are estimates of earnings inequality sensitive to measurement choices a case study of canada in the 1980s while it is necessary that researchers make choices in order to estimate inequality the reasons for the measurement choices and their impact on inequality estimates have not been widely assessed this paper uses canadian data from the 1980s to analyse whether inequality estimates are sensitive to common measurement choices seemingly minor technical choices about the treatment of outlying observations such as the use of top income coded data exclusion of very high and low observations and differences among data sets in the capture of very high observations affect estimates of inequality further the impact of the treatment of outlying observations on inequality estimates are at least as large as the impact of measurement choices of a conceptual nature such as the income definition and population selection the sensitivity of inequality estimates to measurement choices which often remain invisible affect inferences about the relative degree of inequality at a given point in time among countries and

in search of smoking guns what makes income inequality vary over time in different countries we investigate the forces affecting the distribution of income by analyzing an unbalanced panel of information for 16 industrialized countries for the years 1966 through 1994 income inequality is measured with the gini coefficient of equivalent disposable income individuals are the unit of analysis the statistical analysis uses panel methods the results suggest that many factors affect the development of income inequality some factors are strictly economic a decreased industrial sector generally fosters inequality and some support is found for the view that increased trade of manufactured goods from developing countries is also a factor other forces are outside a strictly defined market sphere low inequality is found when a large proportion of the labor force belongs to a trade union and also when there is a large public sector in addition demographic circumstances are important since the proportion of the population under age 15 has a positive effect on inequality we find however no association between the unemployment rate and inequality

joint confidence intervals for income shares and lorenz curves in a recent paper beach and davidson 1983 extended the principles of statistical inference to lorenz curves and income shares by establishing the asymptotic distribution and covariance structure of a vector of lorenz curve ordinates corresponding to a set of quantile abscissae one can thus use the lorenz curve and income shares no longer just as descriptive devices for summarizing distribution information but now also as analytical tools for comparing alternative distributions and carrying out conventional statistical inference on them it would clearly be desirable however to extend and complement this work by providing a method for computing a set of joint confidence intervals about these income shares and for illustrating graphically a joint confidence band about a set of estimated lorenz curve ordinates the present paper provides a new and simple technique for doing this when analyzing differences between sets of income shares or lorenz curves one typically wants to elicit more detailed information than is provided by a standard joint chi square test on the overall set of shares that is when the hypothesis of two sets of shares being the same is rejected we generally want to know further which particular differences in shares are different from zero and of these nonzero differences which are positive and which negative savin 1980 a natural way of providing such information is through multiple comparison procedures developed in this paper in a recent work richmond 1982 has developed a general method of finding multiple comparison intervals that is particularly suited to the present problem and in this situation appears to dominate other conventional alternatives in contrast for example to scheff s s projection method richmond s approach focuses on a set of primary points of interest income shares among a more general set of points including the lorenz curve ordinates and optimizes the joint confidence interval lengths on this primary set of points since estimated lorenz curve ordinates are built up from underlying income shares these shares perhaps further supplemented are natural choices for the primary set the method however also provides a joint confidence band that geometrically bounds the set of lorenz curve ordinates and interpolated segments between them the present

cyclical and political influences on the size distribution of income in the us 1959 1989 the quesion of whether the size distribution of income is subject to cyclical fluctuations in unemployment and inflation has been investigated in several studies in these studies however the fact that unemployment inflation and distribution may be influenced intentionally by policy makers is ignored in order to investigate whether any political influence on the size distribution of income actually exists a model is formulated in which the distribution not only depends on unemployment and inflation but also on a variable representing the political process the model is tested using time series data pertaining to the case of the us in the period 1958 to 1989 the results indicate that inequality tends to be negatively influenced by democratic administrations

