reconciling the old and new census bureau education questions recommendations for researchers beginning with the 1990 census and the january 1992 current population survey cps the bureau of the census changed the emphasis of its educational attainment question from years of education to degree receipt using a matched sample from the 1991 and 1992 march cps this article addresses how to reconcile the old and new questions the effects of those methods on the estimated return s to education are then examined both the estimated linear return and the estimated college high school wage differential are slightly larger using information from the new question

a portfolio approach to endogenous growth equilibrium and optimal policy abstract this paper develops a portfolio approach to modeling endogenous growth in continuous time that is especially suitable for addressing fiscal and financial issues in policy design the analysis focuses on the equilibrium relationship between fiscal and financial policy rates of return and wealth allocation we analyze two models the first is based on the arrow romer model with increasing returns and an external effect of capital on labor productivity the second draws on barro s analysis of government spending and endogenous growth in both models we study the equilibrium allocation and discuss the optimal fiscal and financial policy

labor supply of husbands and wives a simultaneous equations approach labor supply functions for married men and women are formulated as a dynamic simultaneous equations system which is estimated using panel data controlling for fixed individual effects allows marginal labor supply responses to be disentangled from permanent patterns in hours worked due to assortative mating the results suggest that the labor supply of husbands and wives without pre school children is not jointly determined in the short run while families with young children exhibit strong interactions in work hours and negative cross earnings effects neither the joint utility model of family labor supply nor an ad hoc traditional family model is supported by these results the data are for the united states and concern 381 couples from the denver income maintenance experiment excerpt

retirement in dual career families a structural model a structural econometric model of retirement of dual career couples is specified and estimated with panel data from the national longitudinal survey of mature women a coincidence of spouses retiring together despite the younger ages of wives suggests explicit efforts at coordination the estimates suggest that one reason is a correlation of tastes for leisure more important each spouse and perhaps husbands in particular values retirement more once their spouse has retired the opportunity set accounts for peaks in the retirement hazards of each spouse individually but not for peaks in the simultaneous retirement of both spouses

post war fertility and female labour force participation rates this paper provides an explanation for the change in fertility and female labour supply over the post war period in england and wales a model of fertility and labour force participation is outlined and estimated over the period 1953 82 for six age groups of women the most significant factors to influence fertility and participation are found to be male and female earnings and education interest rates number of children and the state of the labour market are also important excerpt

military spending and stochastic growth abstract this study examines capital accumulation military spending arms accumulation and output growth in a stochastic endogenous growth model the analysis shows that higher lower growth in foreign military spending leads to faster slower economic growth in the home country if the home country s intertemporal substitution elasticity in consumption is smaller larger but more volatility in foreign military spending can lead to higher economic growth in the home country when its intertemporal substitution elasticity is large in addition shocks to output production may stimulate economic growth

life cycle asset accumulation and allocation in canada this paper documents the life cycle patterns of household portfolios in canada and investigates several hypotheses about asset accumulation and allocation inferences are drawn from the 1999 survey of financial security with some comparisons to earlier wealth surveys from 1977 and 1984 i find cross sectional evidence for asset decumulation at older ages when annuitized assets like pension wealth are included in the analysis i also find that the portfolio share of financial assets increases sharply with age while indicators of risk tolerance appear to decrease this is consistent with families desiring more liquid and less risky assets as they age jel classification d31 e21 g11 le cycle de vie de l accumulation et de l allocation des actifs au canada ce memoire documente le cycle de vie des portefeuilles des menages au canada et examine plusieurs hypotheses quant a l allocation et l accumulation des actifs on developpe certaines inferences a partir de l enquete sur la securite financiere de 1999 ainsi qu a partir des enquetes sur la richesse de 1977 et 1984 certains resultats pointent vers une decumulation des actifs avec l avancement de l ge quand on prend en compte dans l analyse les actifs annualises comme les rentes il semble aussi que la portion des debentures augmente dramatiquement avec l ge et que les indicateurs de tolerance de risque paraissent diminuer voila qui s arrime bien a un desir d avoir des actifs plus liquides et moins risques a mesure qu on vieillit

fertility volatility and growth abstract empirically growth rates are negatively correlated with birth rates they are also correlated with production risk we argue that these stylized facts are related and arise jointly from the decision of how many children to have in a risky environment

labor force dynamics of older married couples this article analyzes the dynamics of joint labor force behavior of older couples in the united states using the retirement history survey rhs i analyze the determinants of joint retirement and the effect of one spouse s labor force status on the labor force transitions of the other spouse the results reveal strong associations between the labor force transition probabilities of one spouse and the labor force status of the other spouse these result from structural differences in exit and entry behavior by the spouse s status several lagged endogenous variables have substantial effects on behavior even after controlling for unobserved heterogeneity

