are worker managed firms more likely to fail than conventional enterprises evidence from uruguay various theories suggest that worker managed firms wmfs are prone to failure in competitive environments using a long panel of uruguayan firms the author presents new evidence on firm survival by comparing wmfs with conventional firms after excluding microenterprises and controlling for differences in the effective tax burden faced by the two types of firms the hazard of dissolution is 29 lower for wmfs than for conventional firms this result is robust to alternative estimation strategies based on semiparametric and parametric frailty duration models that take into account unobserved firm level heterogeneity and impose a range of distributional assumptions about the shape of the baseline hazard the higher survival rates of worker managed firms seem to be associated with their greater employment stability this evidence suggests that the marginal presence of wmfs in actual market economies cannot be explained by the fact that these firms are less likely to survive than conventional firms

capital taxation and accumulation in a life cycle growth model almost all of the serious economic work on savings decisions within the past decade has relied on some variant of the life cycle hypothesis in which savings arise out of individual choices of an optimum lifetime consumption path this paper reexamines the incidence and welfare consequences of capital income taxes within a realistic life cycle model the results suggest that the elimination of capital income taxation would have very substantial economic effects for example a complete shift to consumption taxation might raise steady state output by as much as 18 percent and consumption by 16 percent the long run welfare gain from such a shift would for plausible parameter values exceed 150 billion annually stated somewhat differently shifting to consumption taxation would raise the lifetime utility of the representative consumer by the equivalent of about six years income in the new steady state these estimates dwarf estimates of the static welfare cost of taxation and significantly exceed even extreme previous estimates of the dynamic loss this study departs from earlier analyses of the effects of taxes on capital income in several respects probably the most important difference between this treatment and most preceding ones lies in the assumptions about the interest elasticity of saving it is shown below that the common two period formulation of saving decisions yields quite misleading results a more realistic model of life cycle savings demonstrates that for a wide variety of plausible parameter values savings are very interest elastic this implies that shifting away from capital income taxation would significantly increase capital formation making possible long run increases in consumption many studies of the welfare effects of capital income taxation have ignored the general equilibrium effects of increased capital formation in an economy with life cycle savings there is no presumption that the undistorted growth path corresponds to any sort of social optimum as peter diamond has shown life cycle savings can lead to a steady state capital intensity either greater or less than the golden rule level more generally it is clear that there is no reason to believe that a life cycle economy will maximize any particular intertemporal social welfare function a fundamental tenet of welfare evaluation is that preexisting distortions must be considered in evaluating the consequences of tax changes the results presented in this paper take explicit account of the nonoptimal character of the no tax steady state this explains in large part why such a sizeable welfare effect of capital taxes is found in an economy far from the golden rule level of capital intensity there are substantial gains in steady state consumption achievable through increased capital formation section i of the paper examines the aggregate savings function in a continuous time life cycle framework the second section clarifies the differences between wage and consumption taxes an aggregate production function is added to complete the model in the third section the effects of changes in capital taxes on both steady state incidence and welfare are considered within a general equilibrium framework the final section of the paper discusses some implications of the results and suggests areas which appear to warrant further study assistant professor of economics massachusetts institute of technology and research analyst national bureau of economic research i am grateful to alan auerbach martin feldstein laurence kotlikoff to the participants in the nber workshop on business taxation and to the harvard public finance seminar for useful discussions james poterba and james buchal performed the numerical calculations

optimal population size and endogenous growth abstract we compare the population and output growth rates implied by the welfare functions of bentham and mill contrary to previous findings we show that under conditions that ensure an optimum the benthamite criterion leads to a smaller population size and higher economic growth

the nonvoting voter in voting research postelection surveys consistently overestimate voter turnout by a substantial margin this paper compares via discriminant analysis of data from the 1978 national election study the characteristics of respondents who falsely claim to have voted with the characteristics of actual voters and admitted nonvoters more importantly it undertakes two parallel analyses of the factors affecting voting or nonvoting the first employs respondent supplied voting data and the second employs officially validated voting data even though misreporters differ in some respects from actual voters and admitted nonvoters the parallel analyses in the latter part of the paper indicate that substantive conclusions about the factors that influence voting or nonvoting are largely unaffected by the use of validated as opposed to reported voting data

the strategic bequest motive although recent research suggests that intergenerational transfers play an important role in aggregate capital accumulation our understanding of bequest motives remains incomplete we develop a simple model of strategic bequests in which a testator influences the decisions of his beneficiaries by holding wealth in bequeathable forms and by conditioning the division of bequests on the beneficiaries actions the model generates falsifiable empirical predictions that are inconsistent with other theories of intergenerational transfers we present econometric and other evidence that strongly suggests that bequests are often used as compensation for services rendered by beneficiaries

