trends in intergenerational mobility abstract we present new evidence on trends in intergenerational mobility in the united states using administrative earnings records we find that percentile rank based measures of intergenerational mobility have remained extremely stable for the 1971 1993 birth cohorts for children born between 1971 and 1986 we measure intergenerational mobility based on the correlation between parent and child income percentile ranks for more recent cohorts we measure mobility as the correlation between a child s probability of attending college and her parents income rank we also calculate transition probabilities such as a child s chances of reaching the top quintile of the income distribution starting from the bottom quintile based on all of these measures we find that children entering the labor market today have the same chances of moving up in the income distribution relative to their parents as children born in the 1970s however because inequality has risen the consequences of the birth lottery t

consumption inequality and family labor supply we examine the link between wage and consumption inequality using a life cycle model incorporating consumption and family labor supply decisions we derive analytical expressions for the dynamics of consumption hours and earnings of two earners in the presence of correlated wage shocks nonseparability progressive taxation and asset accumulation the model is estimated using panel data for hours earnings assets and consumption we focus on family labor supply as an insurance mechanism and find strong evidence of smoothing of permanent wage shocks once family labor supply assets and taxes are properly accounted for there is little evidence of additional insurance jel d12 d14 d91 j22 j31

unbundling negative and positive externalities of nature in cities the influence of wild animals on housing prices proximity to nature is highly valued by urbanites who demonstrate higher willingness to pay for housing at locations near open and green spaces however nature in cities can generate negative ext

education policy and intergenerational transfers in equilibrium this paper compares partial and general equilibrium effects of alternative financial aid policies intended to promote college participation we build an overlapping generations life cycle heterogeneous agent incomplete markets model with education labor supply and consumption saving decisions altruistic parents make inter vivos transfers to their children labor supply during college government grants and loans as well as private loans complement parental transfers as sources of funding for college education we find that the current financial aid system in the u s improves welfare and removing it would reduce gdp by two percentage points in the long run any further relaxation of government sponsored loan limits would have no salient effects the short run partial equilibrium effects of expanding tuition grants especially their need based component are sizeable however long run general equilibrium effects are 3 4 times smaller every additional dollar of government grants crowds out 20 30 cents of parental transfers

general equilibrium treatment effects a study of tuition policy this paper defines and estimates general equilibrium treatment effects the conventional approach in the literature on treatment effects ignores interactions among individuals induced by the policy interventions being studied focusing on the impact of tuition policy and using estimates from our dynamic overlapping generations general equilibrium model of capital and human capital formation we find that general equilibrium impacts of tuition on college enrollment are an order of magnitude smaller than those reported in the literature on microeconomic treatment effects the assumptions used to justify the late parameter in a partial equilibrium setting do not hold in a general equilibrium setting policy changes induce two way flows we extend the late concept to a general equilibrium setting we present a more comprehensive evaluation to program evaluation by considering both the tax and benefit consequences of the program being evaluated and placing the analysis in a market setting this abstract was borrowed from another version of this item

random earnings differences lifetime liquidity constraints and altruistic intergenerational transfers abstract this paper develops a model of private savings behavior in which households care about their descendants cannot have negative net worth and have lifetime earnings depending on random draws from an exogenous distribution of abilities the elements interact very lucky parents are likely to leave large estates constrained children are unusually likely to receive intergenerational transfers the paper proves the existence of a stationary cross sectional distribution of wealth endogenously determines where liquidity constraints will bind and shows that the long term interest rate must be such that ricardian neutrality fails its last section generates several illustrative numerical simulations

the nature of credit constraints and human capital we develop a human capital model with borrowing constraints explicitly derived from government student loan gsl programs and private lending under limited commitment the model helps explain the persistent strong positive correlation between ability and schooling in the u s as well as the rising importance of family income for college attendance it also explains the increasing share of undergraduates borrowing the gsl maximum and the rise in student borrowing from private lenders our framework ofiers new insights regarding the interaction of government and private lending as well as the responsiveness of private credit to economic and policy changes

