bookbuilding and strategic allocation in the bookbuilding procedure an investment banker solicits bids for shares from institutional investors prior to pricing an equity issue the banker then prices the issue and allocates shares at his discretion to the investors we examine the books for 39 international equity issues we find that the investment banker awards more shares to bidders who provide information in their bids regular investors receive favorable allocations especially when the issue is heavily oversubscribed the investment banker also favors revised bids and domestic investors investment banks commonly build a book before pricing an equity issue in the united states it has been standard practice for a number of years in many other countries where fixed price offerings were traditionally used the bookbuilding procedure is becoming increasingly common especially for international equity issues 1 under the formal bookbuilding procedure the investment banker solicits indications of interest from institutional investors such indications consist of a bid for a quantity of shares and might include a maximum price i e a limit price or other details the investment banker uses the information to construct a demand curve the issue price is not set according to any explicit rule but rather based on the banker s interpretation of investors indications of interest he generally sets the price at a level at which demand exceeds supply and then allocates shares to the bidders at his discretion thus the

economic shocks wealth and welfare the immediate effects of the asian crisis on the well being of indonesians are examined using the indonesia family life survey an on going longitudinal household survey there is tremendous diversity in the effect of the shock for some households it was devastating for others it brought new opportunities a wide array of mechanisms were adopted in response to the crisis households combined to more fully exploit benefits of scale economies in consumption labor supply increased even as real wages collapsed households reduced spending on semi durables while maintaining expenditures on foods rural households used wealth particularly gold to smooth consumption

aging and inequality in income and health in our earlier work we used data from the national health interview survey nhis to examine life cycle patterns in health status and in the joint distribution of health status and income deaton and paxson 1998 in this paper we summarize and extend those results and provide new evidence from the panel study of income dynamics psid both surveys contain a measure of household income and collect information on an ordinal measures of self reported health status srhs that ranges from 1 excellent to 5 poor section i concerns problems related to the measurement of inequality in health section ii presents evidence from the two surveys on health and income inequality this abstract was borrowed from another version of this item

cost sharing design matters a comparison of the rebate and deductible in healthcare since 2006 the dutch population has faced two different cost sharing schemes in health insurance for curative care a mandatory rebate of 255 euros in 2006 and 2007 and since 2008 a mandatory deductible using administrative data for the entire dutch population we compare the effect of both cost sharing schemes on healthcare consumption between 2006 and 2013 we use a regression discontinuity design which exploits the fact that persons younger than eighteen years old neither face a rebate nor a deductible our fixed effect estimate shows that for individuals around the age of eighteen a one euro increase of the deductible reduces healthcare expenditures 18 eurocents more than a euro increase of the rebate these results demonstrate that differences in the design of a cost sharing scheme can lead to substantial different effects on total healthcare expenditure

discounting and underpricing in seasoned equity offers abstract expected discounting in seasoned equity offers is a cost of uncertainty about firm value marketing new shares and acquiring information that raises the offer price stockholders incorporate predictable discounting in stock prices when equity offers are first announced the surprise component of discounting reflecting the lead bank s final adjustment to the offer price releases information that often causes economically large price swings on the offer day disparities between the issuer s closing price and the price suggested in the lead bank s final order book are a primary source of information the discount surprise appears to be used by lead banks to update capital suppliers with that eleventh hour information before they commit their funds

longitudinal determinants of end of life wealth inequality abstract inequality in wealth among elderly households and in particular the prevalence of very low wealth holdings can be an important consideration in the design of social insurance programs this paper examines the incidence and determinants of low levels of financial and total wealth using repeated cross sections of the health and retirement study hrs and a small longitudinal sample of hrs respondents observed both at age 65 and shortly before death most of those who report very low wealth holdings at the end of their life had little wealth at the traditional retirement age of 65 there is strong persistence over time in reports of very low wealth and more generally relatively little evidence that wealth is drawn down in the first 15 years of retirement the age specific probability of reporting low wealth increases slowly after age 65 low lifetime earnings are strongly predictive of low wealth at retirement and at the end of life the post retirement onset of a major medical condition and for married women the loss of their spouse are both associated with small increases in the probability of reporting very low wealth but they account for a small fraction of low wealth outcomes low levels of wealth accumulation before age 65 rather than gaps in the safety net after 65 or rapid spend down of accumulated assets appear to be the primary determinant of low levels of wealth just before death

individual risk attitudes measurement determinants and behavioral consequences this paper studies risk attitudes using a large representative survey and a complementary experiment conducted with a representative subject pool in subjects homes using a question asking people about their willingness to take risks in general we find that gender age height and parental background have an economically significant impact on willingness to take risks the experiment confirms the behavioral validity of this measure using paid lottery choices turning to other questions about risk attitudes in specific contexts we find similar results on the determinants of risk attitudes and also shed light on the deeper question of stability of risk attitudes across contexts we conduct a horse race of the ability of different measures to explain risky behaviors such as holdings stocks occupational choice and smoking the question about risk taking in general generates the best all round predictor of risky behavior

health shocks and risk aversion we empirically assess whether a health shock influences individual risk aversion we use grip strength data to obtain an objective health shock indicator in order to account for the non random nature of our data regression adjusted matching is employed risk preferences are traditionally assumed to be constant however we find that a health shock increases individual risk aversion the finding is robust to a series of sensitivity analyses and persists for at least four years after the shock income changes do not seem to be the driving mechanism

cash by any other name evidence on labelling from the uk winter fuel payment standard economic theory implies that the labelling of cash transfers or cash equivalents e g child benefits food stamps should have no effect on spending patterns the empirical literature to date does not contradict this proposition we study the uk winter fuel payment wfp a cash transfer to older households exploiting sharp eligibility criteria in a regression discontinuity design we find robust evidence of a behavioural effect of the labelling on average households spend 41 of the wfp on fuel if the payment was treated as cash we would expect households to spend approximately 3 of the payment on fuel

long term and spillover effects of health shocks on employment and income abstract we use matching combined with difference in differences to identify the causal effects of sudden illness represented by acute hospitalizations on employment and income up to six years after the health shock using linked dutch hospital and tax register data an acute hospital admission lowers the employment probability by seven percentage points and results in a 5 percent loss of personal income two years after the shock there is no subsequent recovery in either employment or income there are large spillover effects household income falls by 50 percent more than the income of the disabled person