testing economic theories of voter behaviour using micro data three hypotheses often encountered in economic analyses of voter behaviour are tested using an extensive data set derived from six consecutive national election studies in the netherlands in the period 1971 1986 these hypotheses are i the party choice and turnout decisions are taken sequentially and independently by voters ii social gorups play a central role in the decisionmaking processes in the political sphere iii the effect of individual level variables on party choice is stable over time the results provide support for the first hypothesis and partial support for the second where the specific categorization of individuals to be chosen is a matter that needs further investigation the third hypothesis is rejected by the data the relationship between the variables chosen and party choice proved to be unstable

investment in human and nonhuman capital transfers among siblings and the role of government the implications for efficient allocation of parents inability to force transfers among siblings are explored when there are differences in abilities of children within families such transfers may be necessary to achieve a first best solution in the absence of such transfers a tax on earned income and a subsidy to inheritance are useful second best tools whereas subsidies to investments in human capital or physical capital are not desirable

endogenous population with public goods and malthusian fixed resources efficiency or market failure a theoretical population model is developed which takes into account both the desire of a nation for a large population for political and economic reasons as well as the malthusian pressures that suggest that there is a natural tendency toward overpopulation the model assumes that parents care about both the number and well being of their children the results show that these two possible sources of externality do not lead to market failure nor to unfettered competitive individual decisions concerning childbearing that are detrimental to society annotation

a dynamic model of voter behavior and the demand for public goods among social groups in great britain abstract a dynamic model of voter behavior is discussed explaining transitions in party choice by imputed party responsibilities with respect to public and private consumption possibilities the model uses a group framework to explicitly describe voter interests it allows for an estimation of the relative preference for public goods as determined by the revealed preference mechanism of voting the model is compared to popularity functions in their general form an empirical application to great britain is presented it appears that retired individuals have the highest relative preferences for public goods followed by housewives men manual workers self employed and non manual workers

what have we learned from the economics of the family the family is distinguished from other social institutions such as firms by its crucial role in the production and nurture of children and its rationale is ultimately to be found in the preferences of individuals for own children sexual reproduction means that the production of one s own child requires the participation of another person of the opposite sex the production of a child who will survive become a successful adult and produce his or her own children requires the expenditure of both personal and purchased resources over a lengthy period of time although interesting insights on the family can be culled from the classics systematic development of the economics of the family is a recent phenomenon beginning in the late 1950 s when harvey leibenstein 1957 and gary becker 1960 attempted to address the determinants of fertility behavior within the framework of consumer theory in this paper i provide a brief overview of the history of family economics since 1960 and along the way offer a selective assessment of what has been learned from it i attempt this assessment by asking how far we have progressed in answering a few of the larger theoretical empirical and policy questions that have motivated economists interests in an area customarily studied by sociologists and demographers or that have caused economists dealing with more traditional subject matter to incorporate the family into their work among the set of questions that have been addressed within the literature during the past twenty five years are 1 what are the causes of the historical association between economic growth and development and demographic transition from high to low levels of fertility and mortality of what relevance is the historical experience of currently developed countries to contemporary ldcs should fertility reduction be a primary goal of policy in the developing countries are the developed countries in danger of extinction because of fertility below replacement levels 2 what was the cause of the post world war ii baby boom and subsequent baby bust was the baby boom a one time aberration from a secular decline in fertility or can we expect substantial fluctuations in the birth rate in the future what are the consequences of the baby boom for the economic welfare of cohorts born during and after the boom 3 is the traditional family dead in the united states and other developed countries why did the divorce rate double in a decade why the growth in female headed households why do so many divorced fathers fail to support their children has the sexual division of labor within the family changed as a consequence of the growth of female labor supply to what extent are these changes in the family caused by social policy and to what extent are they a product of basic market forces associated with modern economic development what are the consequences of these changes for the welfare of future generations i attempt to touch on some issues from each of the three areas in which the questions are grouped however constraints imposed by limitations of space time and most imtdiscussants kenneth wolpin ohio state university robert pollak university of pennsylvania t paul schultz yale university

the transition from payroll to consumption receipts with endogenous human capital abstract the transition from payroll to consumption receipts is simulated in a life cycle growth model featuring adult human capital as in other studies savings are higher under the consumption base however unlike those studies much of the additional savings here take human form human capital production increases for all cohorts in or yet to join the labor market as of the tax change the additional human capital production tends to dampen physical capital accumulation when compared with otherwise identical simulations which hold human capital constant the implications for intergenerational incidence are similar to that found in other examinations of the transition to a consumption base

