identifying the response of fertility to financial incentives summary while using financial incentives to increase fertility has become relatively common the effects of such policies are difficult to assess we propose an identification strategy that relies on the fact that the variation in wages induces variation in benefits and tax credits among comparable households we implement our approach by estimating a discrete choice model of female participation and fertility using individual data from the french labor force survey and a detailed representation of the french tax benefit system our results suggest that financial incentives have had a significant effect on fertility decisions in france as an example we simulate the effects of an additional unconditional child credit of 150 euros per month the effects are strongest for the third child copyright 2013 john wiley sons ltd

macroeconomic forecasts and microeconomic forecasters in the presence of principal agent problems published macroeconomic forecasts by professional economists may not measure expectations forecasters may use their forecasts in order to manipulate beliefs about their ability i test a cross sectional implication of models of reputation and information revelation i find that as forecasters become older and more established they produce more radical forecasts since these more radical forecasts are in general less accurate ex post forecast accuracy grows significantly worse as forecasters become older and more established these findings are consistent with reputational factors at work in professional macroeconomic forecasts

the career costs of children this paper analyzes the life cycle career costs associated with child rearing and decomposes their eects into unearned wages as women drop out of the labor market loss of human capital and selection into more child friendly occupations we estimate a dynamic life cycle model of fertility occupational choice and labor supply using detailed survey and administrative data for germany for numerous birth cohorts across dierent regions we use this model to analyze both the male female wage gap as it evolves from labor market entry onward and the eect of pro fertility policies we show that a substantial portion of the gender wage gap is explainable by realized and expected fertility and that the long run eect of policies encouraging fertility are considerably lower than the short run eects typically estimated in the literature

term premiums in bond returns abstract this paper examines expected returns on u s treasury bills and on u s government bond portfolios expected bill returns are estimated from forward rates and from sample average returns both estimation methods indicate that expected returns on bills tend to peak at eight or nine months and never increase monotonically out to twelve months reliable inferences are limited to treasury bills and thus to maturities up to a year the variability of longer term bond returns preempts precise conclusions about their expected returns

detecting spot price forecasts in futures prices futures markets are often described as having two important social functions first they facilitate the transfer of commodity price risk and second they provide forecasts of commodity prices the evidence that futures markets transfer price risk is irrefutable however there is some debate about the markets forecasting ability in particular forecasts based on the current spot price are often as good as those based on the futures price some economists cite a failure to detect superior forecast power in futures prices as evidence of market inefficiency see e g leuthold 1974 and martin and garcia 1981 there are at least two other explanations first there may be nothing for the futures market to forecast if the current spot price equals the true expectation of the future spot price the futures market cannot provide a better forecast second a superior futures market forecast may be obscured by the unexpected component of the realized spot price the true expectation of the future spot price is unobservable one must approximate this expectation with the actual future spot price

endogenous gender power household labor supply and the demographic transition abstract we present a microeconomic model of the household in which there exists no difference in spousal preferences but childrearing is more time costly for women bargaining between the wife and the husband forms the basis of household decisions marital bargaining power is determined according to the incomes of the spouses which in turn help to determine their reservation utility levels outside the marriage the endogeneity of bargaining power introduces a non cooperative element to the couples decision making problem because both the husbands and the wives take into account how their pre marital education decisions affect their marital power and the share they extract from household resources in the future the model predicts that wives invest more than is pareto efficient in their education in order to increase their bargaining power in marriage as a consequence couples have fewer children and consume more when exogenous structural changes lead women to invest more in education a corollary of the model is that empowering women directly through social reforms such as a lower gender wage gap leads to lower fertility and higher spousal consumption and leisure

inflation forecast errors and time variation in term premia the expectations theory of the term strueture is well known to give wrong signals as to the future course of long term interest rates one explanation involves rational time varying term premia however the anomaly may also be due to inflation forecast errors we study survey forecasts of inflation it seems that the respondents forecasts are insufficiently adaptive interest rates reflect expectations similar to the inflation forecasts as a result past survey forecast errors reliably predict premia on u s government bonds

testing the expectations hypothesis using long maturity forward rates abstract this paper reports on long maturity interest rates the results hardly vary across maturities using forward rate regressions the expectations hypothesis eh is numerically close to being accepted for a long short data set the eh is statistically rejected accepted