international comparisons of welfare and poverty dominance orderings for ten countries inference based stochastic dominance procedures are applied to luxembourg income study data to rank ten western countries in terms of standards of living and poverty first order dominance comparisons ranks more than 50 percent of all pairwise comparisons and second order generalized lorenz dominance adds another 25 percent truncated dominance analysis is used to make inferences about poverty and up to 98 percent of the truncated distributions are ordered the results differ substantially from those obtained when only relative incomes and inequality are considered

inequality in male and female earnings the role of hours and wages the authors decompose annual earnings into hours of work and hourly earnings and analyze male female differences in earnings inequality using canadian data their results indicate that the larger female inequality in earnings is due to a greater inequality in the distribution of hours of work the distributions of wages for men and women are either statistically indistinguishable or more equal for women the authors compare two data points 1988 and 1981 and find the same structure in the gender comparisons also changes between 1988 and 1981 in earnings inequality are generated from movements in the hours distributions copyright 1996 by mit press

what mean impacts miss distributional effects of welfare reform experiments labor supply theory predicts systematic heterogeneity in the impact of recent welfare reforms on earnings transfers and income yet most welfare reform research focuses on mean impacts we investigate the importance of heterogeneity using random assignment data from connecticut s jobs first waiver which features key elements of post 1996 welfare programs estimated quantile treatment effects exhibit the substantial heterogeneity predicted by labor supply theory thus mean impacts miss a great deal looking separately at samples of dropouts and other women does not improve the performance of mean impacts we conclude that welfare reform s effects are likely both more varied and more extensive than has been recognized

how do retirement tests affect the labour supply of older men abstract we analyze the sequential elimination of retirement earnings tests from canada s public pension plans our empirical framework potentially overcomes the obstacles encountered analyzing the tests within the context of a national social security system our results indicate that the removal of the tests were associated with relatively large shifts from part year full time to full year full time work we are unable to reconcile these results within the context of a traditional labour supply model instead they are consistent with a model which incorporates fixed costs of work or labour market rigidities which preclude continuous reductions in labour supply around retirement

changes in the distribution of individual earnings in the united states 1967 1986 using micro data from the current population survey the author examines the sensitivity of conclusion regarding time series changes in inequality to the measure of inequality employed and to the population group analyzed although changes in inequality over time are sensitive to the measure of inequality the author finds a general pattern of stable or decreasing inequality throughout the 1970s followed by a period of increasing inequality based upon a decomposition analysis the author concludes that these changes are not simply the results of the changing employment distribution among groups defined by sex age education or industry instead the rise in inequality results from an increase in inequality within these groups copyright 1992 by mit press

the perceived budget constraint under social security evidence from reentry behavior if as is usually assumed older individuals face a continuous choice of work hours without fixed costs or take account of the actuarial adjustment of social security benefits postponed as a result of the earnings test the earnings limit should not affect their labor supply before age 65 we test and reject these assumptions by estimating the hazard function for labor market reentry after retirement using white men in the retirement history survey we find that the earnings limit does affect reentry and that older men behave myopically responding to current benefits rather than to social security wealth several policy implications follow

new evidence on earnings and benefit claims following changes in the retirement earnings test in 2000 abstract this paper examines the labor force activity and timing of benefit claims of workers aged 65 69 in response to the removal of the retirement earnings test in 2000 we use the 1 sample of longitudinal social security administrative data that covers the period from 4 years before to 4 years after the removal of the test using a reduced form quantile regression method we find that effects on earnings are limited to workers with earnings just around the test threshold and above as predicted by economic theory our estimated effects suggest that labor supply elasticities with respect to the net of tax rate are approximately 0 05 0 07 for working primary beneficiaries aged 65 69 whose earnings are between the median and the 80th percentile further results show that applications for social security benefits following the earnings test removal accelerated by 2 to 5 percentage points among individuals aged 65 69 and by 3 to 7 percentage points among those reaching age 65