economic voting and the symbolic politics argument a reinterpretation and synthesis economic voting is generally regarded as a straightforward political demand for the amelioration of economic grievances this assumption about motives underlies the implicit theories of politicians and the imputations of interests to voters in aggregate time series models several recent articles have argued that voting is not self interested but a manifestation of symbolic preferences at the level of the collectivity this article places the dispute between personal and collective decision referents into the broader perspective of a multi stage model of information processing and decision making personal and collective decision referents are shown to define the poles of a continuum and several hypotheses are derived to predict the relative weights assigned to each in the voter s calculus the model is used in analyses of both the public s evaluations of incumbent economic management and economic voting in different electoral arenas by varying issue publics designed to maximize comparability with aggregate studies this research includes both objective and subjective measures of economic conditions and indexes changes in personal conditions over time from panel data

tax policy the interest elasticity of saving and capital accumulation numerical analysis of theoretical models increasing disillusionment with traditional empirical methods is having a major impact on research methodology which is increasingly turning to simulation analysis based on theoretical models and assumed parameter values in research on saving and wealth accumulation there have been several recent studies consisting of simulation of theoretical models based on the life cycle model a particular focus has been tax policy and capital formation which is the area of concentration of this paper the aim is to analyze in a theoretical simulation context the impact on saving and wealth of an increase in the after tax rate of return to saving generated by a cut in the tax rate on income from capital this paper suggests that such simulation analysis while instructive as to the behavior of the class of models examined and as to the critical channels of influence does not yield a theoretical presumption in favor of cutting taxes on income from capital as a means of stimulating capital formation the development of this literature derives in part from disillusionment with traditional empirical methods many such papers begin by listing a litany of the problems involved in the usual type of empirical analysis before proceeding to simulation of theoretical structures the implicit conclusion at times appears to be that because of the daunting problems of standard empirical methodology the results derived from it can be ignored and that empirical magnitudes can perhaps be discovered by deductive means the temptation to think of the precise numerical results derived from theoretical simulation as empirical can be rather strong it needs to be reemphasized that empirical magnitudes can only be determined by empirical studies in section i the theoretical structure of a zero bequest life cycle model2 is outlined and several numerical simulations of this model are presented these simulations highlight interesting and nontrivial interactions of theoretical parameters and also demonstrate the difficulty involved in attempts to develop robust aggregate implications from such a framework for instance it is argued that summers claim to have developed a prima facie theoretical case for a high interest elasticity of savings 1981a p 537 does not stand up to sensitivity analysis a small change in the assumed rate of pure time preference or in other parametric assumptions generate otherwise plausible cases in which the interest elasticity of aggregate saving is low the experiments conducted in section i are partial equilibrium in the sense that the interest rate is changed exogenously which changes savings and hence the capital stock but the feedback effect of the capital international monetary fund this paper derives from chs 2 and 3 of my doctoral dissertation completed during a research fellowship at the brookings institution financial support was received from brookings and the social science research council i am grateful to henry aaron barry bosworth maxim engers irwin friend laurence kotlikoff franco modigliani joseph pechman duncan ripley robert shiller patricia stack and my supervisor albert ando for comments and guidance on earlier drafts none of the above institutions or individuals is responsible for the views expressed or any remaining errors for example see james tobin and walter dolde betsy white lawrence summers 1978 1981a b g moore alan auerbach and laurence kotlikoff and auerbach kotlikoff and j skinner 2it is popular to establish a sharp dichotomy between life cycle models and bequest models this taxonomy ignores the frequent references to the potential significance of bequests in the writings of the originators of the life cycle hypothesis a distinction between zero bequest life cycle models and life cycle models incorporating bequests is more accurate in terms of doctrinal history see for example albert ando and franco modigliani and modigliani and richard brumberg

the normative and positive aspects of the taxation of imputed rent on owner occupied housing received july 1983 revised version received march 1984 1 introduction this paper is concerned with two basic issues associated with the special income tax treatment of owner occupied housing the first is the effect of this policy on resource allocation and in particular on the rate of productive capital accumulation i e capital accumulation which contributes to the increase of the marginal and average product of labor the rate of total capital accumulation productive and residential capital and consequently on the interest rate and the wage rate the second is whether this policy can or cannot be consistent with some notions of optimality the income tax treatment of owner occupied housing is considered in the existing literature to be discriminatory in favoring this type of capital accumulation versus rental housing and productive capital such a discrimin ation is believed to attract resources from the rental housing and productive capital to owner occupied housing and thus to distort resource allocation however the literature is mainly concerned with the impact of the preferen tial treatment of owner occupied housing on income distribution the total loss of welfare and the owner occupied versus the rental market shares see for example laidler 1969 shelton 1970 aaron 1970 white and white 1977 weiss 1978 rosen 1979 and henderson and ioannides 1983 the long run impact of this policy on the allocation of resources between housing and productive capital and on the total supply of capital are only casually analyzed for example although aaron 1970 recognizes the possibility that the tax benefits to homeowners may affect the total supply of savings in his main analysis he assumes that this supply is unaffected by this financial assistance from the foerder institute for economic research is gratafully acknowledged