benefit generosity and the income effect on labour supply quasi experimental evidence this study uses an unanticipated exogenous doubling of the legal minimum pension in ukraine as a unique quasi experiment to evaluate the income effect on various aspects of labour supply among the elderly in contrast to previous studies the unusually simple pension eligibility rule allows estimating a pure causal income effect applying reduced form difference in differences and regression discontinuity as well as instrumental variable methods on two nationally representative data sets yields a retirement semi elasticity of 0 1 0 2 men and women respond at different margins of labour supply but with similar overall effect

social protection and labor market outcomes of youth in south africa an apartheid driven spatial mismatch between workers and jobs leads to high job search costs for people living in rural areas of south africa costs that many young people cannot pay in this article the authors examine whether the arrival of a social grant specifically a generous state funded old age pension given to men and women above prime age enhances the ability of young men in rural areas to seek better work opportunities elsewhere based on eight waves of socioeconomic data on household living arrangements and household members characteristics and employment status collected between 2001 and 2011 at a demographic surveillance site in kwazulu natal the authors find that young men are significantly more likely to become labor migrants when someone in their household becomes age eligible for the old age pension but this effect applies only to those who have completed high school matric who are on average 8 percentage points more likely to migrate for work when their households become pension e

income and bargaining effects on education and health in brazil abstract this study examines the impacts of the 1991 reform of brazil s rural pension system on schooling and health indicators we conclude that the reform had significant positive effects on schooling especially on literacy for girls co residing with a male pensioner we were unable to find similar results for children living with a female pensioner we further investigated whether these results were driven by bargaining power differences within households our findings suggest that this explanation is plausible

risk pooling between households and risk coping measures in developing countries evidence from rural bangladesh abstract using data from rural bangladesh i test whether income risks are pooled among villagers between neighboring households and between related households living in different villages i find evidence that risks to food consumption are pooled between neighboring households and between related households but not among villagers as for nonfood consumption i find little evidence of risk pooling except between unrelated neighboring households i also find that while households belonging to a neighborhood network do not take any special measures during an economic hardship those not belonging to any such network try to smooth consumption by selling off livestock and other assets and by getting interest free loans negative income shocks are found to have little effect on labor supply or private transfers

estimating the effect of income on health and mortality using lottery prizes as an exogenous source of variation in income a vast literature has established a strong positive relation between income and health status and a negative relation with mortality this paper studies the effects of income on health and mortality using only the part of income variation due to a truly exogenous factor monetary lottery prizes of individuals the findings are that higher income causally generates good health and that this effect is of a similar magnitude as when traditional estimation techniques are used a 10 percent income increase improves health by about 4 5 percent of a standard deviation

income inequality and health status in the united states evidence from the current population survey several recent studies have identified an association between income inequality and aggregate health outcomes this has been taken to be evidence that inequality is detrimental to individual health we use data from the 1995 99 march current population survey to examine the effect of income inequality on individual health status for both the general population and those individuals in poverty we find no consistent association between income inequality and individual health status our results contradict recent claims that the psychosocial effects of income inequality have dramatic consequences for individual health outcomes

home bias in equity portfolios inflation hedging and international capital market equilibrium we test whether the home bias in equity portfolios is caused by investors trying to hedge inflation risk the empirical evidence is consistent with this motive only if investors have very high levels of risk tolerance and equity returns are negatively correlated with domestic inflation we then develop a model of international portfolio choice and equity market equilibrium that integrates inflation risk and deadweight costs using this model we estimate the levels of costs required to generate the observed home bias in portfolios consistent with different levels of risk aversion for a level of risk aversion consistent with standard estimates of the domestic equity market risk premium these costs are about a few percent per annum greater than observable costs such as withholding taxes thus the home bias cannot be explained by either inflation hedging or direct observable costs of international investment unless investors have very low levels of risk aversion article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

asset pricing and dual listing on foreign capital markets a note international capital flows can be hampered by a variety of barriers such as transaction costs information costs and legal restrictions these barriers can be severe enough to produce segmentation of capital markets along national borders thereby producing incentives for firms to adopt financial policies that can effectively reduce the associated negative effects according to stapleton and subrahmanyam 6 p 313 dual listing of the firm s securities on foreign capital markets is one such policy 1 however adoption of this policy will bring forth asset pricing adjustments the purpose of this note is to provide and analyze a closed form solution to the equilibrium asset pricing problem that arises in this situation 2 once the solution is obtained comparative statics are provided 3 the model presented assumes that one of the domestic securities is dually listed on a foreign capital market while none of the foreign securities is dually listed on the domestic capital market this scenario often characterizes the initial stages of capital market integration in which a country with relatively scarce capital or a relatively underdeveloped capital market allows a small number of domestic securities or a fund of domestic securities to be listed on a foreign capital market while simultaneously forbidding its citizens to invest in foreign securities this point can be illustrated by the emergence of a variety of country funds in the u s capital market such as the japan fund in the 1960 s the

institutions health shocks and labour market outcomes across europe this paper investigates the relationship between health shocks and labour market outcomes in 9 european countries using the european community household panel matching techniques are used to control for the non experimental nature of the data the results suggest that there is a significant causal effect from health on the probability of employment individuals who incur a health shock are significantly more likely to leave employment and transit into disability the estimates differ across countries with the largest employment effects being found in the netherlands denmark spain and ireland and the smallest in france and italy differences in social security arrangements help to explain these cross country differences

child labor and schooling responses to anticipated income in south africa abstract forward looking unconstrained households make child labor and schooling decisions considering their permanent income and weighing the relative returns to child time in various potential activities the timing of anticipated changes in income should have no effect on child labor and schooling in a setting where households can borrow against permanent income however this study documents large increases in schooling attendance and declines in total hours worked when black south african families become eligible for fully anticipatable social pension income as an explanation the data are most consistent with liquidity constraints for black elder males forcing rural families into less schooling for boys than they would choose absent the constraint perhaps because of schooling costs

