the effects of prior beliefs and learning on consumers acceptance of genetically modified foods abstract new food products using genetically modified crops appeared in u s supermarkets starting in 1996 and consumers perceived some risks this paper examines the role of consumers prior beliefs about genetic modification and of diverse new information on their willingness to pay for foods that might be genetically modified we use data from economics experiments and show that participants who had informed prior beliefs discounted gm labeled food products more highly than those who had uninformed prior beliefs uninformed participants were especially susceptible to information from interested and third parties in contrast informed participants were generally not affected significantly by new information

technological change and retirement decisions of older workers according to human capital theory technological change will influence the retirement decisions of older workers in two ways first workers in industries with high rates of technological change will retire later if there is a net positive correlation between technological change and on the job training second an unexpected change in the rate of technological change will induce older workers to retire sooner because the required amount of retraining will be an unattractive investment we matched industry data on productivity growth and occupational data on required training with data from the national longitudinal surveys of older men to test these hypotheses our results support both hypotheses

a model of international asset pricing under imperfect commodity arbitrage abstract this paper examines the effect of imperfect international commodity arbitrage i e violation of the law of one price modeled as the existence of non traded goods on the structure of purchasing power risk optimal portfolio rules of the risk averse investors and the equilibrium yield relationship among assets the major results of the paper include i there are two separate sources of purchasing power risk i e relative price risk and inflation risk relative price risk is specific to the country in which the investor resides ii in a world of n countries investors may hold n 1 hedge portfolios as vehicles to hedge against purchasing power risk facing different relative prices investors residing in different countries display divergent portfolio behavior iii in equilibrium investors are compensated in terms of excess return for bearing not only the systematic world market risk but also the systematic inflation and relative price risks

deviations from purchasing power parity and capital flows abstract this article examines the implications of deviations from purchasing power parity ppp for an investor s portfolio decision and the consequent capital flows in a two country intertemporal model with complete financial markets in the presence of deviations form ppp investors from different nations hold disparate portfolios and the equilibrium that results is not a pooling one we solve eplicitly for asset demands and derive the relationship between the direction of capital flows and deviations from ppp in contrast to the small country assumption in the existing literature the world interest rate in this model is determined endogenously

are consumers concerned about palm oil evidence from a lab experiment abstract a lab experiment evaluates the consumers willingness to pay wtp for food products made with and without palm oil palm oil production induces environmental damages and its consumption presents a health risk however the production of alternative oils raises land use issues in the experiment successive messages emphasizing the characteristics of palm oil and palm oil free products are delivered to participants information has a significant influence on wtp when it underlines the negative impact of the related product this effect is stronger for the palm oil product than for the palm oil free product the experiment also compares the welfare effects of two regulatory instruments namely a consumer information campaign versus a per unit tax because of the respective attributes of both palm oil and palm oil free products the information campaign improves welfare with a much larger impact than the tax

wage rigidity and job creation recent research in macroeconomics emphasizes the role of wage rigidity in accounting for the volatility of unemployment fluctuations we use worker level data from the cps to measure the sensitivity of wages of newly hired workers to changes in aggregate labor market conditions the wage of new hires unlike the aggregate wage is volatile and responds almost one to one to changes in labor productivity we conclude that there is little evidence for wage rigidity in the data

market externalities of large unemployment insurance extension programs we provide evidence that unemployment insurance affects equilibrium conditions in the labor market which creates significant market externalities we provide a framework for identification of such equilibrium effects and implement it using the regional extension benefit program rebp in austria which extended the duration of ui benefits for a large group of eligible workers in selected regions of austria we show that non eligible workers in rebp regions have higher job finding rates lower unemployment durations and a lower risk of long term unemployment we discuss the implications of our results for optimal ui policy jel e24 j64 j65 r23

distance decay in the willingness to pay for wine disentangling local and organic attributes this paper investigates how the residents of a french wine producing region value the attributes of wine we elicit the willingness to pay wtp for organic non organic and local non local wines with increasing levels of information on the impact of agricultural practices at both global and local scales the analysis shows that there is a significant organic premium associated with both local and non local wines this organic premium significantly increases with information and significantly decreases with the distance between the consumer s home and the vineyard based on the econometric predictions of the wtp we show that a per unit tax on non organic wines or a standard imposing organic practices increases welfare through the internalization of the attributes revealed by the experiment