taxes in a life cycle growth model with bequests and inheritances in a recent paper lawrence summers 1981 analyzes alternative taxes in a life cycle growth model this paper extends his analysis to include bequests and inheritances this inclusion is worth undertaking for several reasons first several recent empirical studies have suggested that bequests may account for an important share of the capital stock laurence kotlikoff and summers 1981 second it is important to explore whether the comparison of taxes is significantly affected when a bequest motive is introduced third the treatment of bequests under a consumption tax is controversial the endowment rationale calls for treating a bequest as taxable consumption by the deceased peter mieszkowski 1980 the real wage rationale calls for exempting bequests if such exemption raises the steady state capital intensity and real wage my 1980 article this paper confines itself to positive analysis of steady states transition paths and normative implications are explored elsewhere see my 1982 paper

taxing family size and subsidizing child specific commodities abstract the effects and optimal choice of policy instruments directly affecting the welfare of parents and children are examined within the context of a household economics model if fertility were exogenous and households differed in number of children only a first best could be implement through a grant conditional on family size outside this very special case public intervention is either not justifiable on distributional grounds or involves taxing child specific commodities less than adult specific commodities if fertility is endogenous family size must be taxed or subsidized according to whether household expenditure on children is decreasing or increasing in the mother s wage rate

comparative empirical observations on worker owned and capitalist firms abstract the paper analyzes the available quantitative information on worker owned and capitalist firms in a few industrialized countries in an attempt to draw a comparative profile of their respective sectors the population of worker owned firms is found to be heterogeneous changing over time and significantly different from the population of capitalist firms worker owned firms are smaller concentrate in a few industries and since the mid 1970s have higher birth rates and lower demise rates than capitalist firms these findings are interpreted with the aid of a theoretical framework and in a broad historical context

property rights and efficiency in olg models with endogenous fertility is there an economic rationale for pronatalist policies we propose and analyze a particular market failure that leads to inefficiently low fertility in equilibrium the friction is caused by the lack of ownership of children if parents have no claim on their children s income the private benefit from producing a child can be smaller than the social benefit we analyze an overlapping generations model with fertility choice and parental altruism ownership is modeled as a minimum constraint on transfers from parents to children using the efficiency concepts proposed in golosov jones and tertilt 2007 we find that whenever the transfer floor is binding fertility choices are inefficient second we show that the usual conditions for efficiency are not sufficient in this context third in contrast to settings with exogenous fertility a payg social security system cannot be used to implement efficient allocations to achieve an efficient outcome government transfers need to be tied to fertility choice

conversion to a consumption tax the transition in a life cycle growth model this paper examines the transitional losses that may follow conversion from an income tax to a consumption tax even when conversion eventually raises steady state lifetime welfare two recent studies have left the impression that the transitional losses would be large using a life cycle growth model this paper examines two reasons why these studies have probably overestimated the transitional losses the model computes the welfare gains and losses of each age cohort along the transition path it is shown that the greater the bequest motive and subjective discount rate generating the particular initial income tax steady state the smaller would be the transitional losses similarly a policy of age phasing would reduce the losses the results demonstrate the importance of examining the transition path whenever a policy change alters capital accumulation

looking at the population problem through the prism of heterogeneity welfare and policy analyses upon introducing heterogeneity and dynamics into a model of the demand for children a problem of optimal population is defined and analyzed it is shown that from the perspective of social welfare better educated individuals produce too few children while less educated individuals produce too many children and all individuals invest too little in the education of their children the impact of several policy tools geared at addressing the population problem is investigated in particular how child allowances and other tax subsidy policies can be harnessed to enhance welfare and how and why early childhood education programs can mitigate the population problem

social criteria for evaluating population change abstract many applications of economic analysis require social evaluations of alternatives involving different numbers of people in this paper we use the tools of social choice theory to provide an axiomatic formulation of this problem it yields a class of social criteria called critical level generalized utilitarianism this class and its implications are compared with other criteria and are found to yield intuitively appealing results

the life cycle of worker owned firms in market economies a theoretical analysis abstract the population of worker owned firms is likely to grow countercyclically in contrast with capitalist firms many worker owned firms are born during recessions frequently out of capitalist firms and are transformed into capitalist firms during economic booms there exists an offsetting tendency as worker owned firms are formed during periods of sustained increase in the standard of living and are dissolved during economic decline these are some of the conclusions of a theoretical analysis of the obstacles to the formation and relative efficiency attributes of worker owned and capitalist firms carried out in a dynamic framework emphasizing the influence of changes in the environment on organizational life cycles

productivity capital and labor in labor managed and conventional firms an investigation on french data using two new data sets from france the authors present the first study of the comparative productivity of labor managed and conventional firms involving large representative samples of firms in a