towards sustainable city policy an economy environment technology nexus abstract environmental problems have become a worldwide concern for economists as is witnessed by the development of many theories and policies aimed at driving the economy towards a sustainable economy the problem becomes even greater if we discuss cities as recognised in many studies a high percentage of the world population lives in cities where quality of life and environmental concerns undermine all advantages associated with agglomeration economies the vast experience in terms of theoretical and empirical substance which has been built up around the theme of sustainable economy has only partially helped to generate a framework for an urban sustainable development the city is in fact by definition an artifact environment where well established concepts of environmental economics such as natural capital stock natural environment can hardly be transferred and applied in the way they are theoretically formulated the first scope of the paper is to offer an analytical framework for urban sustainable development to present the main economic concepts that are hidden under this label in particular different environments co exist in a city the natural the artifact and the social environment each of them generates positive and negative externalities for the city since each of them represents use advantages and use costs for a city if this is true then it is a plausible assumption that the integration of these three environments has to be supported with specific intervention policies the main aim of this paper is to highlight the possible intervention policies which may be developed to achieve a balanced sustainable development in terms of new policy principles that should govern the sustainable city

how should tax progressivity respond to rising income inequality we address this question in a heterogeneous agent incomplete markets model featuring exogenous idiosyncratic risk endogenous skill investment and flexible labor supply the tax and transfer schedule is restricted to be log linear in income a good description of the us system rising inequality is modeled as a combination of skill biased technical change and growth in residual wage dispersion when facing shifts in the income distribution like those observed in the us a utilitarian planner chooses higher progressivity in response to larger residual inequality but lower progressivity in response to widening skill price dispersion reflecting technical change overall optimal progressivity is approximately unchanged between 1980 and 2016 we document that the progressivity of the actual us tax and transfer system has similarly changed little since 1980 in line with the model prescription

yours mine and ours do divorce laws affect the intertemporal behavior of married couples divorce laws establish spouses individual property rights over household resources and determine when divorce is allowed this paper examines how such laws inuence the intertemporal behavior and the welfare of u s married couples i build a model of household choice about consumption labor supply and divorce under multiple divorce law regimes and i estimate it using exogenous variation in u s divorce laws from the 1970s to the 1990s couples responded to equal division of property and unilateral divorce by increasing tangible assets up to 19 which suggests the presence of a strong income eect for the primary earner and by reducing female employment by over 5 percentage points because the threat of divorce granted additional bargaining power to married woman the bargaining weight of women implied by these responses in the model corresponds to a third of the weight of men this indicates that equal division of assets beneted women when it was

optimal timing of college subsidies enrollment graduation and the skill premium abstract the large increase in the skill premium has led many policy makers to propose increasing college subsidies as a strategy to increase college enrollment and reduce inequality existing analyses typically assume that there is no distinction between enrollment and graduation but in fact more than 50 of college enrollees do not graduate this highlights the need to explicitly model the decision to drop out in assessing the effect of subsidies i build a general equilibrium model of education choice that features an explicit dropout decision calibrate it to match key features of the us economy and use it to evaluate the impact of college subsidies on the supply of college educated labor i show that moving to a system in which subsidies are back loaded i e higher for juniors and seniors than for freshmen and sophomores will increase the supply of college educated labor even holding total subsides constant in fact this effect is larger than what would be accomplished by a uniform 50 increase in subsidies

accounting for the changing role of family income in determining college entry in this paper i analyze the determinants of college enrolment and the changes in these determinants over time i propose a quantitative life cycle model with college enrolment altruistic parents provide financial support to their children using counterfactual experiments i find that 24 percent of all households are financially constrained in their college decision constraints become more severe over time i show that my model is consistent with a narrow college enrolment gap between students from rich and poor families as previously reported in the empirical literature the estimation of enrolment gaps is a popular reduced form approach for measuring the fraction of constrained households my results suggest that these reduced form estimates are misleading and that a structural model of parental transfers is needed to correctly identify constrained households further i show that parental transfers are an important driver behind the changing role of family income as a determinant of college entry a fact that is well documented for the us economy