inter vivos transfers and bequests in three oecd countries reforms reducing the generosity of pensions have distributional effects on future generations if individuals care about their descendants welfare but only affect elderly individuals if bequests are the unintentional result of precautionary savings and safety net programmes such as unemployment insurance may displace sources of private help such as that provided by living parents to their children in need this paper provides comparable measures of how expected bequests and transfers vary with cumulated parental earnings in the united states west germany and the united kingdom the strength of bequest motives is empirically very weak in the available data private inter vivos transfers which appear to depend on the recipients economic situation are partly crowded out by public unemployment insurance programmes together involuntary bequests and intentional inter vivos transfers appear to be an important channel of intergenerational inequality transmission and strengthen substantially the relationship between an individual s and his parents economic status ernesto villanueva

determinants of healthcare spending a state level analysis within the high and rising level of healthcare spending for the us as a whole is substantial variation in spending across states yet relatively little attention has been given to the empirical analysis of interstate differences in aggregate healthcare expenditures and therefore little empirical evidence exists at the state level to guide policymakers using data for all 50 states for the year 1998 we estimate an empirical model that includes structural and reduced form healthcare spending equations and a health production function to assess the significance size and relative importance of factors that prior research indicates may play an important role in explaining interstate variation in medical care expenditures and the main pathways through which they operate our results indicate higher levels of healthcare spending for state populations with higher income less education fewer uninsured residents less healthy lifestyles larger proportion of elderly residents greater availability of medical

a house of her own old age assistance and the living arrangements of older nonmarried women abstract i investigate the factors that fostered the rise in separate living quarters for older nonmarried women since mid century by examining the impact of old age assistance on living arrangements in 1940 and 1950 i find that old age assistance substantially increased demand for separate living quarters but that demand depended upon the rules of the program in particular whether children were held legally responsible for the care of their aged parents i argue that more than half of the decline in the fraction of older nonmarried women living with kin from 1950 to 1990 can be attributed to rising social security benefits and expanded eligiblity and to the fact that social security benefits were given with no strings attached

the dynamics of health in the british household panel survey this paper considers the dynamics of a categorical indicator of self assessed health using eight waves 1991 1998 of the british household panel survey bhps our analysis has three focal points the relative contributions of state dependence and heterogeneity in explaining the dynamics of health the existence and consequences of health related sample attrition and the investigation of the effects of measures of socioeconomic status with a particular focus on educational attainment and income to investigate these issues we use dynamic panel ordered probit models there is clear evidence of health related attrition in the data but this does not distort the estimates of state dependence and of the socioeconomic gradient in health the models show strong positive state dependence and heterogeneity accounts for around 30 of the unexplained variation in health copyright 2004 john wiley sons ltd

the family as an incomplete annuities market families can self insure against uncertain dates of death through implicit or explicit agreements with respect to consumption and interfamily transfers interfamily transfers need have nothing to do with altruistic feelings they may simply reflect risk sharing behavior of completely selfish family members although family annuity markets are incomplete even small families can substitute by more than 70 percent for perfect market annuities given adverse selection and transaction costs family risk pooling may be preferred to public market annuities in the absence of public annuities these risk sharing arrangements provide powerful incentives for marriage and family formation

direct evidence of risk aversion as a source of advantageous selection in health insurance abstract using the self stated degree of risk aversion regarding health from the gsoep we find some evidence for risk aversion being a source of advantageous selection risk averse men more often procure supplementary insurance for hospital visits despite needing the additional coverage less

uncertain medical expenses and precautionary saving near the end of the life cycle this paper introduces a dynamic structural model of household consumption decisions in which elderly families consider the effects of uncertain future medical expenses when deciding current levels of consumption the model with uncertain medical expenses implies a potentially important role for precautionary saving incentives to explain slow rates of dissaving among elderly americans during retirement rather than just simulating the stochastic dynamic model preference parameters are estimated using panel data on health wealth and expenditures for retired families the health uncertainty model predicts consumption levels closer to observed expenditures than a life cycle model with uncertain longevity however elderly families typically dissave their financial assets more slowly than even the baseline health uncertainty model predicts is optimal

foreign equity investment restrictions capital flight and shareholder wealth maximization theory and evidence this article provides a theory of foreign equity investment restrictions we consider a model where the demand function for domestic shares differs between domestic and foreign investors because of deadweight costs in holding domestic and foreign securities that depend on the country of residence of investors we show that domestic entrepreneurs maximize firm value by discriminating between domestic and foreign investors the model implies that countries benefitting from capital flight have binding ownership restrictions such that foreign investors pay a higher price for shares than domestic investors the empirical implications of this theory are supported by evidence from switzerland article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

income related inequality in life years and quality adjusted life years abstract we estimate the income related inequality in sweden with respect to life years and quality adjusted life years qalys we use a large data set from sweden with over 40 000 individuals followed up for 10 16 years to estimate the survival and quality adjusted survival in different income groups for both life years and qalys we discover inequalities in health favouring the higher income groups for men women in the youngest age group 20 29 years the number of qalys is 43 7 45 7 in the lowest income decile and 47 2 49 0 in the highest income decile

endogenous coresidence and program incidence south africa s old age pension we investigate whether living arrangements respond to an arguably exogenous shift in the distribution of power in family economic decision making in the early 1990s the south african old age pension was expanded to cover most black south africans above a sex specific age cut off resulting in a substantial increase in the income of older south africans and potentially their say in the economic decisions of their families beneficiaries of the program are more likely to coreside with adults who have less human capital as measured by height and education since height and education are fixed for adults this cannot be an effect of the pension income but reflects selective changes in living arrangements resulting from the pension the findings highlight the endogeneity of living arrangements and illustrate the potential value of moving beyond theory and data that are confined to a spatially determined definition of the household