the joint choice of retirement age and postretirement hours of work in this paper we develop and estimate the first complete and internally consistent model of the effect of social security on the labor supply of the aged we develop a simple life cycle model that captures the effect of social security on the joint choice of the date of retirement and hours of work immediately after retirement we show that in the presence of social security the budget constraint relating these choices is highly complex and nonlinear and we develop a maximum likelihood procedure for the model that yields consistent parameter estimates our procedure avoids the selectivity biases present in prior studies that have ignored the nonlinearity of the constraint or have examined only self selected subsamples that exclude nonretirees our results show that social security has a significant though relatively small effect on the age of retirement and postretirement hours of work and that the effect of social security grows with advancing age

unemployment and income distribution time series evidence from sweden for a long time swedish politicians have been devoted to keeping unemployment at low levels the main reason for this devotion is probably the belief that higher unemployment increases inequality of income and welfare this is a reasonable belief since unemployment risks are highest among people with low earnings capacity even when they have a job by means of micro data it is easy to verify a marked low income profile of unemployment further the swedish unemployment insurance system replaces only about 70 per cent of foregone income and quite many unemployed do not qualify for any benefits see bjorklund and holmlund 1991 increases in unemployment however are associated with many changes in the economy with complex consequences for the personal distribution of income in addition to the income losses suffered by those who become unemployed higher unemployment also affects the factor shares of income the profit share typically declines during recessions and because upper income groups receive a relatively high proportion of their income from capital income a countervailing mechanism is involved changes in unemployment also affect inflation which in turn might influence the personal distribution of income the distributional effects of inflation are an open question this note makes an investigation into the relationship between unemployment and the personal distribution of income using swedish time series data the method was first used on u s data by blinder and

the impact of food stamps on us poverty in the 1980s a marginal dominance analysis the relative effectiveness of the us food stamp program in reducing the incidence and depth of poverty is compared at a number of poverty lines across time the analysis is based upon an extension of dominance methods for ordering poverty recently developed statistical inference procedures and a merged data set that permnits an unusually comprehensive measure of income the comparative effectiveness of the food stamp program in reducing headcount poverty over time is contingent on the poverty line selected however the reduction in poverty gaps is greater in 1990 than in 1982 regardless of the poverty line chosen the sensitivity of the results to the income concept equivalence scale and time period used for measuring income are also considered

changes in the distribution of wages in canada 1981 1992 this article uses microdata to study the changes in the distribution of weekly wages in canada from 1981 to 1992 changes in the distribution are analyzed using lorenz curves and eight different univariate measures of inequality evidence is presented that indicates that inequality is anticyclical increasing during recessions and falling during business cycle expansions moreover after changes in the cycle are accounted for there has been a clear upward trend in wage inequality comparisons between the canadian and the u s distributions show that wage inequality was less pronounced in canada than it was in the united states in the 1980s and was increasing in canada relative to the united states from 1989 to 1992

testing for marginal changes in income distributions with lorenz and concentration curves asymptotically distribution free statistical tests for comparing absolute and relative lorenz and concentration curves are provided the procedures do not require independent samples and can be used to test for marginal changes in income distributions the tests are illustrated using a large sample of tax returns that have been randomly selected for audit by the internal revenue service the tests reveal the marginal effects of systematic underreporting of income and tax liabilities on the u s income distribution copyright 1994 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

the impact of medicaid on labor market activity and program participation evidence from the oregon health insurance experiment united states dept of health and human services assistant secretary for planning and evaluation

accuracy of mortgage portfolio risk forecasts during financial crises abstract this paper explores whether factor based credit portfolio risk models are able to predict losses in severe economic downturns such as the recent global financial crisis gfc within standard confidence levels the paper analyzes i the accuracy of default rate forecasts and ii whether forecast downturn percentiles value at risk var are sufficient to cover default rate outcomes over a quarterly and an annual forecast horizon uninformative maximum likelihood and informative bayesian techniques are compared as they imply different degrees of uncertainty we find that quarterly var estimates are generally sufficient but annual var estimates may be insufficient during economic downturns in addition the paper develops and analyzes models based on auto regressive adjustments of scores which provide a higher forecast accuracy the consideration of parameter uncertainty and auto regressive error terms mitigates the shortfall