estimating marginal returns to education this paper estimates marginal returns to college for individuals induced to enroll in college by different marginal policy changes the recent instrumental variables literature seeks to estimate this parameter but in general it does so only under strong assumptions that are tested and found wanting we show how to utilize economic theory and local instrumental variables estimators to estimate the effect of marginal policy changes our empirical analysis shows that returns are higher for individuals with values of unobservables that make them more likely to attend college we contrast our estimates with iv estimates of the return to schooling

using contingent pricing analysis to value open space and its duration at residential locations to estimate benefits from open space adjacent to residences this paper blends contingent valuation and conjoint analysis within a housing market context the resulting framework contingent pricing analysis represents the stated preference counterpart to hedonic pricing analysis by asking individuals to state prices for hypothetical housing locations which include an environmental amenity then it asks individuals to state their willingness to pay for a better and longer lasting environmental amenity as an advantage over hedonic pricing analysis it directly isolates willingness to pay results indicate that potentially short lasting open space adds no value while preserved open space adds 5 066 or 5 to housing value

galton versus the human capital approach to inheritance a century ago francis galton proposed a simple yet powerful model of inheritance gary backer s human capital model is often used to analyze important empirical and policy questions but does it dominate galton s from a positive point of view i derive nine implicatiions of the human capital approach that are distinct from galton s evidence from the pis scf and nlsy micro data sets as well as results reported in previous literatures suggest that four of the unique implications are refuted two implications are verified and mixed results are obtained for three others some extensions of economics recently developed by becker and others when applied to inheritance may improve economics predictions

intergenerational persistence of earnings the role of early and college education recent empirical evidence from the united states indicates a high degree of persistence in earnings across generations designing effective public policies to increase social mobility requires identifying and measuring the major sources of persistence and inequality in earnings we provide a quantitative model of intergenerational human capital transmission that focuses on three sources innate ability early education and college education we find that approximately one half of the intergenerational correlation in earnings is accounted for by parental investment in education in particular early education we show that these results have important implications for education policy

life cycle schooling and dynamic selection bias models and evidence for five cohorts of american males this paper examines an empirical regularity found in many societies that family influences on the probability of transiting from one grade level to the next diminish at higher levels of education we examine the statistical model used to establish the empirical regularity and the intuitive behavioral interpretation often used to rationalize it we show that the implicit economic model assumes myopia the intuitive interpretive model is identified only by imposing arbitrary distributional assumptions onto the data we produce an alternative choice theoretic model with fewer parameters that rationalizes the same data and is not based on arbitrary distributional assumptions

tax and education policy in a heterogeneous agent economy what levels of redistribution maximize growth and efficiency this paper studies the effects of progressive income taxes and education finance in a dynamic heterogeneous agent economy such redistributive policies entail distortions to labor supply and savings but also serve as partial substitutes for missing credit and insurance markets the resulting tradeoffs for growth and efficiency are explored both theoretically and quantitatively in a model that yields complete analytical solutions progressive education finance always leads to higher income growth than taxes and transfers but at the cost of lower insurance overall efficiency is assessed using a new measure that properly reflects aggregate resources and idiosyncratic risks but unlike a standard social welfare function does not reward equality per se simulations using empirical parameter estimates show that the efficiency costs and benefits of redistribution are generally of the same order of magnitude resulting in plausible values for the optimal rates aggregate income and aggregate welfare provide only crude lower and upper bounds around the true efficiency tradeoff

default risk and private student loans implications for higher education policies abstract in recent years the proportion of students facing a binding constraint on government student loans has grown this has led to substantially increased use of private loans as a supplementary source of finance for households higher education investment a critical aspect of the private market for student loans is that loan terms must reflect students risk of default college investment will therefore differ from a world in which government student loans whose terms are not sensitive to credit risk are expanded to no longer bind moreover beyond simply crowding out private lending expansions of the government student loan program will feed back into default risk on private loans the goal of this paper is to provide a quantitative assessment of the likely effects of the private market for student loans on college enrollment we build a model of college investment that reflects uninsured idiosyncratic risk and a well defined life cycle that is consistent with observed borrowing and default behavior across family income and college preparedness we find that higher government borrowing limits increase college investment but lead to more default in the private market for student loans while tuition subsides increase college investment and reduce default rates in the private market consequently higher limits on government student loans have small negative welfare effects while tuition subsidies increase aggregate welfare