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

bouncing back from health shocks locus of control and labor supply abstract many studies have demonstrated a causal effect of ill health on labor supply in this study i explore the personality related heterogeneity measured by differences in control beliefs in the labor supply response to health shocks to identify such behavioral differences i follow the labor supply trajectories of 649 initially full time employed and healthy men who experience at some point in time an episode of ill health when compared with men who have positive control beliefs men with negative control beliefs are on average 100 more likely to drop out of the labor force a drop out unrelated to early retirement and work on average 12 less hours per week the year after the health shock these behavioral differences remain robust to alternative estimation samples and health shock definitions they are strongest for men from low socioeconomic backgrounds who do not have access to private health insurance or who experience high intensity shocks heterogeneous labor supply responses are also observed for conscientiousness and risk tolerance traits that have been linked with willingness to invest and treatment compliance an important conclusion from the findings is that a small set of non cognitive skills produces long term labor market benefits in the advent of adversity

the determinants of mortality mortality rates have fallen dramatically over time starting in a few countries in the 18th century and continuing to fall today in just the past century life expectancy has increased by over 30 years at the same time mortality rates remain much higher in poor countries with a difference in life expectancy between rich and poor countries of also about 30 years this difference persists despite the remarkable progress in health improvement in the last half century at least until the hiv aids pandemic in both the time series and the cross section data there is a strong correlation between income per capita and mortality rates a correlation that also exists within countries where richer better educated people live longer we review the determinants of these patterns over history over countries and across groups within countries while there is no consensus about the causal mechanisms we tentatively identify the application of scientific advance and technical progress some of which is induced by income and facilitated by education as the ultimate determinant of health such an explanation allows a consistent interpretation of the historical cross country and within country evidence we downplay direct causal mechanisms running from income to health

the eurobond market and corporate financial policy abstract on average significant positive abnormal returns are associated with eurobond issues during the period 1975 1985 the cross sectional and time series distributions of the abnormal returns are consistent with the hypothesis that impediments to the adjustment of asset supplies to new demand conditions are large enough to create profitable financing opportunities for firms our analysis demonstrates how profitable financing opportunities can persist on the eurobond market and when they are most likely to arise

large cash transfers to the elderly in south africa we examine the social pension in south africa where large cash sums about twice the median per capita income of african households are paid to people qualified by age but irrespective of previous contributions we present the history of the scheme and use a 1993 nationally representative survey to investigate the redistributive consequences of the transfers documenting who receive the pensions their levels of living and those of their families we also look at behavioural effects particularly the effects of the cash receipts on the allocation of income to food schooling transfers and savings in south africa a large social pension about twice the median per capita income of african households is paid in cash to people qualified by age irrespective of previous contributions we present the history of the scheme and explain how such large transfers could come about in an economy in which the recipients were not only politically weak but without any political representation whatsoever we then use a 1993 nationally representative survey to investigate the redistributive consequences of the transfers documenting who receive the pensions their levels of living and those of their families we also look at behavioural effects particularly the effects of the cash receipts on the allocation of income to food schooling transfers and savings the pressing policy issue for south africans is whether it makes sense to target seven billion rand nearly 2 billion of social expenditure through the current pension schemes our analysis contributes to the discussion by documenting the redistributive and behavioural effects of the transfers we find that at least as far as immediate incidence is concerned and without allowance for behavioural effects the social pension is an effective tool of redistribution and that the households it reaches are predominantly poor because so many of the elderly among south africa s african population live with children the social pension is also effective in putting money into house

the insurance value of medical innovation abstract economists think of medical innovation as a valuable but risky good producing health benefits but increasing financial risk for consumers and healthcare payers this perspective overlooks how innovation can lower physical risks borne by healthy patients facing the prospect of future disease we present an alternative framework that accounts for all these sources of value and links them to the value of healthcare insurance we show that any innovation worth buying reduces overall risk and generates positive insurance value on its own we conduct a stylized numerical exercise to assess the potential empirical significance of our insights our calculations suggest that conventional methods meaningfully understate the value of historical health gains and disproportionately undervalue treatments for the most severe illnesses where physical risk to consumers is the costliest these calculations also suggest that the value of physical insurance from new technologies may exceed the financial spending risk that they pose

how public pension affects elderly labor supply and well being evidence from india summary i study the effect of a recent expansion in india s national old age pension scheme on elderly well being estimates suggest that public pension has a modestly negative effect on the employment of elderly near elderly men with a primary or lower education but no effect on the employment of similar women pension raised family expenditures lowering poverty and the effect was smaller on families headed by illiterate persons suggesting lower pension coverage of this most disadvantaged group further i find that households spent most of the pension income on medical care and education suggesting possible intra family transfers across generations

does the old age pension scheme improve household welfare evidence from india abstract as india s population has been ageing due to declines in fertility and mortality rates more policy emphasis has been placed on reducing poverty among the elderly the present study aims to examine the effect of indira gandhi national old age pension scheme ignoaps on household welfare indicators such as consumption expenditure income assets and poverty using the household longitudinal data based on the india human development survey in 2004 5 and 2011 12 we have applied the propensity score matching to build a counterfactual group and have used the propensity score weighted fixed effects model to eliminate time invariant unobservable household characteristics the results show that the ignoaps participation increased consumption expenditure food and non food expenditure and assets while reducing the household labour supply the sub sample estimations show that these effects are observed only when recipients are women however the results of difference in difference model imply that the poverty reducing effect deteriorated in 2011 12 after the government made several changes to programme specifications in 2007 this was likely because some households which accessed ignoaps after 2007 reduced the labour supply significantly while keeping the level of consumption

worker absence and productivity evidence from teaching a significant amount of work time is lost each year due to worker absence but evidence on the productivity losses from absenteeism remains scant due to difficulties with identification we use uniquely detailed data on the timing duration and cause of absences among teachers to address many of the potential biases from the endogeneity of worker absence our analysis indicates that worker absences have large negative impacts the expected loss in daily productivity from employing a temporary substitute is on par with replacing a regular worker of average productivity with one at the 10th 20th percentile of productivity

mortality health status and wealth in this paper we use the two waves of the british retirement survey 1988 1989 and 1994 to quantify the relationship between socioeconomic status and health outcomes we find that even after conditioning on the initial health status wealth rankings are important determinants of mortality and the evolution of the health indicator in the survey for men aged 65 moving from the 40th percentile to the 60th percentile in the wealth distribution increases the probability of survival by between 1 0 and 1 9 percentage points depending on the measure of wealth used a similar effect is found for women of between 1 1 and 1 3 percentage points in the process of estimating these effects we control for nonrandom attrition from our sample

the nestle crash on november 17 1988 the board of directors of nestle ag decided to allow foreign investors to hold nestle registered stock reversing a longstanding practice this decision had a tremendous impact on the prices of the firm s three classes of common stock as well as on the prices of several other corporations traded on the zurich stock exchange these price changes can be explained by the hypothesis that demand curves slope down

