the fetal origins hypothesis in finance prenatal environment the gender gap and investor behavior we find that differences in individuals prenatal environments explain heterogeneity in financial decisions later in life an exogenous increase in exposure to prenatal testosterone is associated with the masculinization of financial behavior specifically with elevated risk taking and trading in adulthood we also examine birth weight those with higher birth weight are more likely to participate in the stock market whereas those with lower birth weight tend to prefer portfolios with higher volatility and skewness consistent with compensatory behavior our results contribute to the understanding of how the prenatal environment shapes an individual s behavior in financial markets later in life received may 2 2014 accepted september 30 2015 by editor david hirshleifer

minding america s business the decline and rise of the american economy only the economy s competitive position internationally but also the nation s moral fiber in the liberal camp the present confusion which has arisen out of attempts to reconcile reagan s new federalism with longstanding democratic demands for a large share of public goods in the economy has been camouflaged by the visions of felix rohatyn and lester thurow who want to rebuild america s in

exploring the intergenerational persistence of mental health evidence from three generations this paper uses data from the 1970 british cohort study to quantify the intergenerational persistence of mental health and the long run economic costs associated with poor parental mental health we find a strong and significant intergenerational correlation that is robust to different covariate sets sample restrictions model specifications and potential endogeneity importantly the intergenerational persistence is economically relevant with maternal mental health associated with lasting effects on the child s educational attainment future household income and the probability of having criminal convictions these results do not disappear after controlling for children s own childhood and adulthood mental health

the effect of female education on fertility and infant health evidence from school entry policies using exact date of birth this paper uses age at school entry policies to identify the effect of female education on fertility and infant health we focus on sharp contrasts in schooling fertility and infant health between women born just before and after the school entry date school entry policies affect female education and the quality of a woman s mate and have generally small but possibly heterogeneous effects on fertility and infant health we argue that school entry policies manipulate primarily the education of young women at risk of dropping out of school

stature and the standard of living research on the standard of living now emphasizes alternatives or supplements to the national income accounts this paper reviews the results of two decades of research using stature as a measure of health aspects of human welfare after comparing and contrasting stature with per capita income i consider height patterns discovered by economic historians that challenge traditional beliefs about the past including long term trends cycles in heights and the dreadfully small stature of slave children that was followed by catch up growth the paper concludes with comparisons to work in development economics and suggestions for research

the output and welfare effects of government spending shocks over the business cycle how does the output response to a change in government spending vary over the business cycle what are the welfare eects of spending shocks this paper studies the state dependence of the output and welfare eects of shocks to government purchases in a dsge model with real and nominal frictions and a rich scal nancing structure both the output multiplier the change in output for a one dollar change in government spending and the welfare multiplier the consumption equivalent change in welfare for the same change in spending move signicantly across states but tend to co move negatively with one another in an historical simulation the output multiplier is countercyclical correlation with detrended output of 0 4 and strongly negatively correlated with the welfare multiplier correlation between multipliers of 0 9

the costs of low birth weight birth weight has emerged as the leading indicator of infant health and welfare and the central focus of infant health policy this is because low birth weight lbw infants experience severe health and developmental difficulties that can impose enormous costs on society but would the prevention of lbw generate equally sizable cost savings and health improvements estimates of the return to lbwprevention from cross sectional associations may be biased by omitted variables that cannot be influenced by policy such as genetic factors to address this we compare the hospital costs health at birth and infant mortality rates between heavier and lighter infants from all twin pairs born in the united states we also examine the effect of maternal smoking during pregnancy the leading risk factor for lbw in the united states on health among singleton births after controlling for detailed background characteristics both analyses imply substantially smaller effects of lbw than previously thought suggesting two possibilities 1 existing estimates overstate the true costs and consequences of lbw by at least a factor of four and by as much as a factor of 20 or 2 different lbw preventing interventions have different health and cost consequences implying that policy efforts that presume a single return to reducing lbw will necessarily be suboptimal

electoral competition and the growth of public spending in 13 industrial democracies 1950 to 1983 this article examines a theoretically important issue that has received surprisingly little attention whether the process of democratic competition for public office has fueled the growth of domestic spending in the capitalist democracies since world war ii probably because it is difficult to measure electoral competition in multiparty systems existing comparative studies of public spending either ignore this question or use dubious measures of electoral competition this study presents and tests some conceptually more appealing measures of competition the results show a strong robust relationship between improved indicators of electoral competition and the growth of domestic spending from 1950 to 1973 and 1973 to 1983 the study concludes by analyzing the implications of the findings for economic performance in the capitalist democracies and for the democratic management of fiscal policy

unequal societies income distribution and the social contract this paper develops a theory of inequality and the social contract aiming to explain how countries with similar economic and political fundamentals can sustain such different systems of social insurance fiscal redistribution and education finance as those of the united states and western europe with imperfect credit and insurance markets some redistributive policies can improve ex ante welfare and this implies that their political support tends to decrease with inequality conversely with credit constraints lower redistribution translates into more persistent inequality hence the potential for multiple steady states with mutually reinforcing high inequality and low redistribution or vice versa

age structure politics and cross national patterns of public pension expenditures this study examines the determinants of spending on public pensions unlike other programs pensions benefit an easily identifiable high voting group the aged and may be especially amenable to their political influence with that in mind we draw out predictions of industrialism and class theories for the explanation of public pension expenditures the explanations are tested with data on 48 nations at all levels of political and economic development for four time points 1960 1965 1970 1975 pooling the data allows multivariate analysis of appropriate determinants both within and across different groups of nations and detailed analysis of advanced industrial democracies industrialism variables such as percent aged social insurance program experience andfamily size have dominant effects however the effects of percent aged increase with political democracy suggesting that the aged wield political power in increasing pension expenditures class variables in contrast have little or no effect on pensions suggesting the importance of age politics over class politics in the spending for this program

inflation and output in new keynesian models with a transient interest rate peg a familiar result in the canonical dynamic new keynesian dnk model is that policymakers constrained by the zero bound can improve outcomes by promising to keep rates low after the zero bound is not binding we examine a general class of interest rate pegs in a variety of dnk models standard versions of the model produce counterintuitive reversals where the effect of the interest rate peg can switch from highly expansionary to highly contractionary for modest changes in the length of the interest rate peg this unusual behavior does not arise in sticky information models of the phillips curve

business and welfare state development why did employers accept social reforms in recent years employer centered explanations of welfare state development have begun to challenge conventional labor centered and state centered explanations these new explanations suggest that sector specific business interests and cross class alliances propelled the adoption and expansion of social programs the business interests thesis this article presents a novel explanation of differences in business support for welfare state expansion based on a diachronic analysis of the german case and shadow case studies of sweden and the united states the article suggests that when looking at changes in employers positions across time rather than across sectors political constraints turn out to be the central factor explaining variation in employers support for social reforms the political accommodation thesis the article identifies two goals of business intervention in welfare state development pacification and containment in the case of pacification business interests propel social policy expansion in the case of containment they constrain it business chooses pacification when revolutionary forces challenge capitalism and political stabilization thus becomes a priority business chooses containment when reformist forces appear likely to succeed in expanding social protection and no revolutionary challenge exists the article shows that changes over time in the type of political challenges that business interests confront best explain the variation in business support for labor friendly social reforms