a simple account of the behavior of long term interest rates recent empirical research on the term structure of interest rates has shown that the long term interest rate is well described by a distributed lag on short term interest rates but does not conform to the expectations theory of the term structure it has been suggested that the long rate overreacts to the short rate this paper presents aunified taxonomy of risk premia or deviations from the expectations theory this enables the hypothesis of overreaction to be formally stated it is shown that if anything the long rate has underreacted to the short rate however the independent movement of the long rate is primarily responsible for the failure of the expectations theory

bargaining over babies theory evidence and policy implications it takes a woman and a man to make a baby this fact suggests that for a birth to take place the parents should first agree on wanting a child using newly available data on fertility preferences and outcomes we show that indeed babies are likely to arrive only if both parents desire one and there are many couples who disagree on having babies we then build a bargaining model of fertility choice and match the model to data from a set of european countries with very low fertility rates the distribution of the burden of child care between mothers and fathers turns out to be a key determinant of fertility a policy that lowers the child care burden specifically on mothers can be more than twice as effective at increasing the fertility rate compared to a general child subsidy

will the stork return to europe and japan understanding fertility within developed nations we seek to explain the differences in fertility rates across high income countries by focusing on the interaction between the increasing status of women in the workforce and their status in the household particularly with regards to child care and home production we observe three distinct phases in women s status generated by the gradual increase in women s workforce opportunities in the earliest phase characteristic of the 1950s and 1960s in the united states women earn low wages relative to men and are expected to shoulder all of the child care at home as a result most women specialize in home production and raising children in an intermediate stage women have improved but not equal labor market opportunities but their household status lags women in this stage are still expected to do the majority of child care and household production increasing access to market work increases the opportunity cost of having children and fertility falls female labor force participation increases working women in this phase of development have the strongest disincentives to having additional children since the entire burden of child care falls on them in the final phase of development women s labor market opportunities begin to equal those of men in addition the increased household bargaining power that comes from more equal wages results in much higher if not gender equal male participation in household production female labor force participation is higher than in the intermediate phase the increased participation of men in the household also reduces the disincentives for women to have additional children and fertility rates rise compared to the intermediate phase the intermediate low fertility phase might describe japan italy and spain in the present day while the scandinavian countries the netherlands and the modern day united states may be entering the final phase after presenting the empirical evidence we predict that high income countries with the lowest fertility rates are likely to see an increase in fertility in the coming decades

nested tests of alternative term structure theories controversies in term structure theory center around the existence and variability of term premia in securities yields in this paper the term premium on a default free n period bond is defined as the difference between its observable yield to maturity and the average expected per annum rate of return on an n period strip of rollover investments in one period bonds to test alternative term structure theories without introducing ex post proxies for expectational variables this paper uses a set of cross section interest rate forecasts collected jointly with burton malkiel of princeton university from a population of large institutional lenders at four different phases of a single interest rate cycle statistical tests strongly confirm the existence of nonzero term premia at each survey date thereby rejecting the pure expectations theory of the term structure additional tests are unable to reject restrictions implied by the liquidity premium hypothesis that term premia should be positive and increase with maturity finally contrary to the martingale hypothesis ex ante term premium data vary significantly overtime and show a positive association with the level of interest rates this abstract was borrowed from another version of this item

fertility and childlessness in the united states we develop a theory of fertility distinguishing its intensive margin from its extensive margin the deep parameters are identified using facts from the 1990 us census i fertility of mothers decreases with education ii childlessness exhibits a u shaped relationship with education iii the relationship between marriage rates and education is hump shaped for women and increasing for men we estimate that 2 5 percent of women were childless because of poverty and 8 1 percent because of high opportunity cost of childrearing over time historical trends in total factor productivity and in education led to a u shaped response in childlessness rates while fertility of mothers decreased

do husbands and wives pool their resources evidence from the united kingdom child benefit common preference models of family behavior imply income pooling a restriction on family demand functions such that only the sum of husband s income and wife s income affects the allocation of goods and time testing the pooling hypothesis is difficult because most family income sources are not exogenous to the allocations being analyzed in this paper we present an alternative test based on a natural experiment a policy change in the united kingdom that transferred a substantial child allowance to wives in the late 1970s using family expenditure survey data we find strong evidence that a shift toward greater expenditures on women s clothing and children s clothing relative to men s clothing coincided with this income redistribution