intergenerational competitive equilibria under technological uncertainty and an exhaustible resource constraint abstract this paper presents a model of competitive intertemporal equilibrium in a finite horizon overlapping generations economy facing technological uncertainty and an exhaustible resource constraint individuals form rational expectations regarding future prices and economic conditions and income is redistributed from one generation to the next through government mandated lump sum transfers under uncertainty the relationship between resource price appreciation and the interest rate is mediated by consumers risk aversion with respect to consumption in alternative states of nature the intuitively appealing proposition that the expected resource price rises at the expected rate of interest holds only as a special case if future generations are taken to be state contingent in the sense that their composition depends on the states of nature prevailing when they are born then equilibria are generally pareto efficient but if future generations are state independent so that the set of individuals born at a given date is independent of the prevailing state of nature then equilibria may be inefficient because markets do not exist where successive generations may equilibrate their marginal rates of substitution across consumption in alternative contingent states such inefficiencies may be remedied through the implementation of appropriate intergenerational transfers an optimal intergenerational welfare distribution may be supported as a competitive equilibrium if the income transfer regime is properly selected and enforced the social optima that result for a simple version of the model under the maximin welfare criterion indicate that greater sacrifices are required on the part of the present generation when future generations are taken to be state contingent than when they are regarded as state independent this finding provides a possible explanation for the extreme risk aversion of conservationists with respect to the welfare of future generations

millian efficiency with endogenous fertility should governments implement policies that affect fertility decisions on efficiency grounds what is the correct notion of efficiency to use to address these issues this paper develops an extension of the notion of pareto efficiency referred to as millian efficiency to evaluate symmetric allocations in an overlapping generations setting with endogenous fertility this extension is based on preferences of those agents who are actually alive and exclusively allows for welfare comparisons of symmetric allocations first we provide necessary and sufficient conditions to determine whether an allocation is millian efficient or not and we show that the sufficient conditions for dynamic efficiency offered by cass 1972 and balasko and shell 1980 cannot be directly applied when fertility decisions are endogenous second we characterize millian efficient allocations as the equilibria of a decentralized price mechanism and we present a sufficient condition for dynamic efficiency that uses the sequence of prices associated to such decentralized equilibria finally we analyse how intergenerational policies should be designed to restore efficiency and achieve net welfare gains in two different settings in which markets yield inefficient allocations dynamic inefficiencies and financial market incompleteness regarding human capital in the former a pay as you go social security system eliminates dynamic inefficiencies provided pensions are explicitly linked with fertility decisions in the latter a specific link between social security and public education becomes a necessary condition for millian efficiency copyright wiley blackwell

revealed preferences for public goods applying a model of voter behavior most analyses of preferences for government supplied goods disregard the fact that in a democratic society these preferences are revealed by an individual choice the vote in this paper this is taken account of in a model explaining the dynamics in voting behavior in a multi party system the model assumes that voters may be categorized into k groups of individuals pursuing the same interests who remember how parties do in representing these interests given the level to which they are held responsible for government policy the model allows one to estimate party identification sensitiveness to economic performances time preference and relative preferences for public versus private goods all for each of the groups furthermore the model allows for an estimation of the level to which various parties are held responsible for government policies

the problem of population and growth a review of the literature from malthus to contemporary models of endogenous population and endogenous growth abstract this paper deals with the evolution of the literature on the problem of population and growth from the classical period to the recent literature on endogenous growth and development the problem concerns two distinct issues 1 how to explain the observed covariation of the levels and rates of growth of per capita income and population size over time and space and 2 how to improve the human condition represented by these variables through an accommodating social policy the evolution of the literature we survey is reflected by the progressive treatment of key variables as endogenous rather than exogenous to the growth process it is also reflected by a shift from the historical concern about population explosion and its implications for growth to the more recent concern about the association between growth and population implosion in many developed countries

some welfare theoretic implications of endogenous fertility this paper explores the implications of endogenous fertility for inter and intragenerational equity and for intergenerational efficiency considering equity requires social welfare criteria with respect to the issue of intragenerational equity 2 possible criteria in relation to the laissez faire solution are 1 total utility across generations and 2 average or per capita utility when population size is not fixed the 2 are not the same when fertility is not endogenous it is possible to consider noncoercive policies for achieving socially optimal population size or rate growth in general child allowances or taxes and subsidies to future consumption are sufficient to achieve the desired outcome with respect to within generation income distribution a system of child allowances and tax exemptions designed to alleviate poverty and reduce inequality may actually worsen the situation when both fertility and labor supply are endogenous discussing the issue of efficiency for members of the current generation does not require a social welfare function neither diminishing returns nor the existence of public goods unless financed by distortionary taxes leads to market failure from this point of view but the inability of parents to enforce transfers among their offspring or to bargain with the families of the potential spouses of their children may indeed lead to market failure finally the paper examines the implications for fertility of the inefficiency in an economy resulting from the absence of a capital market for transferring from present to future consumption in this case the welfare improving introduction of a capital market may increase the rate of growth of population when parents value children for themselves as well as a means of providing sustenance in old age