interest rate variations mortgage prepayments and household mobility the volatility of interest rates and the deregulation of the mortgage lending sector have meant that many homeowners also own mortgages at terms more favorable than current interest rates this paper presents a model of residential mobility decisions and an empirical analysis that evaluates the importance of the ownership of these mortgages upon the mobility of homeowners the results based upon proportional and nonproportional hazard models indicate that these effects are quite large the empirical analysis distinguishes between different regulatory regimes that govern the assumption of existing mortgages and indicates the implications of these findings for the pricing and valuation of mortgage backed securities copyright 1987 by mit press

making the most out of programme evaluations and social experiments accounting for heterogeneity in programme impacts the conventional approach to social programme evaluation focuses on estimating mean impacts of programmes yet many interesting questions regarding the political economy of programmes the distribution of programme benefits and the option values conferred on programme participants require knowledge of the distribution of impacts or features of it this paper presents evidence that heterogeneity in response to programmes is empirically important and that classical probability inequalities are not very informative in producing estimates or bounds on the distribution of programme impacts we explore two methods for supplementing the information in these inequalities based on assumptions about participant decision making processes and about the strength in dependence between outcomes in the participation and non participation states dependence is produced as a consequence of rational choice by participants we test for stochastic rationality among programme participants and present and implement methods for estimating the option values of social programmes

did soviet elderly employment respond to financial incentives evidence from pension reforms abstract this study answers the open question of whether workers respond to financial incentives in a command economy to do this i evaluate pension reforms in soviet russia in 1964 and 1969 that allowed pensioners to receive a greater share of their pensions if they worked resulting in a progressive elimination of benefit reduction rates variation in group eligibility and variation in benefit reduction rates in eastern and western regions allow for the use of several difference in differences frameworks i collect and digitize novel data from the soviet archives on pensioner employment constructing the first database of the soviet old age labor market i find that soviet pensioners are responsive to financial incentives by 1969 after the benefit reduction rate fell from an average of 47 8 to 24 1 pensioner employment rates rose by 5 7 percentage points representing a 47 increase finally i provide illustrative estimates of the employment elasticity with respect to the average net of tax rate that range from 0 6 to 1 4

the labour supply effect of the abolition of the earnings rule for older workers in the united kingdom high effective tax rates on work at and around state pension age deter participation an example is the earnings test operating in several oecd countries the united states abolished its test for the 65 age group in 2000 the united kingdom offers a natural experiment of this reform as it abolished its test known as the earnings rule in 1989 we examine the effect of this change taking account of the opportunity to defer pension rights abolition of the rule raised working hours of older male workers by around 4 hours a week with a lesser impact on women s behaviour

dollars and dreams a reduced middle class alternative explanations we decompose annual earnings into hours of work and hourly earnings and analyze male female differences in earnings inequality using canadian data our results indicate that the larger female inequality in earnings is due to a greater inequality in the

employment time and the cyclicality of earnings growth abstract we study how the distribution of earnings growth evolves over the business cycle in italy we distinguish between two sources of annual earnings growth changes in employment time number of weeks of employment within a year and changes in weekly earnings changes in employment time generate the tails of the earnings growth distribution and account for its procyclical skewness in contrast the distribution of weekly earnings growth is close to symmetric and stable over the cycle this suggests that studies of earnings risk should carefully model the employment margin to avoid erroneous conclusions on the nature and magnitude of risks underlying individual earnings we show that the combination of simple employment and wage processes is enough to capture the complex features of the earnings growth distribution