risk the financial market and macroeconomic equilibrium growing recognition of the importance of stock market phenomena to the real economy underscores the need for models linking exogenous uncertainty asset market performance and the rest of the economy in an optimizing framework without certainty equivalence this paper constructs a three agent model with continuous time stochastic variables uncertain private production and government expenditure and forward looking rational agents the growth rate of output physical capital accumulation financial asset returns and uncertain inflation are determined as functions of the exogenous uncertainty in the economy analysis of the model finds that increased risk associated with government policy often reverses in an explainable way the conventional comparative static predictions of nonstochastic macro models

risk optimal government finance and monetary policies in a growing economy optimal tax and monetary policies in a stochastic monetary growth model are investigated our findings are of three general types first both capital income taxes and monetary growth are shown to influence the economy through effective risk adjusted measures expressed as a linear function of their respective means and variances second two stochastic neutrality results relating to money and bonds the two nominal assets in the economy are identified third optimal policy rules relating to taxes bond finance and money creation are characterized an essential component of optimal financial policy is a risk adjusted balanced budget

the source of the new canadian job stability patterns this paper explores the causes of the recent change in the canadian job stability patterns using the labour force survey master files 1977 2008 i find that what was previously seen as a cyclical increase in job stability is actually a secular change results indicate that the ageing of the workforce the increased educational attainment and the increased labour force attachment of women play important roles in explaining the aggregate job stability patterns that emerge for education the declining importance of low educated workers is the key and not the rising importance of workers with university degrees with respect to gender the evidence points towards a cohortbased explanation surprisingly the changing industry structure has little explanatory powers finally only the rising educational attainment matters for newer jobs leaving a large part of the increase still unexplained

money bonds and foreign exchange in the theory of finance capital markets provide securities which allow the ownership of productive assets to be allocated among investors according to their willingness to bear risk in exchange for return and independently of their tastes for the productive services provided by the assets this paper uses the theory of finance to study the role of money as a productive asset and the transformation of money into a portfolio asset true to its purpose the capital market provides securities nominal bonds that allow an allocation of the current services of the money supply according to its current productivity and without regard for its future purchasing power risk and an allocation of the future purchasing power risk of the money supply according to the willingness of investors to bear this risk in exchange for return and without regard for investor needs for the future transactions services of money in open

life cycle consumption under social interactions abstract in this paper we examine how social interactions affect consumption decisions at various levels of aggregation in a life cycle economy made up of peer groups for this purpose we consider two analytically solvable life cycle models one under certainty equivalent behavior and one under prudence and explicitly allow for three different forms of social interactions in peer groups namely conformism altruism and jealousy we show that whether social interactions have any effects on individuals optimal consumption decisions critically depends on intertemporal rather than static considerations this is true regardless of whether individuals preferences are time separable or exhibit habit formation and whether information within peer groups is homogeneous or disparate it implies that analyzing the effects of social interactions in static rather than intertemporal settings is likely to be misleading we also show that social interactions when coupled with either habit formation or prudence can significantly strengthen the effects of habit formation or prudence in the direction of resolving two well known puzzles in the literature on the permanent income hypothesis namely excess smoothness and excess sensitivity

gender role attitudes and the labour market outcomes of women across oecd countries this paper uses data from the world value surveys 1990 1995 1999 to investigate the impact of gender role attitudes and work values on women s labour market outcomes across 25 oecd countries anti egalitarian views are found to display the strongest negative association with female employment rates and the gender pay gap these views are however softening among recent cohorts on the other hand perceptions of women s role as homemakers which are likely formed in youth and linked to religious ideology are more persistent over time they could be implicated in the recent slowdown of the gender convergence in pay finally the unavoidable clash between family values and egalitarian views that takes the form of an inner conflict for many women the so called mother s guilt is another obstacle in the path towards greater gender equality in the labour market copyright 2005 oxford university press

the effect of incentive induced retirement on spousal retirement rates evidence from a natural experiment we identify quantify and explain the impact of incentive induced early retirement er of husbands on their wives probability to retire within 1 year using administrative data from the netherlands our identification strategy is based on a policy intervention by which targeted individuals working at the central government level became unexpectedly and temporarily eligible for very generous er benefits this retirement window of opportunity implied for interested workers that transitions from the current job into full retirement had to be effected swiftly and irreversibly we find that induced er of husbands increased their wives probability to retire by 10 percentage points this is a strong and robust local average treatment effect partly the effect runs through wives at ages when they may have been eligible for er programs themselves jel c26 j26 j120 j140