a new test of borrowing constraints for education we discuss a simple model in which parents and children make investments in the children s education investments for other purposes and parents can transfer cash to their children we show that for an identifiable set of parent child pairs parents will rationally under invest in their child s education for these parent child pairs additional financial aid will increase educational attainment the model highlights an important feature of higher education finance the expected family contribution efc that is based on income assets and other factors the efc is neither legally guaranteed nor universally offered our model identifies the set of families that are disproportionately likely to not provide their full efc using a common proxy for financial aid we show in data from the health and retirement study that financial aid increases the educational attainment of children whose families are disproportionately likely to under invest in education financial aid has no effect on the educational attainment of children in other families the theory and empirical evidence identifies a set of children who face quantitatively important borrowing constraints for higher education

sustainability of catch up growth in the extended european union abstract this paper analyses the compatibility of growth and sustainability in the european union eu including a new eu member states from the former soviet bloc eu 10 the extension of eu borders financial and technological support stimulated rapid convergence and decreased the socio economic differences between the old eu 15 and newly accepted eu member states the transition from a command to a market economy resulted in the remarkable increase in resource efficiency and other positive aspects of sustainability along with 1 5 times increased gdp final energy consumption decreased by 20 greenhouse gases emissions by 25 and the emissions of acidifying compounds were halved during the period from the collapse of former soviet bloc to the recent economic crisis however the per capita production and consumption in eu 10 is still approximately half that of eu 15 and further catch up growth should be expected ensuring that economic and social cohesion is not achieved at the expense of increased environmental impact decelerated economic growth is a feature characteristic of mature economies and the gdp growth rate in eu 15 states decreased almost 2 5 times during the last 50 year similar trends are characteristic of other developed countries and market economies have adapted to this trend even with a decelerated growth rate the ecological footprint in developed countries currently exceeds three and more times the allowable limits and almost two thirds of the ecological footprint relates to traditional energy de fossilisation by a greater increase in energy efficiency use of renewable energy and more intense material recovery is the most promising option for reducing the ecological footprint of these countries deceleration of the economic growth rate supplemented by the aforementioned options is a hard but realistic track leading to the reduction of ecological footprint in developed countries to allowable limits without radical de growth in consumption and production that can result in unpredictable and unacceptable consequences

wage risk and employment risk over the life cycle we specify a structural life cycle model of consumption labour supply and job mobility in an economy with search frictions that allows us to distinguish between different sources of risk and to estimate their effects the sources of risk are shocks to productivity job destruction the process of job arrival when employed and unemployed and match level heterogeneity our model allows for four main social insurance programmes in contrast to simpler models that attribute all income fluctuations to shocks our framework allows us to disentangle the effects of the shocks from the responses to these shocks estimates of productivity risk once we control for employment risk and for individual labour supply choices are substantially lower than estimates that attribute all wage variation to productivity risk increases in productivity risk impose a considerable welfare loss on individuals and induce substantial precautionary saving increases in employment risk have large effects on output and primarily through this channel affect welfare the welfare value of government programs such as food stamps which partially insure productivity risk is greater than the value of unemployment insurance which provides partial insurance against employment risk and no insurance against persistent shocks

consumption and labor supply with partial insurance an analytical framework we develop a model with partial insurance against idiosyncratic wage shocks to quantify risk sharing closed form solutions are obtained for equilibrium allocations and for moments of the joint distribution of consumption hours and wages we prove identification and demonstrate how labor supply data are informative about risk sharing the model estimated with us data over the period 1967 2006 implies that i 39 percent of permanent wage shocks pass through to consumption ii the share of wage risk insured increased until the early 1980s and iii preference heterogeneity is important in accounting for observed dispersion in consumption and hours jel e21 e23 e31 e52