labor supply responses to marginal social security benefits evidence from discontinuities abstract a key question for social security reform is whether workers respond to the link on the margin between the social security taxes they pay and the social security benefits they will receive we estimate the effects of the marginal social security benefits that accrue with additional earnings on three measures of labor supply retirement age hours and labor earnings we develop a new approach to identifying these incentive effects by exploiting five provisions in the social security benefit rules that generate discontinuities in marginal benefits or non linearities in marginal benefits that converge to discontinuities as uncertainty about the future is resolved we find that individuals approaching retirement age 52 and older respond to the social security tax benefit link on the extensive margin of their labor supply decisions we estimate that a 10 increase in the net of tax share reduces the two year retirement hazard by a statistically significant 2 0 percentage points from a base rate of 15 the evidence with regard to labor supply responses on the intensive margin is more mixed we estimate that the elasticity of hours with respect to the net of tax share is 0 42 and statistically significant but we do not find a statistically significant earnings elasticity though we lack statistical power to estimate results within subsamples precisely the retirement response is driven mostly by the female subsample while the hours response comes from the male subsample

opening a can of worms the pitfalls of time series regression analyses of income inequality this paper argues that time series regression analysis is of only very limited use for understanding the determinants of income inequality the argument is based on a combination of results from the time series econometrics literature and several characteristics of inequality itself principally nonstationarity of the data in most inequality regression models and the weak theoretical foundations underlying the models a sample of postwar us data is used to illustrate the problems involved

what caused earnings inequality to increase in canada during the 1980s while broad consensus exists that earnings inequality increased in canada during the 1980s as in other industrialised countries there is little agreement about the causes the main contribution of this paper is the simultaneous empirical examination of eight hypotheses of increased earnings inequality using multivariate regression analysis namely the decline in unionisation minimum wages and industrialisation as well as the increase in unemployment trade relative supply of university educated workers and relative supply of female workers and technological change in canada during the 1980s employment and unionisation factors strongly and consistently explain the increase in annual earnings and hourly wage rate inequality after controlling for six other possible determinants the results also point to the importance of considering a multidimensional explanation of increased earnings inequality and avoiding generalisations across gender income and work status groups copyright 2000 by oxford university press

the effects of health insurance and self insurance on retirement behavior this paper provides an empirical analysis of the effects of employer provided health insurance medicare and social security on retirement behavior using data from the health and retirement study we estimate a dynamic programming model of retirement that accounts for both saving and uncertain medical expenses our results suggest that medicare is important for understanding retirement behavior and that uncertainty and saving are both important for understanding the labor supply responses to medicare half the value placed by a typical worker on his employer provided health insurance is the value of reduced medical expense risk raising the medicare eligibility age from 65 to 67 leads individuals to work an additional 0 074 years over ages 60 69 in comparison eliminating 2 years worth of social security benefits increases years of work by 0 076 years

structural unemployment cyclical unemployment and income inequality this is the first study that decomposes unemployment into its structural and cyclical components and investigates their impact on income distribution controlling for the influence of inflation increases in structural unemployment have a substantial aggravating impact on income inequality inflation has a progressive impact which is due to the unexpected component the study demonstrates that previous work failed to take into account the stochastic trend behavior of the variables consequently specifications used by previous research cannot predict the behavior of income shares after 1983 whereas the specification used by this paper generates accurate forecasts the results also indicate that a sustained gnp growth is not necessarily associated with an improvement in income inequality because sustained gnp growth can coexist with increased structural unemployment

the effects of collecting income taxes on social security benefits abstract since 1983 social security benefits have been subject to income taxation a provision that can significantly increase the marginal income tax rate for older individuals to assess the impact of this tax we construct and calibrate a detailed life cycle model of labor supply saving and social security claiming we find that in a long run stationary environment replacing the taxation of social security benefits with a revenue equivalent change in the payroll tax would increase labor supply consumption and welfare from an ex ante perspective an equally desirable reform would be to make the portion of benefits subject to income taxes completely independent of other income

lorenz dominance and welfare changes in the u s distribution of income 1967 1986 this paper examines income inequality in the untied states over the period 1967 86 using recently developed tests for differences in lorenz curves the authors are able to rank eighteen of nineteen annual comparisons in contrast standard techniques are able to rank only twelve these results suggest that the lorenz dominance principle is more empirically relevant than previously thought the tests reveal a sharp rise in u s inequality between 1978 and 1982 as well as a shift toward greater inequality over the entire period the authors also examine changes in economic welfare using the joint mean lorenz dominance principle copyright 1991 by mit press