on government deficits and speculation the authors consider a dynamic stochastic general equilibrium model with a representative consumer investor and two producing firms all the assets are real investments of capital into productive processes government expenditures taxes and money financing are explicitly incorporated the holding of money is modeled through a cash in advance constraint fundamental budget deficits generated by flat rate expenditure and income tax rules can be financed by printing money or randomly levying temporary wealth taxes modeled as a poisson process characterization and properties of the balanced budget rational expectations equilibrium are analyzed it is shown that government may promote growth by adjusting the fundamental deficit copyright 1990 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

changes in the labor supply behavior of married women 1980 2000 using march current population survey data we investigate married women s labor supply from 1980 to 2000 we find a large rightward shift in their labor supply function for annual hours in the 1980s with little shift in the 1990s these shifts account for most of the slowdown in the growth of labor supply during this period a major development was the dramatic decrease in the responsiveness of married women s labor supply to their own and husbands wages their own wage elasticity fell by 50 56 while their cross wage elasticity fell by 38 47 in absolute value

how longer work lives ease the crunch of population aging population aging is not a looming crisis of the future it is already here populations age when life expectancy rises and fertility declines economic challenges arise when the increase in people surviving to old age and the decline in the number of young people alive to support them cause the growth in society s consumption needs to outpace growth in its productive capacity the ultimate impact of population aging on our standard of living in the future depends a great deal on how long people choose to work before they retire from the labor force here there is reason for optimism the end of the twentieth century witnessed a profound change in retirement behavior for over a century the labor force participation rate of men over age 65 declined falling steadily from 75 percent in the late 1800s to just 16 percent in 1990 moen 1994 costa 1998 at the end of the twentieth century however the labor force participation rate of older men began to rise quinn 2002 the labor force participation rate of older women rose as well following a remarkable increase in labor force participation among younger women over many decades a constellation of forces some just now gaining momentum has raised labor force participation at older ages at just the time it is needed age related health declines and the reluctance of employers to hire and retain older workers present challenges but the outlook for future gains in labor force participation at older ages is promising the labor market is accommodating older workers to some degree and older men and women are themselves adapting on a number of fronts which could substantially lessen the economic impact of population aging the paper begins by documenting the striking shift in the population age distribution well under way the slowdown in labor force growth and the corresponding rise in the economic dependency ratio which can be viewed as a measure of society s consumption needs relative to its productive capacity we document the historic turnaround in labor force participation and show how future increases in participation could significantly dampen the rise in the economic dependency ratio in the second section we turn to the most important factors behind the increase in labor force participation realized to date the shift in the skill composition of the workforce and technological change in the third section we argue that forces such as changes in the structure of employer provided pensions and social security are likely to propel future increases in labor force participation at older ages the fourth section illustrates the diversity of adaptations already at play in the labor market as older men and women seek to extend their working lives finally we discuss the relatively less dramatic population aging in the united states compared to other high income countries and how the united states is better poised than many countries to attain further gains in labor force participation at older ages

nominal rigidity and monetary uncertainty abstract a stochastic macromodel with dynamically optimising wage setting households is used to examine the effect on current macroeconomic variables of an anticipated increase in variability of the money stock there is a nominal rigidity in the form of a money wage set one period in advance in whose absence monetary uncertainty has no effect on current variables we show that for plausible parameterisations monetary uncertainty combined with nominal rigidity raises the nominal interest rate depressing aggregate demand and hence current price and output it also causes the wage to be set higher increasing the natural rate of unemployment

exchange rate determination and asset prices in a stochastic small open economy abstract this paper constructs a stochastic general equilibrium model of a small open economy consisting of risk averse optimizing agents the stochastic processes describing the rate of monetary growth government expenditure private production and the foreign price level are taken to be exogenous determining all asset risks and returns and the equilibrium stochastic process describing the domestic inflation rate and the exchange rate the model is used to examine the effects of the means and variances of policy shocks on the equilibrium and the determinants of the foreign exchange risk premium

the effect of a wife s retirement on her husband s mental health this article examines the effect of wives retirement on their husband s mental health in australia by exploiting the exogenous variations in women s retirement induced by the age pension qualifyi

institutional reforms of 2006 and the dramatic rise in old age employment in germany the authors investigate whether a cut in unemployment benefit payout periods enacted in germany in 2006 affected older workers labor market transitions the authors use rich administrative data an