mother s education and the intergenerational transmission of human capital evidence from college openings we examine the effect of maternal education on birth outcomes using vital statistics natality data from 1970 to 1999 we also assess the importance of four channels through which maternal education may improve birth outcomes use of prenatal care smoking marriage and fertility in an effort to account for the endogeneity of education attainment we use data about the availability of colleges in the womans country in her 17th year as an instrument for maternal education we find that higher maternal education improves infant health as measured by birth weight and gestational age it also increases the probability that a new mother is married reduces parity increases use of prenatal care and reduces smoking suggesting that may be important pathways for the ultimate effect on health our results add to the growing body of literature which suggests that estimates of the returns to education which focus only on increases in wages understate the total return

dealing with a liquidity trap when government debt matters optimal time consistent monetary and fiscal policy how does the need to preserve government debt sustainability affect the optimal monetary and fiscal policy response to a liquidity trap to provide an answer we employ a small stochastic new keynesian model with a zero bound on nominal interest rates and characterize optimal time consistent stabilization policies we focus on two policy tools the short term nominal interest rate and debt financed government spending the optimal policy response to a liquidity trap critically depends on the prevailing debt burden while the optimal amount of government spending is decreasing in the level of outstanding government debt future monetary policy is becoming more accommodative triggering a change in private sector expectations that helps to dampen the fall in output and inflation at the outset of the liquidity trap

imperfect credibility and the zero lower bound as the nominal interest rate cannot fall below zero a central bank with imperfect credibility faces a significant challenge to stabilize the economy in a new keynesian model during a large recession we characterize the optimal monetary policy at the zero lower bound for the nominal interest rate if credibility is imperfect confronting monetary policy communication of the u s federal reserve and the swedish riksbank with such a framework the credibility of both institutions is shown to have been low in the aftermath of the 2008 economic crisis

equilibrium in a production economy with an income tax this paper develops a method to study an infinite horizon production economy distorted by a state dependent income tax this setting permits taxes to depend on the capital stock an endogenous state variable and thus captures situations where the evolution for capital and taxes is jointly determined to solve this model the consumption function is represented as a fixed point of a nonlinear monotone operator that is defined such that its nth iteration computes the consumption function n steps away from the horizon for a corresponding finite horizon economy the oparator s monotonicity is exploited in proving the existence of and constructing an equilibrium copyright 1991 by the econometric society

what is the optimal speed limit on freeways abstract when choosing his speed a driver faces a trade off between private benefits time savings and private costs fuel cost and own damage and injury driving faster also has external costs pollution adverse health impacts and injury to other drivers this paper uses large scale speed limit increases in the western united states in 1987 and 1996 to address three related questions first do the social benefits of raising speed limits exceed the social costs second do the private benefits of driving faster exceed the private costs third what is the optimal speed limit i find that a 10 mph speed limit increase on highways leads to a 3 4 mph increase in travel speed 9 15 more accidents 34 60 more fatal accidents and elevated pollutant concentrations of 14 24 carbon monoxide 8 15 nitrogen oxides 1 11 ozone and 9 higher fetal death rates around the affected freeways using these estimates i find that the social costs of speed limit increases are two to seven times larger than the social benefits in contrast many individual drivers would enjoy a net private benefit from driving faster privately a value of a statistical life vsl of 6 0 million or less justifies driving faster but the social planner s vsl could be at most 0 9 2 0 million to justify higher speed limits i conclude that the optimal speed limit was lower but not much lower than 55 mph

welfare capitalism and the social security act of 1935 a central concern of political theorists has been the relationship between the state and the economy or more specifically how political power gets translated into economic power recent debates have been shaped around critiques of the corporate liberal thesis which contends that class conscious capitalists manipulate the polity so that government comes to pursue policies favorable to capitalism alternative theories suggest that the state is capable of transcending the demands or interests of any particular social group or class the social security act of 1935 which represented the beginning of the welfare state in the united states was a conservative measure that tied social insurance benefits to labor force participation and left administration of its public assistance programs to the states in this paper the social security act is used as a case study to adjudicate between several competing theories of the state the analysis demonstrates that the state functions as a mediating body weighing the priorities of various interest groups with unequal access to power negotiating compromises between class factions and incorporating working class demands into legislation on capitalist terms a central concern of political theorists has been the relationship between the state and the economy or more specifically how economic power gets translated into political power recent debates have been shaped around critiques of the corporate liberal thesis which stresses the strategies of class conscious capitalists to manipulate the polity alternative theories suggest that the state is capable of transcending the demands or interests of any particular social group or class the core agenda of those espousing some variant of corporate liberalism has been to explain how major economic interests manipulated the polity in the twentieth century so that government came to pursue policies favorable to capitalism domhoff 1979 kolko 1963 o connor 1973 useem 1983 according to this perspective capitalists rationally pursued a series of policies designed to allow them control of the political process resulting in a synthesis of politics and economics for example kolko 1963 has argued that the regulatory reforms of the progressive era traditionally explained as a respose to muckraker s criticism were actually desired by large industry as a way not only of controlling

canadian contributions to family economics canadian scholars have made substantial contributions to the relatively new field of family economics these include new models of how men and women match in marriage markets and of how decisions are made in multi person households several were early contributors to the literature on married women s labour supply and labour supply in a family context and helped to develop empirical methods in this area a particular focus has been on the impacts of policy relevant parameters such childcare costs on family labour supply and child well being new work on child development the impact of early life conditions and the processes of intergenerational transmission also highlight the importance of family context in determining economic well being

optimal debt management in a liquidity trap we study optimal debt management in the face of shocks that can drive the economy into a liquidity trap and call for an increase in public spending in order to mitigate the resulting recession our approach follows the literature of macroeconomic models of debt management which we extend to the case where the zero lower bound on the short term interest rate may bind we wish to identify the conditions under which removing long maturity government debt from the secondary market can be an optimal policy outcome we show that the optimal debt management strategy is to issue short term debt if the government faces a sizable exogenous increase in public spending and if its initial liability is not very large in this case our results run against the standard prescription of the debt management literature in contrast if the initial debt level is high then issuing long term government bonds is optimal finally we find a role for revisions in the debt management strategy during lt episodes whereby the government actively manages the maturity structure in some cases removing long bonds from the secondary market

regulation and capitalization of environmental amenities evidence from the toxic release inventory in massachusetts environmental regulation in the united states has undergone a slow evolution from command and control strategies towards market based regulations one such innovation is the toxics release inventory tri a regulation that requires polluting e rms to publicly disclose information about their toxic emissions the basic tenet of this regulation is that it corrects for informational asymmetries between polluters and households allowing communities to pressure polluters to decrease their emissions policy makers have judged the tri a tremendous success as national releases declined by 43 between 1988 and 1999 yet many of the fundamental problems which are known to lead to the classic failure of the coase theorem such as high transaction costs and dife culties in organizing cast doubt on the effectiveness of disclosure rules alone to lead to an efe cient outcome in the caseof pollution we use an event study methodology with high quality data on house prices and other local attributes to assess the extent to which the public values changes in toxic releases and thus the success of tri our major e ndings include 1 declines in toxic releases appear unrelated to any political economy variables that might lead to public activism 2 initial information released under tri had no signie cant effect on the distribution of house prices and 3 house prices show no signie cant impact of declines in reportedtoxic releases over time standard errors aresmall enoughthat we can reject the hypothesis that large declines in toxic releases lead to more than a 0 5 increase in house prices these results also hold when we control for differences in the availability of information on tri and the possible effect of expectations our e ndings cast doubt on the ability of the public to process complex information on hazardous emissions and support the coase theorem in that right to know lawssuch as tri may not be the most effective form of environmental regulation