the neglect of society in the theory of the firm a systems theory perspective the prevailing theories of the firm acknowledge the importance of trust and loyalty but neglect such behaviour in the substance of their analyses the present paper unravels this paradox by drawing on niklas luhmann s ground breaking insight that the complexity reducing function of social systems leads them to neglect their critical environmental dependencies thereby compromising their own sustainability if the firm is conceived as a social system luhmann s theory implies that the neglect of social behaviour by the predominant theories of the firm can be explained as reflecting the neglect of society by actual firms this argument promises to not only furnish the theory of the firm with a concern for sustainability but also render it more amenable to unconventional institutions such as cooperatives and non profit organisations that help compensate for the damage inflicted by conventional firms on the social environment

income distribution policies with endogenous fertility the implications of endogenous fertility for intra generational welfare comparisons of alternative policies with respect to income taxation and family allowances are considered the interactions among the choices between leisure options labor force participation and fertility are shown to be crucial to the determination of both the signs and the magnitudes of the optimal child allowances and income tax rates the implications of a negative marginal tax rate and a negative child allowance are considered annotation

effects of social norms and fractionalization on voting behaviour in japan this article uses prefecture level panel data from japan spanning the period 1989 2003 to examine the influence of social norms and fractionalization on voting behaviour the key findings obtained from analysis via the fixed effects estimation which controls for unobserved prefecture specific fixed effects are as follows 1 the voter turnout is higher in close knit communities indicating that social norms enhance voting 2 fractionalization from both economic and generational standpoints lowers the voter turnout and 3 a lack of social capital can lead to the distribution of votes being spread thinly among the competing parties

financial markets and the political structure of the enterprise abstract this paper argues that competitive financial markets disfavor democratic enterprises even assuming such enterprises suffer no allocational deficiencies this conclusion follows from five assertions a the democratic enterprise requires access to credit markets b access to credit presupposes access to equity markets c the democratic firm s optimal risk level is lower than that desired by stockholders d the risk level assumed by the firm is costly to observe subject to inaccurate measurement and contractually unenforceable and e the incentives required to induce stockholder favorable risk behavior are more costly for democratic firms than for firms with stockholder accountable management

employee buyout in a bargaining game with asymmetric information why are some firms purchased by their employees this paper explores this question theoretically suggesting that employees may attempt to overcome their informational handicap regarding firm profitability by making simultaneous offers on wages and a purchase price for the firm owners of relatively unprofitable firms will tend to sell out for low prices instead of paying high wages whereas owners of profitable firms will prefer to pay high wages over receiving low firm prices the buyout serves as a screening mechanism the probability of an employee buyout decreases with the employees outside options and increases with owners outside options copyright 1996 by american economic association

why capital hires labor a bargaining perspective organizational forms often serve as vehicles for the appropriation of quasi rent capitalist firms typically emerge when production requires noncontractible investments in specific physical assets because worker control would divert quasi rents away from ass et owners ex post conversely labor managed firms tend to emerge in niches requiring specialized human capital but general purpose physi cal assets a key result is that capitalist firms can persist in competitive markets even when labor managed firms would yield a larg er total surplus copyright 1993 by american economic association

the simple analytics of contraceptive social marketing abstract contraceptive social marketing csm programs have been advocated for the dissemination of contraceptives in developing countries this paper considers csm programs from a simple economic perspective it begins with a review of the major economic models of private fertility determinants and the associated private demand for contraceptives and then adds private contraceptive supply to obtain market equilibrium next inefficiencies due to negative externalities of added children and due to imperfect information and distributional concerns are considered finally this framework is utilized to point to lacunae in our knowledge of csm programs and their impact and to suggest some promising areas for research

the family inheritance and the intergenerational transmission of inequality unequal inheritance of material wealth is commonly considered a major cause of inequality in consumption however theoretical models of the intergenerational transmission of inequality by becker blinder and ishikawa imply that unequal inheritance may either increase or reduce consumption inequality differences in inherited wealth resulting from unequal parental incomes increase inequality in recipients consumption however unequal bequests caused by differences among families in the endowed ability of children or the costs of producing human capital are equalizing empirical results confirm these predictions the inheritance received by children is inversely related to both children s income and parental education thus bequests are compensatory in that ceteris paribus low income children inherit more than their advantaged contemporaries

inequality within and between families between family differences in expenditures and output reflect the effect of simultaneous increases in children s ability on the willingness of parents to transfer resources to them within family differences also reflect the attitudes of parents toward disparity among children in this paper we characterize the conditions on parents preferences that determine whether between family differences exceed within family differences for additive utility within family differences in expenditures always exceed between family differences this may also be true for the max min utility function if an increase in ability reduces the marginal utility of income within family differences in output utility or income can also exceed between family differences in this case the implication for income distribution is that equality is enhanced by a higher correlation of ability between brothers