tax policy and human capital formation missing from recent discussions of tax reform is any systematic analysis of the effects of various tax proposals on skill formation this gap in the literature in empirical public finance is due to the absence of any empirically based general equilibrium models with both human capital formation and physical capital formation that are consistent with observations on modern labor markets this paper is a progress report on our ongoing research on formulating and estimating dynamic general equilibrium models with endogenous heterogeneous human capital accumulation our model explains many features of rising wage inequality in the u s economy james heckman lance lochner and christopher taber 1998 in this paper we use our model to study the impacts on skill formation of proposals to switch from progressive taxes to flat income and consumption taxes for the sake of brevity we focus on steady states in this paper although we study both transitions and steady states in our research this abstract was borrowed from another version of this item

minding the gap between schools and universities abstract during the 2000s decade governments in south america reallocated per student public expenditures from tertiary to basic education potentially alleviating the economic gap between students in public schools and public universities to investigate the welfare and macroeconomic effects of such types of policies we build and calibrate a general equilibrium model using brazilian data from the beginning of the 2000s we find that the optimal utilitarian policy allocates per student public expenditures equally across education stages benefits almost the entirety of households delivers significant welfare gains to the poorest families and cuts back income inequality we also use our framework to investigate economic differences between brazil and the united states and find that differences in the supply of vacancies in public universities is the education policy aspect that alone has the highest explanatory power over aggregate earnings and college attendance differences between the two countries

an estimable dynamic general equilibrium model of work schooling and occupational choice this paper develops and estimates a dynamic general equilibrium overlapping generations model of career decisions the model is fit to data on life cycle employment schooling and occupation decisions and on life cycle labor earnings within and between cohorts observed in the us between 1968 and 1993 based on the estimates of the model the impact of cohort size on skill prices and consequently on career decisions is assessed compared to a baseline case in which cohort size increased at a steady average rate and the fertility process was stationary it is found that the male baby bust generations born in the 1930s and 1940s faced higher skill prices by as much as 2 0 completed college at a higher rate by as much as 0 3 percentage points and worked more over the lifetime by as much as 0 1 years in contrast the males from the baby boom generations born in the 1950s and 1960s faced lower skill prices by as much as 1 5 completed college at a lower rate by as much as 1 0 percentage points and worked less over the lifetime by as much as 0 1 years the impact of cohort size is found to differ across gender due to the differential impact of fertility on the value of home production unlike males the female baby bust generations completed college at a lower rate by as much as 1 5 percentage points and worked less over the lifetime by as much as 0 5 years while the female baby boom generations completed college at a lower rate by as much as 1 5 percentage points and worked more over the lifetime by as much as 0 2 years a tuition subsidy experiment is also performed both in a general equilibrium setting in which skill prices are endogenous and in a partial equilibrium setting with fixed skill prices based on the estimated model a 1 increase in tuition is predicted to reduce college enrollment rates by 1 27 in partial equilibrium consistent with previous estimates and by 1 05 in the general equilibrium case thus for this policy experiment the partial equilibrium analysis of schooling choice would not differ significantly from the general equilibrium analysis

intersectoral labor mobility and the growth of the service sector one of the most striking changes in the u s economy over the past 50 years has been the growth in the service sector between 1950 and 2000 service sector employment grew from 57 to 75 percent of total employment however over this time the real hourly wage in the service sector grew only slightly faster than in the goods sector in this paper we assess whether or not the essential constancy of the relative wage implies that individuals face small costs of switching sectors and we quantify the relative importance of labor supply and demand factors in the growth of the service sector we specify and estimate a two sector labor market equilibrium model that allows us to address these empirical issues in a unified framework our estimates imply that there are large mobility costs output in both sectors would have been double their current levels if these mobility costs had been zero in addition we find that demand side factors that is technological change and movements in product and capital prices were responsible for the growth of the service sector