the measurement and trend of housing inequality in the united states 1978 85 inequality in housing services for renters owners and all households in the united states is estimated for 1978 and 1985 hedonic techniques are applied to data from the american housing survey to derive values for housing services that include publicly provided as well as subsidized housing we find significant disparities in housing but substantially less inequality than in incomes in 1978 the top decile garnered 19 2 of housing services while the bottom decile received only 5 1 the trend however is towards greater equality in housing with large and statistically significant shifts across all deciles by 1985 the share of the top decile dropped to 16 3 a percentage decrease in share of 15 3 while that of the bottom decile rose to 5 7 a percentage increase of 11 4

how does social security claiming respond to incentives considering husbands and wives benefits separately abstract most women receive some social security benefits based upon their husbands earnings history but husbands benefit claiming is inconsistent with maximizing lifetime benefits for the couple i show that husbands claiming behavior responds to the actuarial incentives from their retired worker benefits not responding to incentives from spouse and survivor formulas reduces wives lifetime benefits rule changes to the social security benefit calculation the age difference between spouses and the relative strength of the wife s labor force history creates variation in incentives segments of the population predicted to be more responsive to incentives provides similar results to the main specification

the determinants of default on insured conventional residential mortgage loans this paper presents empirical evidence on the determinants of default for insured residential mortgages a multinomial logit model is specified and estimated for regional aggregates constructed from cross sectional and time series data the results document the independent statistical significance of contemporaneous payment income and loan value ratios and unemployment rates as well as more commonly studied determinants of default such as age and the original loan value ratio

life expectancy and claiming behavior in a flexible pension system we study the relationship between early claiming of pensions and incentives in the highly flexible norwegian public pension system measuring incentives to claim based on an estimated model for expected longevity despite a strong correlation between incentives and claiming decisions the additional costs to public budgets arising from this selection turn out to be modest based on analyses exploiting only variation in expected pensions generated by variation in parental longevities and only claiming of pensions not in conjunction with retirement we conclude that part of the selection is active some individuals claim pensions early because they gain from doing so this article is protected by copyright all rights reserved

nutrition and nonparticipation in the us food stamp programme microdata from the national food consumption survey are used to test for differences in caloric and protein intake distributions we compare poor households that participate in the us food stamp programme to eligible households that do not participate tests for stochastic dominance provide unambiguous evidence that eligible nonparticipants suffer from relative undernutrition compared to participating households probit analysis is used to identify characteristics of participating and nonparticipating households

earnings dynamics and inequality among canadian men 1976 1992 evidence from longitudinal income tax records using an extraordinary database drawn from longitudinal income tax records we decompose canada s growth in earnings inequality into its persistent and transitory components we find that the growth in earnings inequality reflects both an increase in long run inequality and an increase in earnings instability the canadian data strongly reject several restrictions commonly imposed in the u s literature and they also suggest that imposing these evidently false restrictions may lead to distorted inferences about earnings dynamics and inequality trends

canadian labour market performance in international perspective my objective is to assess canadian labour market outcomes in recent decades and to compare canada s performance with that experienced in other industrialized countries the focus is on three key dimensions employment unemployment and the structure of earnings although my main purpose in the paper is to examine the canadian record i also ask what we can learn from canada s experience about the causes of some of the salient economic developments in oecd countries the rise and persistence of unemployment in europe and the growth of income inequality in countries such as the united states the united kingdom canada and australia let s begin with the question how well has the canadian economy performed during the past three decades if our reference point is the 1950s and 1960s the answer is likely to be poorly indeed the first twenty five years following the second world war now appear as a golden era since that period real income growth has been slow earnings have become more unequally distributed and unemployment has trended upward reaching levels that would have been considered outside the range of plausibility in the 1960s however most of the advanced countries have experienced a sharp deterioration in their economic performance since the early 1970s the turbulent world economic environment has made it difficult to sustain the kind of outcomes ob