occupational mobility and the distribution of occupational success among young men interpretation of the distribution of occupational success depends crucially on an understanding of the process of mobility if the holders of low paying jobs this year are just as likely as anyone else to hold good jobs next year then the lower tail of the earnings distribution is not a matter of great social concern further if the distribution of success is primarily determined by a random process the prospects for a significant reduction in the inequality of earnings are unfavorable on the other hand high mobility in the short run may conceal systematic stratification of the labor force it may be that the same individuals spend most of their time in the worst jobs if so luck and random events may play a small role in the distribution of well being inequality may be a major issue and the elimination of stratification may hold out the promise of an important reduction in inequality simple tabulation of distributions of success and of mobility among categories of success cannot answer the basic question of the role of stratification in this paper we develop a model and statistical method for studying mobility and relating it to characteristics upon which stratification may be based our study rests on annual interviews conducted from 1966 through 1969 with about 3 000 white males born between 1942 and 1952 1 we find that mobility is closely related to personal characteristics especially intelligence and education men with high iqs and extensive education are more likely to move to high paying jobs and are more likely to remain in them nevertheless random events dominate the distribution of occupational success in the short run our results strongly support the finding of christopher jencks and his collaborators that redistribution of the determinants of earnings would do almost nothing to reduce the observed inequality of annual earnings

monetary randomness and investment abstract this paper develops a neoclassical model in which the behavior of the money supply affects investment by affecting the real distribution of asset returns investment depends on wealthholders demand for capital a stochastic money growth rule influences portfolio choice by affecting the distribution of the inflation rate the variance of inflation matters to wealthholders because of the existence of assets with returns that are not indexed to changes in the price level money and bonds which are contracted in nominal terms in a rational expectations environment asset demands will thus be sensitive to the distribution of the money growth rate our principle conclusion is that an increase in the variance of the money growth rate lowers investment which complements tobin s 1965 result that an increase in the mean stimulates capital accumulation the paper also represents a step toward incorporating an asset market into a macroeconomic model in a manner which takes account of lucas 1976 criticism of econometric policy evaluation all variables in the model including asset return distributions are functions of technology preferences and the money supply rule further expectations are rational

can social security explain trends in labor force participation of older men in the united states after a long decline the labor force participation rate lfpr of older men in the united states leveled off in the 1980s and began to increase in the late 1990s we examine how changes in social security rules affected these trends we attribute only a small portion of the decline from the 1960s 80s to the increasing generosity of social security over this period increases in the full retirement age and the delayed retirement credit explain one quarter to one half of the recent increase in the lfpr increasing educational attainment and increasing lfpr of married women also contributed to the recent rise

money inflation and investment abstract this paper analyzes an infinite horizon optimizing monetary growth model with endogenously determined income tax rates the technology is linear and random and preferences exhibit unitary relative risk aversion and a constant elasticity of substitution between real money balances and consumption an explicit solution for the rational expectations equilibrium is derived the relationship between the money growth rate and investment depends on the elasticity of substitution moreover maximizing welfare is inconsistent with choosing a money growth rule to maximize investment

why have the labor force participation rates of older men increased since the mid 1990s this article seeks to explain the substantial increases in older men s labor force participation rates observed since the mid 1990s using data from the united states canada and the united kingdom i exploit the cohort effects driving recent increases in older women s participation rates to identify the effect of a wife s participation decision on her husband s participation decision i then decompose the changes in older married men s participation rates demonstrating that husbands responses to increases in wives participation in the labor force can explain one fourth one half and one third of the increase in the united states canada and the united kingdom respectively

monetary uncertainty in discrete time utility of money models abstract in a discrete time model higher variability of the future money supply affects current macroeconomic variables when beginning of period money is the argument of utility but not when end of period money is the effect is through the existence of a precautionary money demand

optimal government finance policy and exchange rate management in a stochastically growing open economy abstract optimal monetary policy is analyzed in a stochastic small open economy consisting of risk averse representative agents the analysis shows how optimal monetary policy should be directed toward an optimal interest rate target this target which maximizes the intertemporal utility of the representative agent is determined by balancing off the marginal gains of a higher interest rate on increased growth and the future consumption it generates against the marginal losses stemming from a reduction in the holdings of real money balances the paper shows how an appropriately set monetary growth rate eliminates the need for continuous intervention in the exchange market

economics and identity this paper considers how identity a person s sense of self affects economic outcomes we incorporate the psychology and sociology of identity into an economic model of behavior in the utility function we propose identity is associated with different social categories and how people in these categories should behave we then construct a simple game theoretic model showing how identity can affect individual interactions the paper adapts these models to gender discrimination in the workplace the economics of poverty and social exclusion and the household division of labor in each case the inclusion of identity substantively changes conclusions of previous economic analysis