do private transfers displace the benefits of public transfers evidence from south africa abstract this paper investigates whether government transfer programs displace or crowd out private support focusing on a large increase in state old age pensions in south africa using data spanning the period of the expansion we find that each rand of public pension income to the elderly leads to a 0 25 0 30 rand reduction in private transfers from children living away from home however despite the large increase in income there were no significant changes in migration labor supply or household composition we also show that evaluations of the distributional effects of the pension are overstated when crowding out is ignored

consumption smoothing migration and marriage evidence from rural india a significant proportion of migration in low income countries particularly in rural areas is composed of moves by women for the purpose of marriage we seek to explain these mobility patterns by examining marital arrangements among indian households in particular we hypothesize that the marriage of daughters to locationally distant dispersed yet kinship related households is a manifestation of implicit interhousehold contractual arrangements aimed at mitigating income risks and facilitating consumption smoothing in an environment characterized by information costs and spatially covariant risks analysis of longitudinal south indian village data lends support to the hypothesis marriage cum migration contributes significantly to a reduction in the variability of household food consumption farm households afflicted with more variable profits tend to engage in longer distance marriage cum migration the hypothesized and observed marriage cum migration patterns are in dissonance with standard models of marriage or migration that are concerned primarily with search costs and static income gains

average earnings and long term mortality evidence from administrative data in this paper we exploit a unique database that merges longitudinal earnings data on pennsylvanian workers with national death records to study the detailed nature of the corre lation between earnings and mortality we find that the estimates typically reported in the lit erature which are based on single years of earn ings data are likely to understate substantially the strength of the association between income and mortality in particular relative to a single year of earnings the average of earnings over a six year period predicts a 70 percent greater impact of income on mortality in addition con trolling for the mean level of earnings over a period we find that greater earnings volatility is associated with higher mortality we also examine the lag structure of the rela tionship between earnings and mortality we

the impact of global equity offerings this article examines the impact of u s firms issuing equity in multiple markets we compare the stock price reactions to announcements of global equity offers to a control group of issues offered exclusively in the domestic u s market all else equal the adverse price reaction that typically accompanies equity issuance is reduced by 0 8 percent when some shares are sold abroad the overall evidence suggests global offers are effective in expanding demand and reducing the price pressure effects associated with share issuance the benefits of global offers appear to be associated with an increase in the number of foreign shareholders the search for new capital markets and lower costs of capital is an ongoing search for most firms in recent years the number of u s firms issuing common equity in international markets has increased significantly in 1985 u s firms raised 89 million through follow on equity offers in foreign markets and this amount increased to 18 915 million in 1995 a greater than 200 fold increase in nominal terms this paper focuses on follow on global equity issues by u s firms and attempts to assess why firms widely acknowledged to have access to broad and deep domestic capital markets increasingly seek to raise equity abroad the global equity offerings we examine involve a simultaneous sale of common equity at the same offer price in the u s market and one or more international markets we examine the characteristics of the issuers and issues and investigate to what extent the wider distribution of shares affects the pricing and costs of these issues our main line of inquiry examines whether the distribution of shares to multiple markets results in a higher offer price for equity shares than would be obtained had the shares been sold exclusively in the u s market domes

a median voter model of health insurance with ex post moral hazard abstract one of the main features of health insurance is moral hazard as defined by pauly pauly m v 1968 the economics of moral hazard comment american economic review 58 531 537 people face incentives for excess utilization of medical care since they do not pay the full marginal cost for provision to mitigate the moral hazard problem a coinsurance can be included in the insurance contract but health insurance is often publicly provided having a uniform coinsurance rate determined in a political process is quite different from having different rates varying in accordance with one s preferences as is possible with private insurance we construct a political economy model in order to characterize the political equilibrium and answer questions like under what conditions is there a conflict in society on what coinsurance rate should be set and which groups of individuals will vote for a higher and lower than equilibrium coinsurance rate respectively we also extend our basic model and allow people to supplement the coverage provided by the government with private insurance then we answer two questions who will buy the additional coverage and how do the coinsurance rates people are now faced with compare with the rates chosen with pure private provision

the marginal propensity to earn and consume out of unearned income evidence using an unusually large cash grant reform in this paper we use the rapid introduction of an unconditional cash grant child support in south africa to estimate the marginal propensity to consume and earn out of unearned income we find that the marginal propensity to earn is about 0 3 and that the marginal propensity to consume is about 0 7 nothing of the grant appears to be saved if anything households dissave against future grant payments the marginal propensities estimated here are similar to those reported in comparable papers using us data however they stand in contrast to some results on conditional cash transfers in other developing countries

socioeconomic inequality of access to healthcare does choice explain the gradient equity of access is a key policy objective in publicly funded healthcare systems however observed inequalities of access by socioeconomic status may result from differences in patients choices using data on non emergency coronary revascularisation procedures in the english national health service we found substantive differences in waiting times within public hospitals between patients with different socioeconomic status up to 35 difference or 43 days between the most and least deprived population quintile groups using selection models with differential distances as identification variables we estimated that only up to 12 of these waiting time inequalities can be attributed to patients choices of hospital and type of treatment heart bypass versus stent residual inequality after allowing for choice was economically significant patients in the least deprived quintile group benefited from shorter waiting times and the associated health benefits were worth up to 850 per person

bargaining with grandma the impact of the south african pension on household decision making i examine how an exogenous change in individual income affects decision making in the household using the age discontinuity in eligibility for the south african pension i find that eligible women are 15 percentage points more likely to be the primary decision maker in the household than noneligible women this corresponds with a large increase in their share of household income there are no parallel effects for men due to labor force withdrawal male income does not increase with eligibility suggesting that their status in the household is unchanged

household composition labor markets and labor demand testing for separation in agricultural household models this paper tests the separation of farm labor supply and labor demand decisions using the observation that household composition is an important determinant of farm labor use with nonseparation after assessing the conditions under which the test has power against several alternatives an empirical model is developed to test the proposition that farm employment is independent of family composition the model is estimated on a data set from rural java the null hypothesis that farm labor allocation decisions are independent of household structure is not rejected the results are robust to different specifications of the labor demand function copyright 1992 by the econometric society