the perverse effects of partial employment protection reform the case of french older workers abstract french firms laying off workers aged 50 and above have to pay a tax to the unemployment insurance system known as the delalande tax we evaluate the impact of this tax on layoffs as well as on hiring taking advantage of several changes in the measure since its introduction in 1987 a legislative change in 1992 exempted firms from the tax for workers who were hired after age 50 following this change the transition rate from unemployment to employment increased significantly for workers over 50 compared to workers under 50 the difference is sizeable between one third and one half of the initial transition rate evidence on the effect on layoffs is less clear cut the impact is sizeable only for the most stringent tax schedule after 1998

international debt and world business fluctuations abstract the international transmission of real productivity disturbances is examined in an optimizing model with two countries each inhabited by an infinitely lived representative consumer producer we analyze the dynamics of output consumption investment interest rates and net external debt foreign productivity shocks can have positive or negative impacts on domestic output and international debt depending on the intertemporal distribution of the shocks transient foreign shocks are shown to be positively transmitted and lead to increased domestic indebtedness while permanent foreign shocks are negatively transmitted and lead to a decline in domestic indebtedness

effects and value of verifiable information in a controversial market evidence from lab auctions of genetically modified food food products containing genetically modified gm ingredients have entered the market over the past decade the biotech industry and environmental groups have disseminated conflicting private information about gm foods this paper develops a unique methodology for valuing independent third party information in such a setting and applies this method to consumers willingness to pay for food products that might be gm data are collected from real consumers in an auction market setting with randomized information and labeling treatments the average value of third party information per lab participant is small but the public good value across u s consumers is shown to be quite large jel c91 d12 d82

real wages over the business cycle evidence from panel data one topic on which keynes did not disagree with classical economists was the cyclical behavior of real wages keynes 1936 as well as various classical writers predicted that real wages should move countercyclically quoting the general theory p 17 in general an increase in employment can only occur through the accompaniment of a decline in real wages thus i am not disputing this vital fact which the classical economists have rightly asserted as indefeasible this prediction is based on the premise of competition and a given short run capital stock increases in employment then correspond to more intensive use of capital and through diminishing product lower real wages for this reason evidence by dunlop 1938 and tarshis 1939 that real wages move procyclically was viewed as paradoxical both dunlop and tarshis based their findings on an observed positive correlation between real and money wages which given the procyclical movement of money wages implies a positive correlation between

not so voluntary retirement decisions evidence from a pension reform abstract firms may encourage their workers to retire early experience rating of early retirement benefits creates incentives for firms to avoid this we use a pension reform as a natural experiment in order to evaluate the effect of this experience rating the key result is that experience rating of early retirement benefits reduces early exits of older workers

real wages and unemployment in the big squeeze uk real wage growth has slowed down stagnated and recently turned sharply negative we document the nature of real wage changes across the wage distribution over the last three decades showing that recent patterns represent a distinct break of trend that pre dates the onset of recession we explore whether unemployment has become a stronger moderating influence on real wage growth and report using aggregate economy wide and regional panel data that real wage unemployment sensitivities have become stronger in the period from 2003 onwards finally we offer some assessment of possible drivers of this increased sensitivity of real wages to unemployment

why real interest rates cost of capital and price earnings ratios vary across countries abstract this paper examines how productivity changes affect real rates of return and price earnings ratios in a small open economy the model provides conditions under which increased productivity in a country s traded goods sector causes prices of non traded goods to increase relative to the price of traded goods under these conditions real rates of interest decline and the production of certain non traded durable goods such as capital equipment and housing immediately increase this overconstruction has two effects first the increase in capital relative to labor in these sectors increases the marginal product of labor and hence immediately causes an increase in wages and the prices of non traded goods second an oversupply of capital goods and housing depresses their rental rates in the current period thereby increasing their price to rental ratios or equivalently their price earnings ratios