gender and say a model of household behaviour with endogenously determined balance of power the evidence that the same total income can lead a household to choose different consumption vectors depending on who brings in how much of the income has led to an effort to replace the standard unitary model of the household with the collective model which recognizes that the husband and the wife may have different preferences and depending on the balance of power between them the household may choose differently one weakness of this new literature is that it fails to recognize that the household s choice could in turn influence the balance of power once this two way relation between choice and power is recognized we are forced to confront some new questions concerning how to model the household this paper tries to answer these by defining a household equilibrium examining its game theoretic properties and drawing out its testable implications it is shown for instance that once we allow for dynamic interaction a household can exhibit inefficient behavior and that for a certain class of parameters children will be less likely to work in a household where power is evenly balanced than one in which all power is concentrated in the hands of either the father or the mother the paper also draws out the implications for female labor supply

a note on the determinants of unexpected exchange rate movements abstract in this paper we study the relative importance of surprises in fundamentals in explaining unexpected exchange rate movements employing a unique survey dataset that contains matched exchange rate and interest rate expectations we are able to derive a number of interesting conclusions a variance decomposition of unexpected exchange rate movements into various components reveals that interest rate news is relatively unimportant but that changes in perceptions about risk premia and more importantly revisions of expectations with regard to future exchange rate levels are crucial in explaining unexpected exchange rate movements

the expectation hypothesis of the term structure of very short term rates statistical tests and economic value this paper re examines the validity of the expectation hypothesis eh of the term structure of us repo rates ranging in maturity from overnight to three months we extend the work of longstaff 2000a in two directions i we implement statistical tests designed to increase test power in this context ii more importantly we assess the economic value of departures from the eh based on criteria of profitability and economic significance in the context of a simple trading strategy the eh is rejected throughout the term structure examined on the basis of the statistical tests however the results of our economic analysis are favorable to the eh suggesting that the statistical rejections of the eh in the repo market are economically insignificant

financial incentives and fertility using panel data on over 300 000 israeli women from 1999 to 2005 we exploit variation in israel s child subsidy to identify the impact of changes in the price of a marginal child on fertility we find a positive statistically significant and economically meaningful price effect on overall fertility and consistent with becker 1960 and becker and tomes 1976 a small effect of income on fertility which is negative at low and positive at high income levels we also find a price effect on fertility among older women suggesting that part of the overall effect is due to a reduction in total fertility

federal reserve interest rate targeting rational expectations and the term structure abstract the amount of information in the yield curve for forecasting future changes in short rates varies with the maturity of the rates involved indeed spreads between certain long and short rates appear unrelated to future changes in the short rate contrary to the rational expectations hypothesis of the term structure this paper estimates a daily model of federal reserve interest rate targeting behavior which accompanied by the maintained hypothesis of rational expectations explains the varying predictive ability of the yield curve and elucidates the link between fed policy and the term structure

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

more on marriage fertility and the distribution of income according to pareto 1896 the distribution of income depends on the nature of the people comprising a society on the organization of the latter and also in part on chance in the model developed here the nature of the people is captured by attitudes toward marriage divorce fertility and children singles search for mates in a marriage market married agents bargain about work and the quantity and quality of children they can divorce social policies such as child support requirements reflect the organization of the society finally chance is modeled by randomness in income marriage opportunities and marital bliss

the quantitative role of child care for female labor force participation and fertility consistent with facts for a cross section of oecd countries i document that the labor force participation rate of west german mothers with children aged zero to two exceeds the corresponding child care enrollment rate whereas the opposite is true for mothers with children aged three to mandatory school age i develop a life cycle model that explicitly accounts for this age dependent relationship through various types of non paid and paid child care the calibrated version of the model is used to evaluate two policy reforms concerning the supply of subsidized child care for children aged zero to two these counterfactual policy experiments suggest that the lack of subsidized child care constitutes indeed for some females a barrier to participate in the labor market and depresses fertility

household intertemporal behaviour a collective characterization and a test of commitment in this paper a formal test of intra household commitment is derived and performed to that end two models of household intertemporal behaviour are developed in both models household members are characterized by individual preferences in the first formulation household decisions are always on the ex ante pareto frontier in the second model the assumption of intra household commitment required by ex ante efficiency is relaxed it is shown that the full efficiency household euler equations are nested in the no commitment euler equations using this result the hypothesis that household members can commit to future allocations of resources is tested using the consumer expenditure survey i strongly reject this hypothesis it is also shown that the standard unitary framework is a special case of the full efficiency model however if household members are not able to commit household intertemporal behaviour cannot be characterized using the standard life cycle model these findings have two main implications first policy makers can change household behaviour by modifying the decision power of individual household members second to evaluate programmes designed to improve the welfare of household members it would be beneficial to replace the standard unitary model with a characterization of household behaviour that allows for lack of commitment