is there a fiscal free lunch in a liquidity trap this paper uses a dsge model to examine the eects of an expansion in government spending in a liquidity trap the spending multiplier can be much larger than in the normal situation if the liquidity trap is very persistent and scal stimulus can be rapidly implemented moreover the budgetary costs may be minimal as the large response of output boosts tax revenues allowing for something close to a scal free lunch however we caution that the multiplier may be much smaller under plausible implementation lags for many types of public spending and or if the liquidity trap lasts less than two years in addition because the marginal impact of scal expansion decreases in the scale of the outlay it is crucial to distinguish between average and marginal multipliers

the developmental effect of state alcohol prohibitions at the turn of the twentieth century john p lennon treasurer of the american federation of labor says that seventy percent of the drink bill of the united states is contributed by the american laboring man this means that liquor money is usually bread money meat money shoe money and money that ought to go for clothing american issue maryland edition june 12 1909 as cited in odegard 1928 i introduction work by economists provides considerable evidence consistent with the fetal origins hypothesis that various chronic health outcomes are prompted by an adverse in utero environment e g banerjee et al 2010 deschenes et al 2009 1 while the outcomes and conditions vary across studies the underlying findings emphasize the risks associated with negative exposures during this critical development period most studies in the fetal origins literature exploit the variation afforded by temporary adverse in utero shocks e g famines and focus on early life outcomes e g low birth weight however recent research in this area examines the effects in adulthood of positive in utero and childhood exposures for example hoynes schanzenbach and almond 2012 find that the beneficial effects of food stamp access in utero and during childhood persist into adulthood suggesting the potential for positive and sustained environmental changes during gestation and in early childhood to have long lasting impacts 2 results from bleakley 2007 suggest higher adult incomes among cohorts in the american south with more childhood exposure to hookworm eradication efforts 3 we contribute to this growing literature by exploiting the quasi randomization of alcohol consumption created by state level alcohol prohibition laws passed in the united states in the early part of the twentieth century we argue that such laws represented a positive shock to individuals who were in utero or who were young children around the times of the laws adoption using a large dataset of world war ii enlistees we examine the long term effects of these state prohibition laws on adult educational attainment obesity and height although we do not observe alcohol consumption and hence our results provide intent to treat estimates our design avoids the reporting problems associated with using more recent data on alcohol use we find small but statistically significant effects which do not appear to be the result of pre existing trends for two of the three outcome variables ii background reduced consumption of alcohol could lead to improved outcomes for those individuals in utero or in early childhood during this period through two channels first reduced alcohol consumption by the household members who likely consumed the most alcohol during this period namely men may have shifted resources to other members of the household namely women and children second reduced consumption by pregnant women themselves would reduce fetal exposure to alcohol we provide some historical evidence on the potential relevance of these mechanisms in the context of state level alcohol prohibitions a intrahousehold shift in resources to women and young children liquor traffic as the enemy of the home was a favorite theme of the anti saloon league and other temperance organizations of the time odegard 1928 42 4 the suggestive titles of pamphlets distributed by such organizations included better babies unborn children why babies die and boys worth more than taxes the obvious intention of such propaganda was to convey the message that the saloon culture and the alcohol consumption that came with it resulted in adverse outcomes for children and families that would be reversed under prohibition determining whether or not this reversal materialized is difficult given the lack of historical consumption data state level data on alcohol consumption are not available for this period however national data on consumption and other measures that are likely to be associated with consumption provide some evidence to suggest lower alcohol consumption in the period during which many states adopted alcohol prohibition laws

lack of confidence the zero lower bound and the virtue of fiscal rules abstract in the presence of the zero lower bound standard business cycle models with a taylor type monetary policy rule are prone to equilibrium multiplicity a drop in private sector confidence can drive the economy into a liquidity trap without any change in fundamentals i show in the context of a standard new keynesian model that it is possible to design ricardian fiscal spending rules that insulate the economy from such expectations driven liquidity traps in the case of price adjustment costs desirable fiscal rules ensure that a drop in confidence does not lead to a decline in real marginal costs in the case of nominal wage adjustment costs desirable fiscal spending rules ensure that a drop in confidence does not lead to a decline in the ratio of the marginal rate of substitution between private consumption and hours worked relative to the real wage rate

does hazardous waste matter evidence from the housing market and the superfund program this paper uses the housing market to develop estimates of the local welfare impacts of superfund sponsored cleanups of hazardous waste sites we show that if consumers value the cleanups then the hedonic model predicts that they will lead to increases in local housing prices and new home construction as well as the migration of individuals that place a high value on environmental quality to the areas near the improved sites we compare housing market outcomes in the areas surrounding the first 400 hazardous waste sites chosen for superfund cleanups to the areas surrounding the 290 sites that narrowly missed qualifying for these cleanups we find that superfund cleanups are associated with economically small and statistically insignificant changes in residential property values property rental rates housing supply total population and types of individuals living near the sites these findings are robust to a series of specification checks including the application of a regression discontinuity design based on knowledge of the selection rule overall the preferred estimates suggest that the local benefits of superfund cleanups are small and appear to be substantially lower than the 43 million mean cost of superfund cleanups

on the political economy of welfare expansion a comparative analysis of 18 advanced capitalist democracies 1960 1971 this article elaborates the thesis that economic growth and various types of collective action by class linked actors determine the expansion and decline of welfare spending in rich capitalist democracies our multivariate model of this thesis specified to 1960 1971 growth rates in direct cash transfer payments as proportions of gross domestic product is supported strongly by regression analyses these indicate that economic growth notably facilitates transfer payment growth they also suggest that rightist party participation in government notably dampens welfare expansion while leftist centrist and christian democratic party participation in government are conducive to welfare expansion and they suggest that the political influences of both unions and large industrial corporations are conducive to growth in transfers payments as well in addition state authorities appear to augment welfare spending in response to working class protests strike activity and capital investment disinvestment activ

fiscal activism and the zero nominal interest rate bound in an economy where the zero lower bound on nominal interest rates is an occasionally binding constraint and the government lacks a commitment technology it may be desirable for society to appoint a policymaker who cares less about government spending stabilization relative to inflation and output gap stabilization than the private sector does a policymaker of this type uses government spending more elastically to stabilize the economy at the zero lower bound the anticipation of aggressive fiscal expansions in future liquidity trap situations increases inflation expectations and lowers real interest rates thereby mitigating the decline in output and inflation