determinants of the current account balance in the united states this article studies the role of public and private imbalances in the behaviour of the current account balance in the united states in the context of an intertemporal model the estimation evaluates the effects of public and private imbalances on the dynamics of the current account correlation coefficients support the ricardian equivalence higher budget deficit correlates with a reduction in private consumption and an increase in private savings government saving does not vary significantly with macroeconomic variables in the short or in the long run in contrast fluctuations in government investment vary significantly with a number of economic variables in the long and in the short run accordingly fluctuations in the budget deficit are likely to be driven by fluctuations in public investment in contrast to government savings private savings vary significantly with macro variables in the long and in the short run fluctuations in private investment appear less evident compared to that in privat

seniority wages and the role of firms in retirement in general retirement is seen as a pure labor supply phenomenon but firms can have strong incentives to send expensive older workers into retirement based on considerations about wage costs and replacement costs we discuss steep seniority wage profiles as incentives for firms to dismiss older workers before retirement conditional on individual retirement incentives e g social security wealth accrual rates or health status the steepness of the wage profile will have different incentives for workers as compared to firms to maintain the employment relationship using an instrumental variable approach to account for selection of workers in our firms and for reverse causality we find that firms with higher labor costs for older workers have on average a lower job exit age and a higher incidence of golden handshakes author s abstract

does local labeling complement or compete with other sustainable labels a conjoint analysis of direct and joint values for fresh produce claim as a way to explore the increasing use of sustainability labels in the marketplace this study analyzes the differential values and interactive effects of sustainable production claims organic fair trade and carbon footprint and location claims through a conjoint choice experiment included in a 2008 u s survey locally grown is the highest valued claim and its value is further enhanced with fair trade certification but carbon intensive local products are discounted more severely than those sourced from other locations some negatively valued claims imports and carbon footprint can be mitigated by combining them with other claims organic and fair trade copyright 2011 oxford university press

the real exchange rate the capital stock and fiscal policy abstract this paper studies the joint determination of aggregate supply the real exchange rate and the current account in response to changes in government spending in a model where there is no uncertainty in the aggregate but where individuals are uncertain about their lives duration international capital mobility fixes the steady state capital stock and aggregate supply in a small country whereas in a large country the steady state capital stock is endogenous an increase in government spending is more likely to generate a real exchange rate depreciation in a small country since the loss of wealth associated with cumulated current account deficits does not increase rest of the world spending in the case of a large country current account deficits are wealth transfers to the rest of the world and increase foreign spending thus the normal long run response is an increase in the relative price of domestic output

import dependency and structural adjustment in sub saharan africa one of the effects of structural adjustment programs in sub saharan africa has been the reduction of imports in the face of scarce foreign exchange this article takes the analysis of import demand beyond the traditional income and price determinants to account for factors likely to be important to sub saharan african countries in the 1990s first the effect of demand on imports is reflected by the level of absorption rather than the less direct income variable second because adjustment programs may cut government consumption and through increases in interest rates reduce investment these components of absorption are also considered independently to assess their differential effect on imports third import barriers are often set in dollar terms to limit the use of foreign exchange because reliable and complete data for import restrictions are not available the ratio of exports to debt is included as an indicator of foreign exchange availability to reflect its effect on trade barriers and thus imports the findings suggest that this more comprehensive assessment of import demand will be needed if the size and even direction of changes in import demand in response to policy reform is to be understood and anticipated

the effect of implicit contracts on the movement of wages over the business cycle evidence from micro data in this paper we address the question of whether wages are affected by labor market conditions in a manner more consistent with a contract approach than with a standard spot market model from a simple implicit contract model we derive implications about the links between wages and past labor market conditions using individual data from the current population survey and the panel study of income dynamics we find that an implicit contract model with costless mobility describes these links better than either a simple spot market model or an implicit contract model with costly mobility