measuring the effects of socio economic variables on the income distribution an application to the east german transition process this paper develops a discrete variant of the semiparametric methodology of dinardo fortin and lemieux 1996 dfl to measure the effects of socio economic variables on the income distribution although the proposed method is also based on the calculation of hypothetical income distributions by reweighting the original population it is much easier to implement the framework is applied to examine the distributional effects of rising unemployment decreasing female labor market participation and widening income structure in east germany following the reunification with west germany in 1990 the empirical results suggest that both these tendencies contributed considerably to the recent increase in income inequality in east germany

a note on canadian migration to the united states during the 1980s and 1990s considerable media attention had been directed towards the flow of highly talented canadians to the united states in the 1990s there are firm theoretical reasons however to believe that qualitative differences in migration began as early as the 1980s owing to the widening distribution of earnings and the related increased returns to education in the united states relative to canada both of which could result in qualitative improvements in the migration flow us immigration policy remained essentially unchanged during the 1980s but changed markedly in the 1990s owing to the implementation of the canada us free trade agreement cufta and its successor the north american free trade agreement nafta we use a flexible empirical approach to document these changes in immigrant quality using 1980 1990 and 2000 us census data our results suggest that improvements in canadian immigrant quality occurred during the 1990s but these also happened earlier casting doubt on the hypothesis of improving canadi

the 1983 social security reforms and labor supply adjustments of older individuals in the long run a structural life cycle retirement model with an improved specification over previous models is used to analyze and compare the long run effects on the labor supply of older workers of the 1983 social security reforms the effects of separate provisions from the 1983 amendments are examined these include the raising of the normal retirement age to 67 the increase in the delayed retirement credit to 8 and the lowering of the reduction rate for earnings over the test amount to 1 00 for every 3 00 of earnings

risk based capital requirements for mortgage loans abstract we contribute to the debate over the reform of the basel accord by developing risk based capital requirements for mortgage loans held in portfolio by financial intermediaries our approach employs simulation of both economic variables that affect default incidence and conditional loss probability distributions results indicate that appropriate capital charges for credit risk vary substantially with loan characteristics and portfolio geographic diversification hence rules that offer little risk differentiation including the current basel i regime and standardized approach proposed in basel ii result in significant divergence between regulatory and economic capital these results highlight the incentive problems inherent in simplified methods of capital regulation

the labor supply effects of the social security earnings test the social security earnings test taxes away benefits at a 33 50 rate once earnings pass a threshold amount i investigate the response to three past changes in the earnings test rules each applying to some age groups and not others i find that beneficiaries bunch in substantial numbers just below the earnings threshold and the bunching shifts when the earnings test rules change these shifts in the budget constraint are incorporated into an econometric model to identify income and substitution effects the estimation yields significant elasticities that suggest considerable deadweight loss suffered by working beneficiaries

convergence of the south and non south income distributions 1969 1979 income distribution and inequalities in the southern united states are analyzed and compared with data for the rest of the country the evidence presented in this paper reveals that in the 1970s the souths income distribution either converged or moved significantly closer to the income distribution of the rest of the country the degree of convergence depends on the definition of the recipient unit and to a degree on the particular cost of living index used to deflate southern and non southern incomes the convergence is attributed in part to the labor unionization in the northeast and the resulting relocation of companies to the south data are from the 1970 and 1980 censuses and concern total household income excerpt

pension reform and labor supply abstract we exploit a comprehensive restructuring of the early retirement system in norway in 2011 to examine labor supply responses to increases in work incentives and actuarially neutral reductions in the age of first access to pension benefits we find that increasing the returns to work is a powerful policy the removal of an earnings test implying a doubling of the average net take home wage led to an increase in average labor supply by 7 h per week 30 at age 63 and by 8 h 46 at age 64 the responses primarily came at the extensive margin in contrast reducing the access age has almost no effect on labor supply in our setting with actuarially fair work incentives