preferences loyalty and party choice the paper analyses the electorate s voting intentions with respect to the labour and conservative parties in great britain almost all policy issues are found to be endogenous i e to be influenced by party choice within a simultaneous relationship socio economic factors which influence choice through the endogenous policy issues include education geographical location age gender income and wealth parental particularly maternal influence is also found to be important and not to decline with age or education the paper also highlights the importance of competence rather than policy issues

an econometric analysis of the old age security motive for childbearing a switching regression for birth interval lengths with endogenous switching is developed to test mead cains contention that parents fertility decisions arise from lexicographic preferences for old age security the model is estimated as a survival model using malaysian data assuming that contraceptors constitute the group of parents who have attained the minimal number of children with which they feel their old age support is secure strong support for cains concept of old age security as the principal interest of those parents who have not yet attained a sufficient number of children appears in these data however the income effect accompanying the provision of alternative means of old age support generates an ambiguous effect on subsequent fertility excerpt

rational choice theory and the paradox of not voting at least since downs s 1957 seminal work an economic theory of democracy rational choice theorists have appreciated the paradox of not voting in a large election the probability that an individual vote might change the election outcome is vanishingly small if each person only votes for the purpose of influencing the election outcome then even a small cost to vote like a minor schedule conflict or mildly bad weather should dissuade anyone from voting yet it seems that many people will put up with long lines daunting registration requirements and even the threat of physical violence or arrest in order to vote given the central place of voting within political economy the lack of an adequate rational choice model of large elections with costly voting presents an obvious problem for the most part theorists have bypassed the turnout problem either by eliminating voters as strategic actors or by assuming that the decision to vote is independent of other strategic choices the problem with the first approach is that the empirical literature on voting behavior provides considerable evidence of apparently strategic behavior in primary elections there is evidence that voters condition their vote choice on the viability of candidates abramson aldrich paolino and rohde 1992 in a seminal and comprehensive study cox 1997 shows that voting patterns and election outcomes are broadly consistent with patterns of behavior predicted by strategic voting models for example under plurality rule in which the candidate with the most votes wins the election

the ecological fallacy revisited aggregate versus individual level findings on economics and elections and sociotropic voting several aggregate level studies have found a relationship between macroeconomic conditions and election outcomes operating in intuitively plausible directions more recent survey based studies however have been unable to detect any comparable relationship operating at the individual voter level this persistent discrepancy is puzzling one recently proposed explanation for it is that voters actually behave in an altruistic or sociotropic fashion responding to economic events only as they affect the general welfare rather than in terms of self interested pocketbook considerations it is argued here that the discrepancies between the macro and micro level studies are a statistical artifact arising from the fact that observable changes in individual welfare actually consist of two unobservable components a government induced and politically relevant component and an exogenous component caused by life cycle and other politically irrelevant factors it is shown that because of this individual level cross sectional estimates of the effects of welfare changes on voting are badly biased and are essentially unrelated to the true values of the behavioral parameters of interest they will generally be considerable underestimates and may even be of the wrong sign an aggregate level time series analysis on the other hand will often yield reasonably good if somewhat attenuated estimates of the underlying individual level effects of interest thus in this case individual behavior is best investigated with aggregate rather than individual level data it is also shown that the evidence for sociotropic voting is artifactual in the sense that the various findings and evidence which ostensibly show sociotropic behavior are all perfectly compatible with the null hypothesis of self interested pocketbook voting

savings and wealth in models with altruistic bequests during recent years much attention has been given to the role of bequests in explaining various aspects of economic behavior for example authors have studied the impact of bequests on physical wealth accumulation laurence kotlikoff and lawrence summers 1981 the interest elasticity of savings owen evans 1983 tax reform laurence seidman 1984 and the distribution of wealth alan blinder 1976a more recently economists have begun to distinguish between human and physical bequests gary becker and nigel tomes 1986 acknowledging the presence of bequest in human form is important in analyzing each of the issues mentioned above outlays on children affect the shape of the family s labor supply and expenditure profiles upon which the level of aggregate savings crucially depends if these outlays are interest sensitive substitutes for physical bequests they will also influence the interest elasticity of savings in the area of tax reform the neutrality of the consumption tax depends on the ability of the government to identify human capital bequests from general consumption raymond batina 1987 if this is not possible the portfolio choice of investment in human versus physical capital may be distorted at the margin finally the unequal transmission of wealth across generations may be explained by the lack of physical bequests and the inefficiently low levels of human bequests made by wealthconstrained households becker and tomes 1986 to distinguish clearly the behavior of constrained households from unconstrained households who make sizeable physical bequests both types of bequests must be recognized this paper introduces a model that makes explicit examination of these issues possible it extends lord s 1989 multiperiod model of life cycle savings and adult human capital investment by adding altruistically motivated human and physical bequests 2 the model is calibrated using microeconomic data on earnings time and goods expenditures on children s human capital and physical bequests we then use the model to examine the contribution of bequests to wealth accumulation and the level of savings this topic is the source of an important but yet unresolved debate between franco modigliani 1988 and kotlikoff 1988 kotlikoff maintains that u s wealth accumulation is primarily the consequence of bequests as opposed to life cycle savings for retirement one type of evidence cited by kotlikoff comes from simulation results demonstrating the failure of realistically calibrated life cycle models to generate sufficiently high saving rates and wealth income ratios alan auerbach and kotlikoff 1987 we show however that if a pure life cycle