optimal taxation and debt in an open economy abstract we characterize the time profile of the optimal consumption tax in a small open economy under foreseen fluctuations in the taste for current consumption productivity or external interest rates we give conditions for the efficient tax to be lowered or raised when productivity rises taste fluctuations are parameterized to be equivalent to effective consumption price fluctuations we give conditions under which the optimal tax rises or falls with the effective price in contrast the optimal tax rate is invariant to changes in the interest rate the associated behavior of optimal debt is also characterized

the capital inflows problem revisited a stylized model of southern cone disinflation in the late 1970s countries in latin america s southern cone initiated attempts to lower domestic inflation rates through the progressive reduction of a preannounced rate of exchange rate devaluation the stabilization programs gave rise to massive capital inflows real exchange rate appreciation and current account deficits this paper develops a stylized intertemporal framework in which the effects of a credible preannounced disinflation scheme can be studied it is shown that even when agents have perfect foresight and markets clear continuously the capital inflows phenomenon and the associated real appreciation may result while unanticipated permanent inflation changes are neutral in the paper anticipated inflation is neutral only in exceptional circumstances a preannounced disinflation operates by altering the path of an expenditure based real domestic interest rate that depends on expected changes in the prices of liquidity services and nontradable consumption goods

world trade patterns economic disturbances and exchange rate management abstract this paper construct and analyzes a three country stochastic model of world trade the objectives of this paper are to investigate the propagation of economic disturbances worldwide and to analyze the nature of optimal exchange rate management on the part of a single country faced with monetary and real disturbances accurring in all its trade patterns the paper analyzes the roles of bilateral trade patterns the type of underlying stochastic disturbances i e monetary vs real and transsitory vs permanent and of the optimality criterion in determining the optimal exchange rate regime

real wage cyclicality of job stayers within company job movers and between company job movers using the british new earnings survey panel data nespd for the period 1975 to 2001 we estimate the wage cyclicality of job stayers those remaining within single jobs in a given company within company job movers and between company job movers we also examine how the proportion of internal and external job moves varies over the business cycle we find that the wages of internal movers are slightly more procyclical and wages of external movers considerably more procyclical than those of stayers notwithstanding a decomposition shows that in britain wage cyclicality arises almost entirely from the procyclicality of wages for job stayers with across and within firm mobility playing a lesser role thus there is little evidence for rigid wage models that imply that employers use changes in job titles as a means of adjusting wages to the business cycle we also show that the distinctions between private and public sectors and between workers covered and uncovered by collective agreements have important impacts on the wage estimates of both stayers and movers

what is it about organic milk an experimental analysis auction experiments were used to examine demand relationships and willingness to pay wtp for organic rbst free no antibiotics used and conventional milk elasticities showed strong substitute and complement relationships between organic rbst free and no antibiotics varieties the sum of the latter two s premiums were not significantly different than the organic premium suggesting diminishing marginal utility for added attributes results from a two stage heteroskedastic tobit model demonstrated that wtp premiums for the varieties differ significantly by demographics and beliefs regarding the conventional version these suggest market segments for rbst free and no antibiotics versions could succeed alongside organic benefiting consumers and producers copyright 2007 oxford university press

labor market shocks and retirement do government programs matter abstract this paper argues that labor market conditions are an important and often overlooked determinant of retirement transitions in our analysis we examine how the unemployment rate affects retirement and whether the social security ss system and unemployment insurance ui system influence how older workers respond to labor market shocks we use pooled cross sectional data from the march current population survey cps in our analysis we find that downturns in the labor market increase retirement transitions and that the magnitude of this effect is comparable to that associated with moderate changes in financial incentives to retire and to the threat of a health shock facing older workers interestingly retirements only increase in response to an economic downturn once workers become ss eligible suggesting that retirement benefits may help to alleviate the income loss associated with a weak labor market we also estimate the impact of ui generosity on retirement and find little consistent evidence of an effect this suggests that in some ways ss may serve as a more effective form of unemployment insurance for older workers than ui

capital inflows external shocks and the real exchange rate abstract this paper examines the effects of a fall in world interest rates on capital flows and the real exchange rate in an optimizing framework with imperfect capital markets a permanent fall leads to a steady state reduction in net foreign assets and a real depreciation regardless of whether the country is initially a net creditor or net debtor on impact the real exchange rate appreciates in the net debtor case but may either appreciate or depreciate in the net creditor case the dynamics associated with a temporary shock depend not only on its duration but also on the initial asset position