defaults on mortgage obligations and capital requirements for u s savings institutions abstract this paper analyzes credit risk for residential mortgages estimates of the hazard of mortgage default are presented based upon a large sample of conventional loans issued in the late 1970s mean returns are estimated together with variances and covariances for various loan to value ltv ratios and geographic groups these results are then used to analyze capital requirements for institutions holding mortgages we ask for a given bankruptcy risk how should capital requirements vary by ltv and geographical diversification the empirical results indicate that both factors have powerful effects upon bankruptcy risk thus capital requirements should vary substantially along these dimensions

poverty in eastern europe in the years of crisis 1978 to 1987 poland hungary and yugoslavia eastern europe experienced an economic crisis between 1978 and 1987 declining income led to substantial increases in poverty rates in poland and yugoslavia while poverty in hungary remained at about the same level as before the crisis in all three countries urban poverty increased as the economic condition of state sector workers deteriorated to a much greater extent than that of agricultural and mixed households the increased poverty was entirely explained by declining income because the overall income distribution did not change or in some cases improved

the effect of age targeted tax credits on labor force participation of older workers abstract i analyze the effect of income tax policy changes on labor force participation of older workers i exploit two age targeted policy initiatives to promote work at older ages simultaneously implemented in sweden in 2007 an earned income tax credit and a payroll tax credit for workers above age 65 using an age based discontinuity in eligibility criteria i conduct a difference in differences analysis with the reform as an instrument for the net of tax rate i find a participation elasticity with respect to the net of participation tax rate of about 0 22 in the year following the 65th birthday for individuals who were working four years earlier

cohort patterns in canadian earnings assessing the role of skill premia in inequality trends in this paper we document the pattern of change in age earnings profiles across cohorts and evaluate its implications using synthetic cohorts from the survey of consumer finances over the period 1971 to 1993 wwe show that the age earnings profiles of canadian men have been deteriorating for more recentcohorts in comparison with older cohorts we find this pattern for both high school and university educated workers in no case do we find evidence that the return to gaining experience has been increasing over time nor do we find increased within cohort dispersion of earnings we view these findings as conflicting with the hypothesis that increased skill premia largely explain the observed increase in dispersion of male weekly earnings jel classification j31 o33 ce memoire documente le pattern de changements dans les relations ges gains d une cohorte a l autre et en analyse les implications utilisant des cohortes synthetiques pour la periode 1971 93 on montre que les profils ges gains des hommes au canada se sont deteriores dans les cohortes les plus recentes on ne trouve pas de resultats qui montreraient que le rendement sur l experience accumulee s est accru dans le temps ou qu il y a dispersion accrue des gains a l interieur des cohortes les auteurs suggerent que ces resultats contredisent l hypothese que des primes accrues pour les habiletes expliqueraient l accroissement qu on a observe dans la dispersion des gains des hommes au canada

mortgage default and possession under recourse a competing hazards approach recent studies by ambrose buttimer and capone have stressed the fact that lender and borrower decisions after the initial default on amortgage may significantly affect the amount and timing of recoveries and hence more broadly the value and riskiness of mortgage loan portfolios this study uses microeconomic data from the uk to examine the timing decisions of mortgage lenders and borrowers when mortgages are in default the results suggest that salary and interest rates influence timing decisions more than loan to value ratios do and that lenders and borrowers accelerate the resolution of delinquent mortgages as the economic climate deteriorates

changing the social security rules for work after 65 this paper simulates the effects of proposed changes in the social security rules including the elimination of the retirement earnings test for men who work after normal retirement age a policy change that was given serious consideration by the social security administration in 1988 89 and that is similar to other proposals made in congress and elsewhere since then is projected to raise long run costs by 43 billion net of taxes and to induce an increase of 3 5 in the number of full time male workers between the ages of 65 and 69 the outcome especially in the short run is greatly affected by the timing of workers decisions to apply for benefits