more power to the pill the impact of contraceptive freedom on women s life cycle labor supply the release of enovid in 1960 the first birth control pill afforded u s women unprecedented freedom to plan childbearing and their careers this paper uses plausibly exogenous variation in state consent laws to evaluate the causal impact of the pill on the timing of first births and extent and intensity of women s labor force participation the results suggest that legal access to the pill before age 21 significantly reduced the likelihood of a first birth before age 22 increased the number of women in the paid labor force and raised the number of annual hours worked

indexation and the effect of inflation uncertainty on real gnp this article examines the combined effects of inflation uncertainty and indexation on the growth rate of real gross national product gn p the evidence suggests that greater indexation partially reduces t he adverse effect of inflation uncertainty on real gnp growth over time it also indicates that in contrast to earlier findings regarding th e effect of inflation uncertainty on employment the overall effect of inflation uncertainty on real gnp growth may be permanent a preliminary assessment of whether the discrepancy is the result of in flation uncertainty permanently affecting the growth rate of the capi tal stock is inconclusive copyright 1988 by the university of chicago

interest rates and monetary policy uncertainty abstract this paper analyzes a model in which optimizing households are uncertain about monetary policy and learn about it over time in this model the variance of changes in nominal and ex post real interest rates increases with the variance of the household s predictive distribution over money growth a positive relation between unexpected changes in nominal interest rates and the money stock results from monetary policy uncertainty finally if money growth covaries negatively with real wealth an increase in monetary policy uncertainty increases the expected real rate of interest and decreases the nominal rate of interest

adjustment costs and investment in a stochastic endogenous growth model abstract this paper introduces costly investment into a stochastic equilibrium macro model investment is determined by an endogenously determined tobin q that depends upon the structural parameters of the economy the model permits a sequence of economies allowing for an increasing role of government to be studied the effects of both a structural change taking the form of a higher variance of productivity shocks and fiscal policy on the equilibrium is analyzed paying particular attention to the impact on the growth rate and its variability the role of the tobin q in determining the response of the mean growth rate and its variance is emphasized

interest rate variability and economic performance some international evidence using data for short term and long term interest rates across a major group of industrial countries his paper studies the impact of interest rate variability on the cyclical behaviour of real output and the price level in these countries theory predicts that the increased variability of the interest rate stemming from a rise in the level of uncertainty has a negaive impact on he ouput demanded and supplied and in turn an ambiguous impact on the price level the empirical evidence is generally consistent with this prediction next the investigation attempts to shed some light on major sources of uncertainty underlying the interest rate variability focus in on he variability of monetary growth the exchange rate and the energy price some evidence on he relative contribution of these sources of uncertainty of the variability of the interest rate and in turn to the cyclical behaviour of real output and the price level across countries is provided

interest rate variability and economic performance further evidence evans 1984 argues that a policy induced rise in unanticipated interest rate volatility in 1980 82 substantially and significantly reduced output in the u s economy he concludes that stabilizing interest rates is probably sensible monetary policy p 204 a second hypothesis that increased volatility of money growth has contributed to stagnation is rejected by evans this comment raises some questions about the strength of evans s conclusions and about the implicit channels of influence for his results evans s conclusion that only past unanticipated volatility affects output is theoretically and empirically weak anticipated changes in volatility are shown to have similar effects on output second evans implies that in barro s 1981 output model the channel of the interest rate volatility effect on the economy is through an unanticipated decline in aggregate demand the price level effect of such an unanticipated reduction in aggregate demand is tested in barro s price equation in examining these issues an alternative measure of money

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

production technologies in stochastic continuous time models abstract properties of dynamic stochastic general equilibrium models can be revealed by either using numerical solutions or qualitative analysis very precise and intuition building results are obtained by working with models which provide closed form solutions closed form solutions are known for a large class of models some of which however have some undesirable features such as potentially negative output this paper offers closed form solutions for models which are just as tractable but do not suffer from these shortcomings

intertemporal substitution risk aversion and economic performance in a stochastically growing open economy abstract the constant elasticity utility function implies that the intertemporal elasticity of substitution is the inverse of the coefficient of relative risk aversion with empirical evidence suggesting that this relationship may or may not hold studies of risk and growth should decouple these two parameters this paper provides an analytical characterization and numerical simulations of the equilibrium of a stochastically growing small open economy under general recursive preferences we show that errors committed by using the constant elasticity utility function even for small violations of the compatibility condition can be substantial our results suggest that the constant elasticity utility function should be employed with caution