voluntary and involuntary early retirement an international analysis recent literature makes a distinction between voluntary and involuntary early retirement where involuntary early retirement results from employment constraints rather than from a preference for leisure relative to work this article analyses voluntary and involuntary early retirement based on international microdata covering 19 industrialized countries the results show that involuntary early retirement is particularly widespread in continental europe countries facing economic recessions and having strict employment protection legislation have higher shares of involuntary retirements among early retirees generous early retirement provisions of the social security system do not only make voluntary early retirement more attractive for individuals but also induce firms to push more employees to retire early

benefit duration and unemployment entry a quasi experiment in austria apart from being an important aspect of job search behavior of individuals potential bene t duration can also have e2ects on unemployment entry rates in this paper the causal connection between the two is investigated for the case of austria using a quasi experimental situation that arose following the enactment of a law that extended bene t duration for older workers in speci c regions of the country unemployment entry is found to have risen between 4 and 11 percentage points due to the new law several robustness checks are presented to see if a causal interpretation of this result is possible preliminary analysis shows that this increase in unemployment entry can be best understood not as voluntary quits but layo2s by rms who want to get rid of high tenured and expensive older workers c

the retirement consumption puzzle and involuntary early retirement evidence from the british household panel survey this article uses data from the british household panel survey bhps to shed further light on the fall in consumption at retirement the retirement consumption puzzle comparing food spending of men retiring involuntarily early through ill health or redundancy with spending of men who retire voluntarily it finds a significant fall in spending only for those who retire involuntarily this is consistent with the observed fall in spending being linked to a negative wealth shock for some retirees

job selection and wages over the business cycle we consider a model with on the job search where current wages depend only on current aggregate labor market conditions and idiosyncratic match specic productivities we show theoretically that the model replicates the ndings in bils 1985 and beaudry and dinardo 1991 on the history dependence in wages we develop a method to measure match qualities in the data and show empirically that various variables summarizing past aggregate labor market conditions have explanatory power for current wages only because they are correlated with match qualities they lose any predictive power once match qualities are accounted for

consequences of seniority wages on the employment structure the author examines seniority wage profiles in german establishments to discern hiring patterns with respect to age and sex using the country s linked employer employee dataset liab over the per

labor supply effects of the recent social security benefit cuts empirical estimates using cohort discontinuities abstract in response to a crisis in social security financing two decades ago congress implemented an increase in the normal retirement age nra of 2 months per year for cohorts born in 1938 and after these cohorts began reaching retirement age in 2000 this paper studies the effects of these benefit cuts on recent retirement behavior the evidence suggests that the mean retirement age of the affected cohorts has increased by about half as much as the increase in the nra if older workers continue to increase their labor supply in the same way there might be important implications for the estimates of social security trust fund exhaustion that have played such a major role in recent discussions of social security reform

cluster sample methods in applied econometrics inference methods that recognize the clustering of individual observations have been available for more than 25 years brent moulton 1990 caught the attention of economists when he demonstrated the serious biases that can result in estimating the effects of aggregate explanatory variables on individual specific response variables the source of the downward bias in the usual ordinary least squares ols standard errors is the presence of an unobserved state level effect in the error term more recently john pepper 2002 showed how accounting for multi level clustering can have dramatic effects on t statistics while adjusting for clustering is much more common than it was 10 years ago inference methods robust to cluster correlation are not used routinely across all relevant settings in this paper i provide an overview of applications of cluster sample methods both to cluster samples and to panel data sets

consumer welfare effects of introducing and labeling genetically modified food abstract non hypothetical valuations obtained from experimental auctions in three united states and two european locations were used to calculate welfare effects of introducing and labeling of genetically modified food under certain assumptions we find that introduction of genetically modified food has been welfare enhancing on average for united states consumers but not so for europeans and while mandatory labeling has been beneficial for european consumers such a policy would be detrimental in the united states