wealth health and child development evidence from administrative data on swedish lottery players we use administrative data on swedish lottery players to estimate the causal impact of substantial wealth shocks on players own health and their children s health and developmental outcomes our estimation sample is large virtually free of attrition and allows us to control for the factors conditional on which the prizes were randomly assigned in adults we find no evidence that wealth impacts mortality or health care utilization with the possible exception of a small reduction in the consumption of mental health drugs our estimates allow us to rule out effects on 10 year mortality one sixth as large as the crosssectional wealth mortality gradient in our intergenerational analyses we find that wealth increases children s health care utilization in the years following the lottery and may also reduce obesity risk the effects on most other child outcomes including drug consumption scholastic performance and skills can usually be bounded to a tight interval around zero overall our findings suggest that in affluent countries with extensive social safety nets causal effects of wealth are not a major source of the wealth mortality gradients nor of the observed relationships between child developmental outcomes and household income jel codes i10 i14 j24

rearranging the family income support and elderly living arrangements in a low income country this study examines the link between income and living arrangements our identification comes from exploiting a discontinuity in age in the benefit formula for the social pension in south africa in contrast to previous literature we find no association between pension income and elderly independence we do find that potential beneficiaries alter their household structure when they become pension eligible prime working age women depart and the presence of children younger than five and young women of childbearing age increase these shifts in coresidence patterns are consistent with a setting where prime age women have comparative advantage in work away from extended family relative to younger women the additional income from old age support may induce a change in living arrangements to exploit this advantage

heaping induced bias in regression discontinuity designs heaping induced bias in rd designs this study uses monte carlo simulations to demonstrate that regression discontinuity designs arrive at biased estimates when attributes related to outcomes predict heaping in the running variable after showing that our usual diagnostics may not be well suited to identifying this type of problem we provide alternatives and then discuss the usefulness of different approaches to addressing the bias we then consider these issues in multiple non simulated environments

the effect of market segmentation and illiquidity on asset prices evidence from exchange listings this article documents the effect on share value of listing on the new york stock exchange and reports the results of a joint test of merton s 1987 investor recognition factor and amihud and mendelson s 1986 liquidity factor as explanations of the change in share value we find that during the 1980s stocks earned abnormal returns of 5 percent in response to the listing announcement and that listing is associated with an increase in the number of shareholders and a reduction in bid ask spreads cross sectional regressions provide support for both investor recognition and liquidity as sources of value from exchange listing the effect on share value of listing on the new york stock exchange nyse by over the counter otc stocks has been the focus of empirical investigation by scholars and practitioners for at least 50 years the consensus conclusion is that an nyse listing is or at least has been associated with a significant increase in share price streetlore has historically attributed this increase in value to the increased investor recognition that is believed to accompany listing on a major exchange until recently this investor recognition explanation has lacked a rigorous analytical foundation merton 1987 fills this void with a model of capital market equilibrium with incomplete information to develop his model merton adopts most of the assumptions of the original sharpe lintner mossin capital asset pricing model capm but relaxes the assumption of equal information across investors he further assumes that investors invest only in the those securities of which they are aware 2 with this modification to the original capm framework merton derives a model in which expected returns increase with systematic risk firm specific risk and relative market value and decrease

public policy and extended families evidence from pensions in south africa how are resources allocated within extended families in developing economies this question is investigated using a unique social experiment the south african pension program under that program the elderly receive a cash transfer equal to roughly twice the per capita income of africans in south africa the study examines how this transfer affects the labor supply of prime age individuals living with these elderly in extended families it finds a sharp drop in the working hours of prime age individuals in these households when women turn 60 years old or men turn 65 the ages at which they become eligible for pensions it also finds that the drop in labor supply is much larger when the pensioner is a woman suggesting an imperfect pooling of resources the allocation of resources among prime age individuals depends strongly on their absolute age and gender as well as on their relative age the oldest son in the household reduces his working hours more than any other prime age household member

alimony rights and intrahousehold allocation of resources evidence from brazil can family policy affect well being of individuals without altering the resources available to their families this article examines the extension of alimony rights and obligations to cohabiting couples in brazil for women in intact relationships alimony rights upon dissolution should improve outside options strengthening their negotiating positions and increasing their influence over intrahousehold allocation of resources robust econometric evidence indicates that more decision power in the hands of women impacts hours worked by female adults and investments in the education of children this suggests that family policy and models of family decision making should take intrahousehold heterogeneity of preferences into account

ill health and retirement in britain a panel data based analysis we examine the effect of ill health on retirement decisions in britain using the british household panel survey 1991 1998 as self reported health status is likely to be endogenous to the retirement decision we instrument self reported health by a constructed health stock measure using a set of health indicator variables and personal characteristics as suggested by bound et al bound j schoenbaum m stinebrickner t m waidmann m 1999 the dynamic effects of health on the labor force transitions of older workers labour economics 6 179 202 using a range of econometric techniques we show that adverse shocks to individual health stocks predict individual retirement behaviour among workers aged from 50 until state pension age we compare responses of economic activity to constructed health measures with that arising using direct indicators of functional limitations and specific health problems we also examine the dynamics of health shocks and whether adverse and positive health shocks have symmetric effects on transitions in and out of economic activity

healthy bodies and thick wallets the dual relation between health and economic status there is abundant evidence of a quantitatively large association between many measures of economic status including income and wealth and a variety of health outcomes such as mortality or morbidity however considerable and often heated debate remains especially across disciplines about the direction of causation and about why the association arises although medical scientists are often convinced that the dominant if not exclusive pathway is that variation in socioeconomic status produces health disparities they are increasingly debating among themselves about why low economic status might lead to poor health at least for modern industrial countries 1 the old standby arguments the less well to do have access to less or lower quality medical care or a stronger pattern of deleterious personal behaviors have been rejected as insufficient instead a series of intriguing competing theories have arisen that emphasize long term impacts of early childhood or even inter uterine environmental factors the cumulative effects of prolonged exposures to individual stressful events or reactions to macro societal factors such as rising levels of income inequality a common link is that each theory attempts to document the physiological processes through which low economic status leads to poorer health while these scientific questions are extremely important this research has taken place with little input from economists economists are now making contributions about the alternative pathway the impact poor health may have on economic resources poor health may restrict a family s capacity to earn income or to accumulate assets by limiting work or by raising medical expenses at a minimum this work should provide a caution against exaggerating the magnitude of causation from economic status to health outcomes but the potential contribution runs deeper as people age the evolving variation in individual health outcomes may offer additional statistical information to estimate parameters of household savings and consumption behavior that so far have proven to be somewhat elusive thus incorporating health uncertainty and risk into economic models should eventually enrich our understanding of basic tenets of household behavior the first section of this paper documents the size of the association between health and one prominent economic status measure household wealth section two deals with how health influences economic status by sketching out reasons why health may alter household savings and eventually wealth and then providing estimates of the empirical magnitude of these effects section three shifts attention to the alternative pathway the links between economic status and health and summarizes 2major controversies and evidence surrounding these issues