superfund cleanups and infant health in 1980 outcry over the health effects of toxic waste in love canal new york resulted in the comprehensive environmental response compensation and liability act which became known as superfund superfund was intended to provide a mechanism for conducting remedial clean ups at the most dangerous hazardous waste sites over the years it became the largest and most expensive federal program to deal with toxic waste in the us given the substantial cost and slow rate of clean up there is considerable debate on whether it is in the public interest to continue the program in its current form epa 2006 while the costs of the programs are clear its benefits are not well understood indeed the policy is controversial in part because there is a paucity of reliable information on the program s benefits some previous studies find poorer birth outcomes near a site while others do not see martine vrijheid 2000 however evidence of a correlation between proximity to a site and poor birth outcomes does not necessarily represent a causal effect because populations living near hazardous waste sites are typically different from the general population and their health outcomes are likely to differ even in the absence of negative health effects from exposure for example michael greenstone and justin gallagher 2008 found that residents of areas near hazardous waste sites are more likely to be poor and have lower levels of education than others our project is the first to examine the effect of site cleanups on infant health rather than simply focusing on proximity to a site we focus on single births that occurred within 5km of a superfund site between 1989 and 2003 in five large states florida michigan new jersey pennsylvania and texas the basis of our difference in differences approach is to compare changes in birth outcomes before and after a site s clean up among births to mothers who live within 2 000 meters of the site and among those who live between 2 000 and 5 000 meters away our approach is made feasible by access to confidential vital statistics data that includes the exact street address of the mother s residence our large sample gives us statistical power to detect small effects

the interactive effects of human capital and quality of life on economic growth abstractto bridge the gap in the quality of life qol and economic growth literature and understand the reinforcing effects of qol and human capital on economic development we examine the interactive effects of these two factors on wage growth from 2000 to 2007 at the county level across the united states first a rosen roback model is employed to estimate implicit values of amenities including climate clean air and other natural attributes which are used to generate qol indices second qol human capital represented by the share of college graduates and their interaction serve as key variables in the wage growth model an instrumental variable approach and location fixed effects are used to address endogeneity of human capital and control for location specific unobservable characteristics results suggest that human capital and qol significantly contribute to economic growth and the growth effects are even larger in nonmetropolitan counties importantly we find that the effect of human capital on

science class and the welfare state a class centered functional account this article offers comparative analysis of economists role in new deal labor relations and social welfare policie to suggest a class centered functional hypothesis in the absence of a historically strong socialist labor movement state reliance on social science expertise occurs to the extent that it is functional for the reproduction of capitalism its markets and its market ideology the hypothesis differs from traditional neo marxist accounts of state reliance on science by 1 suggesting that reliance on science will probably not legitimate state action with overt class content and 2 arguing that although functional adjustments are not automatic science s facilitation of politicization and legitimation crisis in the short term can provide a mechanism through which dysfunctional state reliance on science is restricted or supressed whereas national labor relations board nlrb economists promoted radical possibilities in a statute undermining market determination of wages and market ideology

early life health interventions and academic achievement this paper studies the effect of improved early life health care on mortality and long run academic achievement in school we use the idea that medical treatments often follow rules of thumb for assigning care to patients such as the classification of very low birth weight vlbw which assigns infants special care at a specific birth weight cutoff using detailed administrative data on schooling and birth records from chile and norway we establish that children who receive extra medical care at birth have lower mortality rates and higher test scores and grades in school these gains are in the order of 0 15 0 22 standard deviations

taxation and democracy swedish british and american approaches to financing the modern state taxation and democracy is the first book to examine the structure politics and historic development of taxation policies in several countries comparing three quite different political democracies sweden britain and the united states the book provides a powerful account of the ways these democracies have managed to finance their welfare programs despite widespread public resistance to taxes sven steinmo argues that the different political structures of these countries produce varying tax systems and by extension differing social policy regimes according to steinmo all democracies face a basic dilemma how government can be both autonomous and responsive to public wishes this dilemma is a crucial factor in explaining their different tax systems in the united states for example the system of multiple checks and balances and fragmented political authority has led to a tax system that is complex inefficient and has a low revenue yield sweden s corporatist model of government is less responsive to the will of the masses and so the country has a surprisingly regressive tax system that is stable efficient and has a high revenue yield its working class basically agrees to accept a heavy tax burden in exchange for heavy social welfare spending the british government which is dominated by strong parties can virtually dictate tax policy preferences to the parliament and so its tax system is highly unstable as is the distribution of tax burdens among classes steinmo demonstrates that the new institutionalism can account for both historic continuities and political change that common economic and political forces confronting these countries in the twentieth century were shaped by each country s changing political institutions his study thus makes an important contribution to comparative political theory as well as to our understanding of the development of the modern welfare state

monetary and fiscal policy in a liquidity trap with inflation persistence abstract this paper relies on the new keynesian model with structural inflation persistence to characterize the optimal monetary and fiscal policy in a liquidity trap it shows that with a phillips curve that is both forward and backward looking the monetary policy that is implemented during a liquidity trap episode can be sufficient to avoid a depression the central bank does not need to commit beyond the end of the crisis to get some traction on economic activity regarding fiscal policy inflation persistence justifies some front loading of government expenditures to get inflation started such as to reduce the real interest rate the magnitude of the optimal fiscal stimulus is decreasing in the degree of inflation persistence finally if inflation persistence is due to adaptive expectations rather than to price indexation then monetary policy is ineffective while the optimal fiscal stimulus is large and heavily front loaded

the politics of public aid to private industry the role of policy networks firms lobby for subsidies along geographic sector or factor lines and as a result receive subsidies with a local sectoral or factorwide scope this article investigates what determines the line of cleavage and thereby the scope of the subsidy the factor mobility hypothesis according to which an economic prior the degree of factor mobility determines the geometry of lobbying coalitions misses the fact that factor mobility is as much the product of policy and policymaking as it is its determinant this article argues instead that politicians maximize their chances of staying in power through the deliberate use of subsidies to structure the political debate and embed factor owners into stable policy networks individual factor owners in turn join these policy networks to lobby for monopoly rents capable of insuring them against adverse economic competition the model yields two testable hypotheses first right governments favor subsidies to capital whereas left governments favor subsidies to lab

inequality at birth some causes and consequences recent research shows that health at birth is affected by many factors including maternal education behaviors and participation in social programs in turn endowments at birth are predictive of adult outcomes and of the outcomes of future generations exposure to environmental pollution is one potential determinant of health at birth that has received increasing attention a large literature outside of economics advocates for environmental justice and argues that poor and minority families are disproportionately exposed to environmental hazards i provide new evidence on this question showing that children born to less educated and minority mothers are more likely to be exposed to pollution in utero and that white college educated mothers are particularly responsive to changes in environmental amenities i estimate that differences in exposure to toxic releases may explain 6 of the gap in incidence of low birth weight between infants of white college educated mothers and infants of black high school dropout mothers this abstract was borrowed from another version of this item

intrafamily resource allocations a dynamic structural model of birth weight using large american and british survey data this paper provides structural estimates of the production functions for birth weight and fetal growth in addition to maternal smoking we estimate the impact of when a mother stops work which has not been considered in the literature mothers work interruptions of up to 3 months before birth have a positive effect on birth outcomes especially among british children parental behavior appears to respond to child idiosyncratic endowments in a way that suggests that parents have inequity aversion concerns evidence in favor of inequity aversion emerges also from the analysis of breast feeding decisions

population aging class context and age inequality in public spending although recent experiences in the united states suggest that population aging for both demographic and political reasons favors public spending for the elderly relative to children many european nations with different political environments show no shuch pattern this paper investigates age inequality or bias in public spending for these two age based dependent groups using annual time series data for 18 advanced industrial democracies the results show that a large aged population reduces age inequality in favor of the eldearly in the presence of 1 class based corporatism and 2 strong leftist parties whereas a large aged population increases age inequality in the absence of these two factors