real interest rates home goods and optimal external borrowing the paper investigates the optimal time path of consumption and external borrowing in the dependent economy model the small country faces given world prices and a given world real interest rate the presence of a home goods sector implies that the relevant real interest rate appropriate to consumption decisions depends on the rate of change of the real price of home goods the paper shows how transitory disturbances in output or in the world real interest rate affect the time profile of consumption and the trade balance in particular it is shown that the presence of a home goods sector dampens the consumption effects of changes in the world interest rate

macroeconomic adjustment under alternative lending arrangements abstract this paper investigates macroeconomic adjustment for a small open economy under alternative lending arrangements the arrangements considered all have the common feature of a link between international lending rates and measures of creditworthiness by employing an intertemporal maximizing model of a small open economy the paper analyzes adjustment paths for the stock of international debt the real exchange rate and consumption in response to economic shocks the paper finds that arrangements linking interest rates on lending to the outstanding stock of debt are consistent with a stable adjustment trajectory whereas arrangements linking interest rates to performance on the trade balance are likely to be unstable

reference norms staggered wages and wage leadership theoretical implications and empirical evidence this article presents an extension of the taylor model with staggered wages in which wage setting is also influenced by reference norms we show that reference norms can considerably increase the persistence of inflation but that the size of this effect depends on the exact definition e g external vs internal symmetric vs asymmetric norms using data on collectively bargained wages in austria from 1980 to 2006 we show that wage setting is strongly influenced by reference norms that external norms seem to matter more than internal norms and that there is a clear indication for the existence of wage leadership asymmetric norms

information and consumer perception of the organic attribute in fresh fruits and vegetables using a double hurdle model on panel data from 3 200 danish households monthly observations for 2002 2007 we study the effects of health related media information on the demand for organic fruit and vegetables we find that negative information about pesticides contained in conventional fruit and vegetables mainly influences the probability of a consumer entering the organic market not the quantities consumed by households that are already active on the organic market positive information that links health and the consumption of organic food influences both steps of the decision process our dataset includes information about consumers media habits which allows us to disentangle the direct effects of media information from the indirect effects of this information as it is disseminated through the population our results suggest that directly obtained information is the main type of information influencing consumers while information loadings by dissemination through the population have almost no effect on consumption

how sensitive are retirement decisions to financial incentives a stated preference analysis we study the effects of financial incentives on retirement decisions using stated preference data dutch survey respondents were given hypothetical retirement scenarios describing age s of partial and full retirement and replacement rate s a stylized model is estimated in which utility is the discounted sum of within period utilities that depend on employment status and income parameters of the utility function vary with observed and unobserved characteristics simulations show that the income and substitution effects of pensions as a function of the retirement age are substantial and larger than according to studies using data on actual retirement decisions in the netherlands

does raising the early retirement age increase employment of older workers two pension reforms in austria increased the early retirement age era from 60 to 62 for men and from 55 to 58 25 for women we find that raising the era increased employment by 9 75 percentage points among affected men and by 11 percentage points among affected women the reforms had large spillover effects on the unemployment insurance program but negligible effects on disability insurance claims specifically unemployment increased by 12 5 percentage points among men and by 11 8 percentage points among women the employment response was largest among high wage and healthy workers while low wage and less healthy workers either continued to retire early via disability benefits or bridged the gap to the era via unemployment benefits taking spillover effects and additional tax revenues into account we find that for a typical birth year cohort a one year increase in the era resulted in a reduction of net government expenditures of 107 million euros for men and of 122 million euros for women

social security benefits and employer behavior evaluating social security early retirement benefits as a form of unemployment insurance employers often shed older workers by encouraging them to take early retirement an implicit contract model suggests that this behavior will be influenced by the social security early retirement program when demand is weak and layoffs are necessary social security benefits can act like a form of unemployment insurance effectively subsidizing workforce reductions by lowering the cost to the firm of shedding older workers since social security benefits are not subject to experience rating the result is an inefficiently high level of early retirements this paper concludes with a discussion of policies for restoring early retirements to efficient levels