the effects of market segmentation and investor recognition on asset prices evidence from foreign stocks listing in the united states non u s firms cross listing shares on u s exchanges as american depositary receipts earn cumulative abnormal returns of 19 percent during the year before listing and an additional 1 20 percent during the listing week but incur a loss of 14 percent during the year following listing we show how these unusual share price changes are robust to changing market risk exposures and are related to an expansion of the shareholder base and to the amount of capital raised at the time of listing our tests provide support for the market segmentation hypothesis and merton s 1987 investor recognition hypothesis the globalization of u s capital markets has accelerated dramatically in the past decade increasing numbers of companies from overseas have chosen to either raise capital through global equity issues or prepare for future capital raising by way of cross listings on u s exchanges as of 1997 about 1 300 non u s companies have listed their shares for trading on the new york stock exchange nyse the american exchange amex the national association of securities dealers automation quotation nasdaq system or

two economists musings on the stability of locus of control empirical studies of the role of non cognitive skills in driving economic behavior often rely heavily on the assumption that these skills are stable over the relevant time frame we analyze the change in a specific non cognitive skill i e locus of control in order to directly assess the validity of this assumption we find that short and medium run changes in locus of control are rather modest on average are concentrated among the young or very old do not appear to be related to the demographic labor market and health events that individuals experience and are unlikely to be economically meaningful still there is no evidence that locus of control is truly time invariant implying that the use of lagged measures results in an errors in variables problem that could downward bias the estimated wage return to locus of control by as much as 50 percent those researchers wishing to analyze the economic consequences of non cognitive skills should consider i restricting their analysis to the working age population for whom there is little evidence of systematic change in skill levels and ii accounting for error in the skill measures they employ

income productivity in china on the role of health this study provides empirical evidence regarding the income productivity of health human capital in china we appeal to concepts from human capital theory to support a basic model that treats health as a form of human capital in the income production process our model examines the economic return at the household level from the health of its individual members we estimate this with a longitudinal sample drawn from the china health and nutrition survey chns allowing us to exploit within variation in health and income to address possible unobservables biasing estimates of the impact of health on income in the simple cross sectional setting household income is strongly influenced by the health of its members particularly in rural areas these findings could have important implications for health and economic policy making aimed at reducing the long standing urban rural economic gap and more comprehensively insuring the rural population against health and economic risk

investor base and corporate borrowing evidence from international bonds abstract we examine international bond issues by us firms to study the benefits of investor taste for cross border security issuances we proxy for firms international investor taste with the fraction of prior international bond holding in firms domestic and international bonds and find that international investor demand increases with such taste moreover the offering yield spreads on international bonds are lower than domestic offering yield spreads for these internationally recognized firms and they have higher probability of issuing internationally such international recognition may occur for instance if the diversification benefits of adding the security to investor s portfolio outweigh the negative effects of higher renegotiation costs for international compared to domestic investors

uncertain health and survival effects on end of life consumption this article analyzes the impact of health and survival uncertainty on the saving and consumption decisions of retirees a dynamic programming approach is used to model the household s planning problem the utility parameters are estimated using panel data we find that a fall into poor health raises the marginal utility from consumption simulations are used to indicate the effects of falling into poor health and loss of spouse they reveal a large transfer from the healthy to the sick partner and a strong dependence of saving on the survivor benefits suggesting that concern about the surviving spouse is an important motive for saving

investments time preferences and public transfers paid to women abstract the literature suggests that men and women may have different preferences this paper exploits a social experiment in which women in treatment households were given a large public cash transfer progresa in an effort to disentangle the effect of additional income in the household from the effect of changing the distribution of income within the household the impact of progresa income on savings and investments decisions is compared with all other income sources after taking into account participation in the program additional money in the hands of women is spent on small livestock which are traditionally managed and cared for by women improved nutrition and child goods particularly clothing among single headed households progresa income is not treated differently from other income direct evidence on intertemporal preferences gathered in the mexican family life survey indicates that women are more patient than men when thinking about the future taken together the results suggest t

sequential sales learning and cascades when ipo shares are sold sequentially later potential investors can learn from the purchasing decisions of earlier investors this can lead rapidly to cascades in which subsequent investors optimally ignore their private information and imitate earlier investors although rationing in this situation gives rise to a winner s curse it is irrelevant the model predicts that 1 offerings succeed or fail rapidly 2 demand can be so elastic that even risk neutral issuers underprice to completely avoid failure 3 issuers with good inside information can price their shares so high that they sometimes fail 4 an underwriter may want to reduce the communication among investors by spreading the selling effort over a more segmented market consider a scenario in which an issuer is selling a new security of uncertain value for example an ipo initial public offering of stock or high yield debt through an underwriter the s e c has banned variable price sales while the value of this new security is highly uncertain to individual market participants investors hold perfectly accurate information when aggregated moreover there are many potential investors and a small number of these investors can jointly determine the value of the firm or its project with high precision it would seem that in this scenario underpriced offerings would succeed and overpriced offerings would fail nevertheless this paper shows that if the distribution channels of invest ment banks are limited underpriced offerings can fail and overpriced offer ings can succeed with limited distribution channels it takes the under writer time to approach interested investors therefore later investors can observe how well an offering has sold to date or at least how successful it has sold relative to offerings previously undertaken by this underwriter

international financial integration through equity markets which firms from which countries go global the authors study international financial integration analyzing firms from various countries raising capital trading equity and cross listing in major world stock markets using a large sample of 39 517 firms from 111 countries covering the period 1989 2000 they find that although international financial integration increases substantially over this period only relatively few countries and firms actively participate in international markets firms more likely to internationalize are from larger and more open economies with higher income better macroeconomic policies and worse institutional environments these firms tend to be larger grow faster and have higher returns and more foreign sales while changes occur with internationalization these firm attributes are present before internationalization takes place the results suggest that international financial integration will likely remain constrained by country and firm characteristics