the consumption tax in the presence of altruistic cash and human capital bequests with endogenous fertility decisions abstract we provide an analysis of the consumption tax policy in the presence of cash bequests human capital investments in children and endogenous fertility decisions it is shown that the consumption tax is no longer neutral if the tax rate is constant over the taxpayer s life cycle labor supply is exogenous and the parent expects the offspring to pay the same tax rate if the number of children is chosen optimally by the parent neutrality breaks down because the shadow prices of both bequests and fertility are interlinked it is more expensive to produce a child the larger either bequest is and it is more expensive to make a bequest of either type to each child the larger the number of children produced several examples are provided where imposing the consumption tax induces an increase in the number of children produced and a decrease in net capital formation

escaping the poverty trap in a developing rural economy in this paper we examine the economic policies that might allow a developing rural economy to escape from the poverty trap characterized by a subsistence level of per capita consumption in the long run in our model where labour is combined to land available in fixed quantity to produce a homogeneous good saving could be made through only having children the number of which is an endogenous decision we provide conditions under which the economy runs into a poverty trap and proceed to analyse the relevant policies in this case we demonstrate that an escape from this poverty trap is possible through a suitable technology transfer or an appropriate child rearing tax but not with a foreign manufacturing sector which increases only temporarily the labour income in this rural economy jel classification j11 o11 o40 se sortir du piege de la pauvrete dans une economie rurale en developpement dans cet article nous analysons les politiques qui peuvent permettre a une economie rurale en developpement de sortir d un piege de pauvrete caracterise par un niveau de consommation de subsistance dans notre modele pour lequel le travail est combinea la terre afin de produire un bien homogene l epargne ne peut se faire qu a travers les enfants dont le nombre est une variable de decision endogene nous decrivons les conditions sous lesquelles l economie converge vers un piege de pauvrete et analysons les politiques appropriees a adopter dans une telle situation nous demontrons que la sortie du piege de pauvrete peut etre accomplie gr ce a un transfert technologique approprie ou a travers une taxe sur les enfants par contre l introduction d un secteur manufacturier controle par des etrangers ne fait qu accroitre temporairement le revenu per capita

population size individual choice and social optima optimal population size when fertility is endogenous is considered in relation to two social welfare criteria a benthamite and a millian and in relation to purely individualistic maximization of utility in the current generation the authors show that a tax subsidy scheme involving child allowances and subsidies to future generation consumption can be found to support a social optimum through individual choice a general proof that the optimal population size according to the benthamite criterion is always larger than that given by the millian criterion is presented but it is shown that no general conclusions about the size of the population under laissez faire are possible excerpt

economic outcomes and political support for british governments among occupational classes a dynamic analysis the first section of the article establishes the political salience of macroeconomic issues to the british electorate reviews the distributional consequences of macroeconomic outcomes and suggests that unemployment outcomes in particular have strong class related distributional effects the second part presents a dynamic model of how rational voters evaluate the governing party based on the idea that voters evaluate the cumulative performance of the governing party relative to the prior performance of the current opposition since the present relevance of prior outcomes decays over time voters weight current performance more heavily than past performance informing contemporaneous political judgments the empirical analyses in the third section include measures of nominal economic performance inflation and exchange rate movements and real economic performance unemployment and real income fluctuations the regression results indicate that the responses of political support among the occupational classes to macroeconomic changes are sizeable and that the cross class variations are consistent with the distributional consequences reviewed at the beginning of the article the concluding section develops the electoral implications of the empirical results and presents a novel interpretation of trends in class related political support for the parties the evidence shows that the argument that there has been a persistent decline of class based political alignments in britain is erroneous

the viability of employee owned firms evidence from france this study examines data on french producer cooperatives for the years 1970 79 to test the widely accepted theoretical prediction that employee owned firms either will fail as commercial undertakings or degenerate into capitalist firms as the proportion of hired workers who are not members of the cooperative firm increases contrary to this prediction the authors find a high rate of survival among the producer cooperatives studied with many cooperatives still healthy after fifty years of operation and they find no evidence of degeneration either in terms of the proportion of hired workers productivity profitability or capital intensity the findings do however suggest that the firms financial structure became increasingly inefficient with age