the effect of natural space on nearby property prices accounting for perceived attractiveness this paper estimates the effect of attractive natural space on dutch residential property prices we operationalize attractive natural spaces by combining land use data with unique data on the perceived attractiveness of natural spaces in our main results the effect of attractive natural space on property prices falls from 16 0 for properties within 0 5 km to 1 6 for properties up to 7 km away our findings advance existing hedonic studies by verifying that economic benefits of living near natural space extend over a larger distance this has important implications for public policy regarding investment in natural space near residential areas jel h41 q51

redistribution and education subsidies are siamese twins abstract we develop models of optimal linear and non linear income taxation with endogenous human capital formation to explore optimal education subsidies optimal subsidies on education ensure efficiency in human capital accumulation and thus play an important role in alleviating the tax distortions on learning induced by redistributive policies if the government cannot verify all investments in human capital education policy offsets some but not all tax induced distortions on learning non pecuniary educational costs benefits may increase decrease subsidies on education especially if they are complementary to work effort

female labour supply human capital and welfare reform we estimate a dynamic model of employment human capital accumulation including education and savings for women in the united kingdom exploiting tax and benefit reforms and use it to analyze the effects of welfare policy we find substantial elasticities for labor supply and particularly for lone mothers returns to experience which are important in determining the longer term effects of policy increase with education but experience mainly accumulates when in full time employment tax credits are welfare improving in the u k increase lone mother labor supply and marginally reduce educational attainment but the employment effects do not extend beyond the period of eligibility marginal increases in tax credits improve welfare more than equally costly increases in income support or tax cuts

intergenerational transfers and the accumulation of wealth h t ouseholds acquire wealth from two sources they save out of income they have earned and they receive transfers from other people the first method of wealth accumulation goes under the name of life cycle saving in which people save during their working lives and dissave after retirement the second involves either an inter vivos transfer that is a transfer between living people or a bequest a transfer that occurs at the death of the donor while inter vivos transfers and bequests will arise in dynastic models where preferences include a taste for the well being of one s descendents few empirical life cycle models reflect these concerns indeed a sharp debate has arisen over the ability of the simple life cycle model to explain observed wealth accumulation understanding the relative sizes of these sources of wealth accumulation affects a variety of issues for example the effects of government debt social insurance public transfer programs estate taxes and incentives for charitable giving depend to some extent on the magnitude and nature of private saving and transfers of wealth analyses of the inequality of wealth may depend on whether most of wealth is earned or received as transfers appropriate policies for encouraging private saving may look rather different depending on whether most saving is to be consumed later in life or passed along to the next generation finally evidence on transfer patterns relates to more fundamental

income variance dynamics and heterogeneity recent theoretical work has shown the importance of measuring microeconomic uncertainty for models of both general and partial equilibrium under imperfect insurance in this paper the assumption of i i d income innovations used in previous empirical studies is removed and the focus of the analysis is placed on models for the conditional variance of income shocks which is related to the measure of risk emphasized by the theory we first discriminate amongst various models of earnings determination that separate income shocks into idiosyncratic transitory and permanent components we allow for education and time specific differences in the stochastic process for earnings and for measurement error the conditional variance of the income shocks is modelled as a parsimonious arch process with both observable and unobserved heterogeneity the empirical analysis is conducted on data drawn from the 1967 1992 panel study of income dynamics we find strong evidence of sizeable arch effects as well as evidence of unobserved heterogeneity in the variances

college entry by blacks since 1970 the role of college costs family background and the returns to education college enrollment of black 18 19 year old high school graduates declined from 1980 through 1984 and then rebounded after 1984 this paper presents data from a time series of cross sections of 18 19 year old youths from 1973 through 1988 to test the role of family background direct college costs local economic conditions and returns to college in driving these trends the evidence suggests that on the one hand increases in direct college costs were driving enrollment rates downward throughout the eighties on the other hand dramatic increases in average parental education for black youths exerted upward pressure on college enrollment by blacks particularly in the latter half of the decade the net effect of these two factors contributed to the pattern of decline and recovery observed during the eighties