the origins of private social insurance public policy and fringe benefits in america 1920 1950 how did the american system of private employment related pension and health insurance arise data on corporate fringe benefit programs during the second quarter of the 20th century contradict the received wisdom that benefits rose in response to wartime federal policy changes and industrial factors instead it appears that public policies such as the wagner act and social security led to union and business support for private insurance which in turn spurred to growth of fringe benefits the historical record suggests that neoinstitutional and conflict approaches must be synthesized to explain the expansion of fringe benefits institutional factors influenced organizational outcomes by affecting interest group goals

nonlinear adventures at the zero lower bound abstract in this paper we argue for the importance of explicitly considering nonlinearities in analyzing the behavior of the new keynesian model with a zero lower bound zlb of the nominal interest rate to show this we report how the decision rules and the equilibrium dynamics of the model are substantially affected by the nonlinear features brought about by the zlb we also illustrate a tension between the length of a spell at the zlb and the drop in consumption there

monopoly capital organized labor and military expenditures in the united states 1949 1976 in this paper we systematically assess the neo marxian view that military expenditures are used by the state as a countercyclical fiscal policy either to forestall a serious recession or to facilitate economic recovery in particular we examine the post world war ii political economic experience of the united states because the military expenditures thesis was most fully developed initially in an attempt to explain postwar american prosperity we evaluate what we term the naive model of baran and sweezy which suggests that the degree to which national output is absorbed by military spending should be dependent on aggregate economic conditions such as unemployment finding only inconsistent evidence to support the naive view we incorporate the insights of recent neo marxists especially o connor on the linkages among the monopoly corporate sector the unionized sector of labor and the state the empirical evidence appears consistent with this modified view with unemployment in the unionized sect

a theory of top income taxation and social insurance the development of the welfare state in the western economies between 1930 and 1990 coincided with a puzzling pattern in the taxation of top incomes eective tax rates at the top increased sharply but then gradually decreased even as social transfers continued rising we propose a new theory of the development of the welfare state to explain these facts our main insight is that social insurance and top income taxation are substitutes for averting social con ict we emphasize the role of the great depres sion as a source of aggregate risk and argue that the rise of the welfare state can be understood as a process of exploiting e ciency gains in response to gradual technolog ical improvements in the provision of social insurance our detailed arguments build on the policy histories of the united states great britain and sweden

empirical studies in institutional change paternalism in agricultural labor contracts in the u s south implications for the growth of the welfare state the authors examine paternalism as an implicit contract in which workers trade faithful service for nonmarket goods paternalism reduced monitoring and turnover costs in cotton cultivation in the u s south until the mechanization of the cotton harvest in the 1950s until then the effectiveness of paternalism was threatened by government programs that could have substituted for paternalism but large southern landowners had the political power to prevent the appearance of such programs in the south with mechanization the economic incentive to provide paternalism disappeared and southern congressmen allowed welfare programs to expand in ways consistent with their interests copyright 1993 by american economic association

democracy comes to europe franchise extension and fiscal outcomes 1830 1938 abstract this paper examines the relation between public spending and the spread of democracy in western europe during the period 1830 1938 our data set includes measures of the size of the electorate the election rule and electoral participation as well as measures of the size and composition of central government expenditures for 12 countries we estimate panel regressions and find that 1 the gradual lifting of socio economic restrictions on the voting franchise contributed to growth in government spending mainly by increasing spending on infrastructure and internal security 2 the female suffrage had a weak positive effect through spending on health education and welfare 3 the change from majority to proportional rule which took place in 10 of the countries did not contribute to growth in government spending and held back spending on health education and welfare 4 there exists weak complementarity between economic development and the spread of democracy

optimal fiscal and monetary policy with occasionally binding zero bound constraints abstract this paper studies optimal fiscal and monetary policy when the nominal interest rate is subject to the zero lower bound zlb constraint in a stochastic new keynesian economy in the baseline model calibrated to match key features of the u s economy it is optimal for the government to increase its spending when at the zlb in the stochastic environment by about 60 percent more than it would in the deterministic environment the presence of uncertainty creates a unique time consistency problem if the steady state is inefficient although access to government spending policy increases welfare in the face of a large deflationary shock it decreases welfare during normal times as the government reduces the nominal interest rate less aggressively before reaching the zlb

income inequality in the united states 1913 1998 this paper presents new homogeneous series on top shares of income and wages from 1913 to 1998 in the united states using individual tax returns data top income and wages shares display a u shaped pattern over the century our series suggest that the large shocks that capital owners experienced during the great depression and world war ii have had a permanent effect on top capital incomes we argue that steep progressive income and estate taxation may have prevented large fortunes from fully recovering from these shocks top wage shares were flat before world war ii dropped precipitously during the war and did not start to recover before the late 1960s but are now higher than before world war ii as a result the working rich have replaced the rentiers at the top of the income distribution

optimal discretionary monetary policy in a micro founded model with a zero lower bound on nominal interest rate abstract this paper investigates optimal discretionary monetary policy under the zero lower bound on the nominal interest rate zlb in the case of a distorted steady state due to monopoly and taxation solving a fully nonlinear micro founded fnl model using a global method i find that the central bank in a more distorted economy would cut the interest rate less aggressively under a particularly adverse demand shock this occurs because inflation and nominal interest rates are higher on average making the zlb less likely to bind and causing the economy to escape from the zlb sooner however the social planner would choose the optimal inflation rate of approximately zero the result emerges because the unconditional benefit of avoiding the zlb is not big enough to offset the cost of higher relative price dispersion when inflation is significantly positive in addition i show that the conventional linear quadratic lq method is inaccurate in the case of a sufficiently distorted steady state

optimal monetary and fiscal policy with a zero bound on nominal interest rates i characterize optimal monetary and fiscal policy in a stochastic new keynesian model when nominal interest rates may occasionally hit the zero lower bound the benevolent policymaker controls the short term nominal interest rate and the level of government spending under discretionary policy accounting for fiscal stabilization policy eliminates to a large extent the welfare losses associated with the presence of the zero bound under commitment the gains associated with the use of the fiscal policy tool remain modest even though fiscal stabilization policy is part of the optimal policy mix

tipping and the dynamics of segregation schelling dynamic models of segregation journal of mathematical sociology 1 1971 143 186 showed that extreme segregation can arise from social interactions in white preferences once the minority share in a neighborhood exceeds a tipping point all the whites leave we use regression discontinuity methods and census tract data from 1970 through 2000 to test for discontinuities in the dynamics of neighborhood racial composition we find strong evidence that white population flows exhibit tipping like behavior in most cities with a distribution of tipping points ranging from 5 to 20 minority share tipping is prevalent both in the suburbs and near existing minority enclaves in contrast to white population flows there is little evidence of nonlinearities in rents or housing prices around the tipping point tipping points are higher in cities where whites have more tolerant racial attitudes