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

health status and portfolio choice causality or heterogeneity abstract this paper explores the role of unobserved individual characteristics in the health assets and health portfolio correlations we apply various econometrics models to a unique longitudinal dataset with rich information that allows for the exploitation of four different health indices our findings show strong cross sectional correlations between health and both financial and non financial assets but these correlations seem to be mainly driven by heterogeneity as the correlations largely disappear in the fixed effects model adverse health shocks however are found to motivate a safer portfolio choice even after individual fixed effects are controlled for a result consistent with the prediction made by the background risk theory our findings suggest that health shocks shift investment from risky assets toward other financial assets but keep the total financial assets unchanged

heaping induced bias in regression discontinuity designs this study uses monte carlo simulations to demonstrate that regression discontinuity designs arrive at biased estimates when attributes related to outcomes predict heaping in the running variable after showing that our usual diagnostics may not be well suited to identifying this type of problem we provide alternatives and then discuss the usefulness of different approaches to addressing the bias we then consider these issues in multiple non simulated environments jel c21 c14 i12

inheritances intergenerational transfers and the accumulation of health research on inheritances has largely focused on the motives of the bequeathing regardless of the motivations of the giving generation prior to death wealth is transferred and this additional money may have an impact on the receiving generation in particular inheritances may be correlated with individuals health for several reasons first there may be a causal effect inheritances provide additional financial resources allowing recipients to purchase inputs to health and health care a large literature on socioeconomic status ses and health investigates the effect of financial resources on health second inheritances may signal the overall strength of a dynasty this dynastic strength would manifest itself in both better health and more ability to leave a bequest inheritances could be associated with better health because parents who will eventually bequeath wealth to their children may have disproportionately higher ses which improves the health outcomes of the children third bequests and a bequest motive may signal a stronger interest in one s child this reminder to the child could improve his emotional well being this paper

time preference noncognitive skills and well being across the life course do noncognitive skills encourage healthy behavior a number of prominent diseases are influenced by health behaviors for example it is well known that the decision to smoke comes with considerable risks of developing smoking related ailments such as lung cancer emphysema and heart disease obesity is another health condition that can be costly it is associated with increased risk for diseases such as coronary heart disease and diabetes centers for disease control 2009 nationally it is estimated that about one third of the u s population is obese and estimates suggest that obesity costs society anywhere from 27 to 47 billion in health care expenditures annually centers for disease control 2009 national center for health statistics 2008 research suggests that changing individuals diets and getting them to exercise would help to reduce the prevalence of obesity in society melayne mcinnes and judith shinogle 2009 smoking and obesity provide just two examples of cases in which the nation s burden of disease is influence by behaviors that its citizens engage in because the united states spends a large share of gdp on health care each year understanding the determinants of health behaviors is important as it may allow scholars to identify ways to reduce these costs this paper examines the relationship between individuals health behaviors and the non cognitive skills that individuals possess in the past decade the economics discipline has seen a burst of interest in human capabilities that contribute to labor market productivity beyond the usual foci of attention levels of education and learning by doing the collection of personality traits soft skills incentive enhancing preferences and socio emotional factors that economists are now studying has been loosely grouped together under the heading non cognitive skills 1 while the term may be something of a misnomer because many of the worker attributes that the authors writing in this subfield are interested in require reasoning or cognition the skills of interest have been found to be important determinants of labor market success james heckman jora stixrud and sergio urzua 2006 samuel bowles herbert gintis and melissa osborne 2001 2james heckman 2007 has stated that these socio emotional attributes as non cognitive skills are sometimes called are also likely to affect health behaviors this paper tests this hypothesis it provides a theoretical and an empirical analysis of the connection between socio emotional attributes and the choices that individuals make about health it uses data from a large nationally representative dataset to analyze the relationships

how social security and medicare affect retirement behavior in a world of incomplete markets this paper provides an empirical analysis of how the u s social security and medicare insurance system affect the labor supply of older males in the presence of incomplete markets for loans annuities and health insurance we estimate a detailed dynamic programming dp model of the joint labor supply and social security acceptance decision focusing on a sample of males in the low to middle income brackets whose only pension is social security the dp model delivers a rich set of predictions about the dynamics of retirement behavior and comparisons of actual vs predicted behavior show that the dp model is able to account for wide variety of phenomena observed in the data including the pronounced peaks in the distribution of retirement ages at 62 and 65 the ages of early and normal eligibility for social security benefits respectively we identify a significant fraction of health insurance constrained individuals who have no form of retiree health insurance other than medicare and who can only obtain fairly priced private health insurance via their employer s group health plan the combination of significant individual risk aversion and a long tailed pareto distribution of health care expenditures implies that there is a significant security value for these individuals to remain employed until they are eligible for medicare coverage at age 65 overall our model suggests that a number of heretofore puzzling aspects of retirement behavior can be viewed as artifacts of particular details of the social security rules whose incentive effects are especially strong for lower income individuals and those who do not have access to fairly priced loans annuities and health insurance

the impact of rural pensions in china on labor migration we study the impact of china s new rural pension program on promoting migration of labor by applying a regression discontinuity analysis to this new pension program the results reveal a perceptibl

flexibility of household structure child fostering decisions in burkina faso using data i collected in africa this paper examines a household s decision to adjust its size through child fostering an institution where biological parents temporarily send children to live with other families households experiencing negative idiosyncratic income shocks child gender imbalances located further from primary schools or with more good quality network members fewer subsistence farmers and unmarried individuals and more educated members are significantly more likely to send a child results reject an overall symmetric fostering model across senders and receivers but evidence of symmetry is found when the test is restricted to exogenous income shocks and gender imbalances