gender power fertility and family policy the birth of children often shifts the balance of power within a family if family decisions are made according to the welfare function of the spouses this shift in power might cause a time consistency problem in a model of cooperative family decision making we show that this problem can lead to a systematic downward bias in fertility by keeping fertility low spouses mitigate the ex ante undesired shift in the balance of power that results from the presence of children this provides scope for welfare enhancing policy intervention we discuss to what extent existing family policy measures are suitable for overcoming the bias

household bargaining over fertility theory and evidence from malaysia we develop and test a model of household bargaining over fertility when transfers between spouses are possible the model makes precise how the fertility preferences of each spouse translate into fertility outcomes we show this depends on whether or not spouses can commit to their future actions within marriage if couples bargain with commitment fertility outcomes take account of both spouses fertility preferences and do not depend on the threat point in marital bargaining if couples bargain without commitment the influence of each spouse s fertility preference on fertility outcomes depends on the relevant threat point in marital bargaining and the distribution of bargaining power we test the models using household data from the malaysia family life survey this data set contains information on each spouse s desired fertility level as well as fertility outcomes we exploit differences in threat points in marital bargaining across ethnic groups to help identify the underlying bargaining model the evidence suggests couples bargain without commitment

new hope for the expectations hypothesis of the term structure of interest rates survey data on interest rate expectations permit separate testing of the two alternative hypotheses in traditional term structure tests that the expectations hypothesis fails and that expected future interest rates are ex post inefficient forecasts we find that the source of the spread s poor predictions of future interest rates varies with maturity at short maturities the expectations hypothesis fails at long maturities however changes in the yield curve reflect changes in expected future rates one for one an implication of the expectations hypothesis this result confirms earlier findings that long rates underreact to short rates but now it cannot be attributed to term premia if the attractiveness of an economic hypothesis is measured by the number of papers which statistically reject it the expectations theory of the term structure is a knockout most tests beginning with macaulay 1938 find no evidence supporting the expectations hypothesis 1 many cannot even reject statistically the alternative hypothesis that the spread between long and short rates contains no information about future interest rate changes 2 to make matters worse in u s postwar data future long rates tend to rise when short rates are above long rates since the expectations hypothesis would predict that long rates tend to fall the theory often does worse than even the naive model that future interest

why is the rate of single parenthood lower in canada than in the u s a dynamic equilibrium analysis of welfare policies a critical question in the design of welfare policies is whether to target aid according to household composition as was done in the u s under the aid to families with dependent children afdc program or to rely exclusively on means testing as in canada restricting aid to single mothers for instance has the potential to distort behavior along three demographic margins marriage fertility and divorce we contrast the canadian and the u s policies within an equilibrium model of household formation and human capital investment on children policy differences we consider are eligibility dependence of transfers on the number of children and generosity of transfers our simulations indicate that the policy differences can account for the higher rate of single parenthood in the u s they also show that canadian welfare policy is more effective for fostering human capital accumulation among children from poor families interestingly a majority of agents in our benchmark economy prefers a welfare system that targets single mothers as the u s system does yet does not unlike the u s system make transfers dependent on the number of children

collective labour supply with children we extend the collective model of household behavior to allow for the existence of public consumption we show how this model allows the analysis of welfare consequences of policies aimed at changing the distribution of power within the household our setting provides a conceptual framework for addressing issues linked to the targeting of specific benefits or taxes we also show that the observation of the labor supplies and the household demand for the public good allow one to identify individual welfare and the decision process this requires either a separability assumption or the presence of a distribution factor

household bargaining and excess fertility an experimental study in zambia we posit that household decision making over fertility is characterized by moral hazard due to the fact that most contraception can only be perfectly observed by the woman using an experiment in zambia that varied whether women were given access to contraceptives alone or with their husbands we find that women given access with their husbands were 19 less likely to seek family planning services 25 less likely to use concealable contraception and 27 percent more likely to give birth however women given access to contraception alone report a lower subjective well being suggesting a psychosocial cost of making contraceptives more concealable

separate spheres bargaining and the marriage market this paper introduces the separate spheres bargaining model a new model of distribution within marriage it differs from divorce threat bargaining models e g manser brown mcelroy horney in that the threat point is not divorce but a noncooperative equilibrium within marriage this noncooperative equilibrium reflects traditional gender roles the predictions of our model thus differ from those of divorce threat bargaining models in the separate spheres model cash transfer payments to the mother and payments to the father can but need not imply different equilibrium distributions in existing marriages in the long run the distributional effects of transfer policies may be substantially altered by changes in the marriage market equilibrium