optimal monetary policy under commitment with a zero bound on nominal interest rates we determine optimal monetary policy under commitment in a forwardlooking new keynesian model when nominal interest rates are bounded below by zero the lower bound represents an occasionally binding constraint that causes the model and optimal policy to be nonlinear a calibration to the u s economy suggests that policy should reduce nominal interest rates more aggressively than suggested by a model without lower bound rational agents anticipate the possibility of reaching the lower bound in the future and this amplifies the effects of adverse shocks well before the bound is reached while the empirical magnitude of u s mark up shocks seems too small to entail zero nominal interest rates shocks affecting the natural real interest rate plausibly lead to a binding lower bound under optimal policy however this occurs quite infrequently and does not imply positive average inflation rates in equilibrium interestingly the presence of binding real rate shocks alters the policy response to non binding markup shocks

fetal exposures to toxic releases and infant health every year millions of pounds of toxic chemicals thought to be linked to developmental problems in fetuses and young children are released into the air in this paper we estimate the effect of these releases on the health of newborns using data from the toxic release inventory program and vital statistics natality and mortality files we find significant negative effects of prenatal exposure to toxicants on gestation and birth weight we also find that several developmental chemicals increase the probability of infant death the effect is quite sizeable the reported reductions in cadmium toluene and epichlorohydrin releases during the 90s could account for about 3 9 percent of the overall decrease in infant mortality our results are robust to several specification checks such as comparing developmental to non developmental chemicals and fugitive air releases to stack air releases

monetary policy shocks expectations and information rigidities this paper contributes to the literature by assessing expectation effects from monetary policy for g7 economies we rely on expectation data from consensus economics and a panel vector autoregression framework which accounts for international spillovers and time variation we analyze whether monetary policy has changed the degree of information rigidity after the emergence of the subprime crisis and estimate effects of interest rate changes on expectations disagreements and forecast errors we find strong evidence for information rigidities and identify higher forecast errors by professionals after monetary policy shocks our results suggest that the international transmission of monetary policy shocks introduces noisy information and partly increases disagreement among forecasters jel e31 e52

markov perfect capital and labor taxes abstract this paper analyzes the markov perfect equilibrium of an economy were a benevolent government that lacks the ability to commit to future policy choices uses taxes on capital and labor income to finance the provision of a public good the main finding is that the government taxes capital and subsidizes labor so that only the dynamic inefficiency of future capital taxes remains if agents preference for the public good is sufficiently high then capital is confiscated setting bounds on taxes alleviates the dynamic inefficiency inherent in capital taxation but some implementations carry a high welfare cost allowing for endogenous capital utilization makes the current capital tax distortionary and implies capital and labor tax rates that are relatively close to those measured for the u s economy

fertility and pension programs in ldcs a model of mutual reinforcement surveys of the determinants of fertility decline often include adoption of state sponsored pension programs among the many socioeconomic changes responsible for smaller average family size old age insurance appears in analyses of the western demographic experience pension programs have also been suggested as a policy tool that third world governments might use to reduce fertility 2 the theoretical literature on the pension fertility relationship has thus far emphasized the substitution of old age benefits provided by the state for help received from children and the implications of this substitution for the value of children and desired family size quantitative analysis of the pension fertility relationship has likewise proceeded in terms of the presumed impact of old age insurance 3 very little attention has been given to the possibility that pension programs might be implemented in response to fertility decline and to consequent shifts in the demand for old age security and in the ability of the government to finance such programs it is even possible that the pension response to falling levels of fertility could be mistaken for the assumed fertility effect of old age security programs our purpose is to consider and analyze both directions of effect the literature addressing the determinants of pension expenditure has not yet been linked with the literature addressing the determinants of fertility doing so will not only increase our understanding of fertility patterns but will make an important contribution to the study of how demographic demand factors influence social welfare policy for example aaron and wilensky have utilized the percentage of the population over 65 in their models of pension expenditure 4 although

optimal monetary policy optimal monetary policy maximizes the welfare of a representative agent given frictions in the economic environment constructing a model with two sets of frictions costly price adjustment by imperfectly competitive firms and costly exchange of wealth for goods we find optimal monetary policy is governed by two familiar principles first the average level of the nominal interest rate should be sufficiently low as suggested by milton friedman that there should be deflation on average yet the keynesian frictions imply that the optimal nominal interest rate is positive second as various shocks occur to the real and monetary sectors the price level should be largely stabilized as suggested by irving fisher albeit around a deflationary trend path since expected inflation is roughly constant through time the nominal interest rate must therefore vary with the fisherian determinants of the real interest rate although the monetary authority has substantial leverage over real activity in our model economy it chooses real allocations that closely resemble those which would occur if prices were flexible in our benchmark model there is some tendency for the monetary authority to smooth nominal and real interest rates

the government spending multiplier in a mis managed liquidity trap i study the impact of a government spending shock in a new keynesian model when monetary policy is set optimally in this framework the economy is at the zero lower bound but expectations are well managed by the central bank as such the multiplier effect of government spending increases on expected inflation is small while the one on output can be larger than one this is consistent with recent empirical evidence on the effects of the 2009 arra

on the time consistency of optimal capital taxes abstract this paper studies the time inconsistency problem of optimal capital taxes in the absence of full commitment it is well known that debt restructuring cannot solve the time inconsistency problem for economies with a private stock of capital we re examine this result by exploring the role of institutional delays in government policies we show that when the implementation of government policy requires time debt restructuring can enforce commitment to the optimal capital taxes we conclude that since institutional delays characterize democratic decision making the time inconsistency problem of capital taxes is not so severe

effective lower bound risk abstract even when the policy rate is currently not constrained by its effective lower bound elb the possibility that the policy rate will become constrained in the future lowers today s inflation by creating tail risk in future inflation and thus reducing expected inflation in an empirically rich model calibrated to match key features of the u s economy we find that the tail risk induced by the elb causes inflation to undershoot the target rate of 2 by as much as 50 basis points at the economy s risky steady state our model suggests that achieving the inflation target may be more difficult now than before the great recession if the likely decline in long run neutral rates has led households and firms to revise up their estimate of the frequency of future elb events

environment health and human capital in this review we discuss three major contributions economists have made to our understanding of the relationship between the environment and individual well being first in explicitly recognizing how optimizing behavior particularly in the form of residential sorting can lead to nonrandom assignment of pollution economists have employed a wide range of quasi experimental techniques to develop causal estimates of the effect of pollution second economic research has placed a considerable focus on the role of avoidance behavior which is an important component for understanding the difference between biological and behavioral effects of pollution and for proper welfare calculations lastly economic research has expanded the focus of analysis beyond traditional health outcomes to include measures of human capital including labor supply productivity and cognition our review of the quasi experimental evidence on this topic suggests that pollution does indeed have a wide range of effects on individual well being even at levels well below current regulatory standards given the importance of health and human capital as an engine for economic growth these findings underscore the role of environmental conditions as an important factor of production jel i12 i31 j24 q51 q53

discretionary monetary policy and the zero lower bound on nominal interest rates abstract ignoring the existence of the zero lower bound on nominal interest rates one considerably understates the value of monetary commitment in new keynesian models a stochastic forward looking model with an occasionally binding lower bound calibrated to the u s economy suggests that low values for the natural rate of interest lead to sizeable output losses and deflation under discretionary monetary policy the fall in output and deflation are much larger than in the case with policy commitment and do not show up at all if the model abstracts from the existence of the lower bound the welfare losses of discretionary policy increase even further when inflation is partly determined by lagged inflation in the phillips curve these results emerge because private sector expectations and the discretionary policy response to these expectations reinforce each other and cause the lower bound to be reached much earlier than under commitment

the optimal composition of public spending in a deep recession abstract we study optimal fiscal policy in an economy plunged into a deep recession characterized by a liquidity trap and in which the government can allocate spending both to consumption and investment goods public investment increases the stock of public capital subject to a time to build constraint the zero lower bound on the nominal interest rate binds as a result of a large shock that increases households desire to save in the risk free asset pushing the natural rate of interest below zero under nominal rigidities and sub optimal monetary policy the shock leads to a large decline in private consumption and investment we show that the optimal response to such a shock is to temporarily raise public spending above the level that would be dictated by classical principles and to tilt its composition towards public investment this compositional shift lasts well after the natural rate has ceased to be negative our results suggest that the american recovery and reinvestment act of 2009 was insufficiently oriented towards public investment

the stages of the policy process and the equal rights amendment 1972 1982 studies of how social movements impact policy outcomes typically treat policy change as a dichotomous phenomenon a governmental unit either adopts or does not adopt a particular policy in a particular time frame this simplistic view of the policy process runs the risk of masking how movements and other factors matter at various stages of the policy process each stage is characterized by different rules and different consequences thus movements and other factors ought to matter differently at each stage the authors examine three stages of policy development with regard to state ratification of the equal rights amendment results show that movements mattered more to legislative decisions in the earlier stages of the policy process but that their effects were eclipsed in later stages by public opinion

from the cradle to the labor market the effect of birth weight on adult outcomes lower birth weight babies have worse outcomes both short run in terms of one year mortality rates and longer run in terms of educational attainment and earnings however recent research has called into question whether birth weight itself is important or whether it simply reflects other hard to measure characteristics by applying within twin techniques using an unusually rich dataset from norway we examine the effects of birth weight on both short run and long run outcomes for the same cohorts we find that birth weight does matter despite short run twin fixed effects estimates that are much smaller than ols estimates the effects on longer run outcomes such as adult height iq earnings and education are significant and similar in magnitude to ols estimates

measuring environmental inequality abstract this study presents alternative measures of environmental inequality in the 50 u s states for exposure to industrial air pollution we examine three methodological issues first to what extent are environmental inequality measures sensitive to spatial scale and population weighting second how do sensitivities to different segments of the overall distribution affect rankings by these measures third how do vertical and horizontal inter group inequality measures relate to each other we find substantive differences in rankings by different measures and conclude that no single indicator is sufficient for addressing the entire range of equity concerns that are relevant to environmental policy instead multiple measures are needed

understanding china s urban pollution dynamics china s ongoing urban economic growth has sharply increased the population s per capita income lowered the count of people living below the poverty line and caused major environmental problems we survey the growing literature investigating the causes and consequences of china s urban pollution challenges we begin by studying how urban population and industrial growth impacts local pollution levels and greenhouse gas production as the urban population grows richer its demand for private transportation and electricity sharply increases such privately beneficial activity exacerbates urban pollution externalities facing these severe environmental challenges china s urbanites increasingly demand quality of life progress we survey the emerging literature investigating the demand for environmental progress in china progress in mitigating externalities hinges on whether the powerful central and local governments choose to address these issues we analyze the political economy of whether government officials have strong incentives to tackle lingering urban externalities we conclude by discussing future research opportunities at the intersection of environmental and urban economics jel o18 p25 p28 q53 r23 r41 r58

de globalization theories predictions and opportunities for international business research de globalization now a distinct possibility would induce a significant qualitative shift in strategies structures and behaviors observable in international business ib coming to terms with this qualitative shift would require ib research to develop a much deeper integration of politics the key driver of de globalization to support such integration this paper introduces two relevant theories of de globalization from political science liberalism and realism both predict de globalization under current conditions but lead to different expectations about the future world economy liberalism suggests a patchwork of economic linkages while realism predicts the emergence of economic blocs around major countries this paper discusses the resulting opportunities in three areas of ib research political strategies and roles of multinational enterprises mnes global value chains and the role of the national context for political strategies and roles there is a need to explore how regular business activities and deliberate political agency of mnes affect the political sustainability of globalization for value chains questions include their future reach and specialization changes in organizational forms and the impact of political considerations on location decisions research opportunities on national contexts relate to their ability to sustain globalization and their connection with economic and military power

the rise of the pentagon and u s state building the defense program as industrial policy state centered theories stress the potential for states to be proactive as well as reactive but the analytic tools developed in this literature have not been employed to examine the most impressive episode of state building in the postwar united states the rise of the pentagon this article examines the bureaucratic resources at the disposal of the pentagon and concludes that high ranking military officers have operated as relatively autonomous bureaucrats case studies of the aeronautics and microelectronics industries provide evidence that the pentagon has implemented a de facto industrial policy in the name of national defense the substantive conclusion that the autarkic pentagon has implemented a massive industrial policy contradicts the view that the hegemonic u s state is strong in the international arena but too weak and fragmented to plan the domestic political economy

grey power and the economy aging and inflation across advanced economies what explains the cross national variation in inflation rates across countries in contrast to most literature which emphasizes the role of ideas and institutions this article focuses on electoral politics and argues that aging leads to lower inflation rates countries with a larger share of elderly exhibit lower inflation because older people are both more inflation averse and politically powerful forcing parties seeking their votes to pursue lower inflation logistic regression analysis of survey data confirms that older people are more inflation averse and more likely to punish incumbents at the ballot box for inflation panel data regression analysis shows that social democratic parties have more economically orthodox manifestos in european countries with more elderly people and that the share of elderly is negatively correlated with inflation in both a sample of 21 advanced economies and a larger sample of 175 countries aging therefore pushes governments to pursue lower inflation

economic development pension policies and the labor force participation of aged males a cross national longitudinal approach the decline in labor force participation of aged males experienced by all developed countries can be seen as the result of two kinds of change 1 economic growth and the need for a young recently trained labor force has affected the educational system and occupational structure in ways that give young workers a competitive advantage and force older workers out of the labor force at mandatory retirement ages and 2 government policies have been developed to make retirement more attractive financially and to induce older workers to leave the labor force voluntarily this paper examines the additive and interactive influence of these two groups of variables using a sample of fix time points every five years from 1950 to 1975 for 18 relatively developed nations models are estimated by using generalized least squares which relate labor force participation of males aged 65 and over to such variables as the size of the agricultural labor force the old age dependency ratio government revenues social in

entrepreneurship in and around institutional voids a case study from bangladesh abstract in many developing countries those living in poverty are unable to participate in markets due to the weakness or complete absence of supportive institutions this study examines in microcosm such institutional voids and illustrates the activities of an entrepreneurial actor in rural bangladesh aimed at addressing them the findings enable us to better understand why institutional voids originate and to unpack institutional processes in a setting characterized by extreme resource constraints and an institutional fabric that is rich but often at odds with market development we depict the crafting of new institutional arrangements as an ongoing process of bricolage and unveil its political nature as well as its potentially negative consequences

the inflation bias under calvo and rotemberg pricing new keynesian models rely heavily on two workhorse models of nominal inertia price contracts of random duration calvo 1983 and price adjustment costs rotemberg 1982 to generate a meaningful role for monetary policy these alternative descriptions of price stickiness are often used interchangeably since to a rst order of approximation they imply an isomorhpic phillips curve and if the steady state is ecient identical objectives for the policy maker and as a result in an lq framework the same policy conclusions

the role of information and social interactions in retirement plan decisions evidence from a randomized experiment this paper analyzes a randomized experiment to shed light on the role of information and social interactions in employees decisions to enroll in a tax deferred account tda retirement plan within a large university the experiment encouraged a random sample of employees in a subset of departments to attend a benee ts information fair organized by the university by promising a monetary reward for attendance the experiment multiplied by more than e ve the attendance rate of these treated individuals relative to controls and tripled that of untreated individuals within departments where some individuals were treated tda enrollment e ve and eleven months after the fair was signie cantly higher in departments where some individuals were treated than in departments where nobody was treated however the effect on tda enrollment is almost as large for individuals in treated departments who did not receive the encouragement as for those who did we provide three interpretations differential treatment effects social network effects and motivational reward effects to account for these results

honey i shrunk the kids benefits revisiting intergenerational conflict in oecd countries intergenerational conflict may arise when the interests of different age groups do not align we examine cross country data to find evidence for this conflict in oecd countries we derive our results from a fgls estimation model which is complemented by a system gmm estimation to account for potential endogeneity the data are from a panel of 22 oecd countries over the time period 1985 2005 we find little support for intergenerational conflict in general however those who are close to statutory retirement age dislike public expenditure on families and education because once they retire they will have less income compared to their work income this effect is transitory however implying a change in voting behavior during retirement age

how progressive is the u s federal tax system a historical and international perspective this paper provides estimates of federal tax rates by income groups in the united states since 1960 with special emphasis on very top income groups we include individual and corporate income taxes payroll taxes and estate and gift taxes the progressivity of the u s federal tax system at the top of the income distribution has declined dramatically since the 1960s this dramatic drop in progressivity is due primarily to a drop in corporate taxes and in estate and gift taxes combined with a sharp change in the composition of top incomes away from capital income and toward labor income the sharp drop in statutory top marginal individual income tax rates has contributed only moderately to the decline in tax progressivity international comparisons confirm that is it critical to take into account other taxes than the individual income tax to properly assess the extent of overall tax progressivity both for time trends and for cross country comparisons the pattern for the united kingdom is similar to the u s pattern france had less progressive taxes than the united states or the united kingdom in 1970 but has experienced an increase in tax progressivity and has now a more progressive tax system than the united states or the united kingdom

on the need for fiscal constraints in a monetary union the desirability of fiscal constraints in monetary unions depends critically on whether the monetary authority can commit to following its policies if it can commit then debt constraints can only impose costs if it cannot commit then fiscal policy has a free rider problem and debt constraints may be desirable this type of free rider problem is new and arises only because of a time inconsistency problem

are risk regulators rational evidence from hazardous waste cleanup decisions a large literature in economics and social science focuses on how people reason about risks reactions of individuals to risk frequently depart from behavior predicted by full information variants of expected utility theory risk regulators are human and are subject to political pressures that are reflective of people s attitudes toward risk as a result the public policies they espouse may reflect errors in judgment about risk many biases stem from misperceptions of risk individuals overestimate small probabilities overestimate the risks associated with highly publicized dangers and have preferences over the manner not just the magnitude in which risks arise environmental risks associated with hazardous waste sites may be particularly prone to such errors since they involve small risks that are highly publicized indeed the general public ranks hazardous waste sites as the leading environmental risk a growing literature also analyzes how the decisions of risk regulators depart from choices predicted in a standard benefit cost framework as roger g noll and james e krier 1990 point out since regulators are both human and political their decisions may reflect risk biases regulators may exhibit these biases as individuals and because their constituents will express regulatory demands based on risk perceptions risk regulators may take into account the identity of the parties exposed to risk the level of scrutiny by interest groups the nature of congressional representation of affected constituents and the degree of political activity by potentially exposed individuals 3 errors in risk perceptions and risk decisions cause individuals to diverge from expected utility maximization similar errors by policy makers and the influence of risk politics cause regulators to diverge from social welfare maximization this paper examines decisions made by federal and state regulators at hazardous waste sites addressed by the superfund program to determine how their decisions diverge from those predicted by expected utility theory and benefitcost analysis we analyze whether risk perceptions and politics influence two decisions central to the how clean is clean debate at superfund sites the selection of chemical cleanup targets and the expenditure of remediation funds at these contaminated sites we also explore the interactive influence of risk perception factors and political demands previous research on the regulation of chemical risks in standard setting indicates that decisions reflect evidence of risk biases and responsiveness to political factors in assessing the determinants of the epa s decision to cancel pesticide registration maureen l cropper et al 1992 found that the epa was more likely to cancel a pesticide in instances featuring higher risks to the maximally exposed individual user lower benefits associated with continued use of the pesticide higher values of intervention by environmental groups mea viscusi harvard law school harvard university cambridge ma 02138 hamilton sanford institute of public policy duke university durham nc 27708 we have benefited from the comments from two referees and the excellent research assistance of jason bell kristen blann jahn hakes and robert malme research support was provided under cooperative agreement no cr 823604 01 from the u s environmental protection agency office of policy planning and evaluation dr alan carlin and dr suzanne giannini spohn served as contract officers all views and errors expressed are our own l see u s environmental protection agency epa 1987 for a report on this survey evidence 2 this theme is also articulated in richard j zeckhauser and viscusi 1990 noll 1989 provides a more general assessment of the interaction between political concerns and regulatory policy which is a central theme of this paper 3political factors have long played a prominent role in local hazardous waste policies see among others linda cohen 1981 howard kunreuther and douglas easterling 1990 1992 and kunreuther and rajeev gowda 1990

financial trouble across generations evidence from the universe of personal loans in denmark do people end up in financial trouble simply because of adverse shocks to income and wealth or is financial trouble related to persistent differences in financial attitudes and behavior that may be transmitted from generation to generation we address this question using a new administrative data set with longitudinal information about defaults for the universe of personal loans in denmark we provide non parametric evidence showing that the default propensity is more than four times higher for individuals with parents who are in default compared to individuals with parents not in default this intergenerational relationship is apparent soon after children move into adulthood and become legally able to borrow the intergenerational relationship is remarkably stable across age groups levels of loan balances parental income levels childhood school performance time periods and different measures of financial trouble basic theory points to three possible explanations for the correlation across generations in financial trouble i children and parents face common shocks ii children and parents insure each other against adverse shocks iii financial behavior differs across people and is transmitted across generations our evidence indicates that the last explanation is the most important finally we show that the intergenerational correlation in financial trouble is not fully incorporated in interest setting on loans pointing to the existence of an interest rate externality in the market for personal loans

wage wars institutional politics wpa wages and the struggle for u s social policy the wpa was the most expensive and politically prominent u s social program of the 1930s and the generosity and very nature of u s social policy in its formative years was contested through the wpa in this article an institutional politics theory of social policy is elaborated that incorporates the influence of both institutional conditions and political actors institutions mediate the influence of political actors specifically it is argued that underdemocratized political systems and patronage oriented party systems dampen the cause of generous social spending and the impact of those struggling for it state actors left party regimes and social movements spur social policy but only under favorable institutional conditions to appraise this theory key senate roll call votes on wpa wage rates are examined as well as state level variations in wpa wages at the end of the 1930s the analyses which include multiple regression and qualitative comparative analysis support the theory