occupational choice and the process of development this paper models economic development as a process of institutional transformation by focusing on the interplay between agents occupational decisions and the distribution of wealth because of capital market imperfections poor agents choose working for a wage over self employment and wealthy agents become entrepreneurs who monitor workers only with sufficient inequality however will there be employment contracts otherwise there is either subsistence or self employment thus in static equilibrium the occupational structure depends on distribution since the latter is itself endogenous we demonstrate the robustness of this result by extending the model dynamically and studying examples in which initial wealth distributions have long run effects in one case the economy develops either widespread cottage industry self employment or factory production employment contracts depending on the initial distribution in the other example it develops into prosperity or stagnation

subjective expectations and income processes in rural india this paper uses unique primary data on directly elicited individual subjective expectations to analyse and characterize the process that generates the income of poor rural indian households we validate and use responses to subjective expectations questions and a parametric assumption to fit a household specific probability distribution for future income combining computed moments from this distribution with data for actual current income we specify and estimate a dynamic model of household income we find that our households face a very persistent income process our paper is one of the first that uses subjective expectations data to model income processes

intergenerational income group mobility and differential fertility one question development economists are especially interested in but so far left unanswered is how would the societal income distribution be affected by introducing a family planning program to reduce the reproduction rate of the poor which is usually high in developing countries the purpose of this paper is to search for analytical answers to this question we are able to make definite comparisons about some class of inequality measures of the steady state societal income distributions and these comparisons provide strong theoretical support in favor of the above mentioned family planning program excerpt

self enforcing exchange among generations implications for consumption and mobility abstract a three generation olg model with one directional altruism and two directional intra family transfers is presented adults invest in their children s education and make transfers to their elderly parents however due to lack of altruism adults with high earnings do not share consumption equally with their elderly parents but spend a larger share of their earnings on own consumption and on their children s education this allows the model to be consistent with three empirical observations that are difficult to reconcile with traditional altruistic frameworks of intergenerational social interactions and mobility i consumption is not perfectly shared between members of an extended family ii consumption is not equally persistent over the lifecycle as across generations and iii the intergenerational persistence of earnings is particularly high at the top end of the earnings distribution

decomposing intergenerational income elasticity the gender differentiated contribution of capital transmission in rural philippines summary using longitudinal data from rural philippines we decompose intergenerational income elasticity ige into five distinct pathways intergenerational transmissions of health education land and spouse education capital plus residual correlation in productivity intergenerational human capital transmissions from mothers are stronger than those from fathers maternal education is the parental capital most strongly associated with ige while naive ige estimates are indistinguishable for sons and daughters the pathways that generate these results differ strikingly for sons ige is entirely explained by parent to child capital transmission by contrast strong income correlation exists between daughters and parents even after controlling for parent and child capital endowments

poverty transition in rural vietnam the role of migration and remittances abstractthis study combines insights of the new economics of labour migration with the asset based approach to welfare dynamics using panel household data from vietnam this method allows us to determine whether poverty transitions induced by remittances are actually structural that is based on asset growth and therefore long term or stochastic that is based only on short term increases in income which implies a risk of falling back into poverty to control for endogeneity of remittances we use household fixed effects and instrumental variables estimation the paper shows that remittances have a positive impact on asset growth and that the impact differs with welfare status and ethnicity

you owe me in many cultures and industries gifts are given in order to influence the recipient often at the expense of a third party examples include business gifts of firms and lobbyists in a series of experiments we show that even without incentive or informational effects small gifts strongly influence the recipient s behavior in favor of the gift giver in particular when a third party bears the cost subjects are well aware that the gift is given to influence their behavior but reciprocate nevertheless withholding the gift triggers a strong negative response these findings are inconsistent with the most prominent models of social preferences we propose an extension of existing theories to capture the observed behavior by endogenizing the reference group to whom social preferences are applied we also show that disclosure and size limits are not effective in reducing the effect of gifts consistent with our model financial incentives ameliorate the effect of the gift but backfire when available but not provided

distributional effects of public education in an economy with public pensions we study how the allocation of government expenditures between two major outlays education and pay as you go social security affects human capital distribution in an economy with heterogeneous agents we consider an overlapping generations economy where the government maintains both programs and allocates tax revenues to finance them in our model human capital is one of the factors of production it is itself produced as a combined result of public inputs and private inputs parents decisions to invest time and material resources in education of their children are motivated by altruism heterogeneous in its strength across the population which leads to heterogeneity of incomes we investigate the effect of an increase in public funding for education on the human capital distribution we show that in this framework contrary to some earlier results increased spending on public education may lead to higher inequality our results depend crucially on the interaction of education funding with the social security budget and on the elasticity of substitution in the learning technology

the economics of poverty traps and persistent poverty an asset based approach abstract longitudinal data on household living standards open the way to a deeper analysis of the nature and extent of poverty while a number of studies have exploited this type of data to distinguish transitory from more chronic forms of income or expenditure poverty this paper develops an asset based approach to poverty analysis that makes it possible to distinguish deep rooted persistent structural poverty from poverty that passes naturally with time due to systemic growth processes drawing on the economic theory of poverty traps and bifurcated accumulation strategies this paper briefly discusses some feasible estimation strategies for empirically identifying poverty traps and long term persistent structural poverty as well as relevant extensions of the popular foster greer thorbecke class of poverty measures the paper closes with reflections on how asset based poverty can be used to underwrite the design of persistent poverty reduction strategies

educational inequality and intergenerational mobility in latin america a new database abstract the causes and consequences of the intergenerational persistence of inequality are a topic of great interest among various fields in economics however until now issues of data availability have restricted a broader and cross national perspective on the topic based on rich sets of harmonized household survey data we contribute to filling this gap by computing time series for several indexes of relative and absolute intergenerational education mobility for 18 latin american countries over 50 years and making them publicly available we find that intergenerational mobility is on average rising in latin america this pattern seems to be driven by the high upward mobility of children from low educated families at the same time there is substantial immobility at the top of the distribution significant cross country differences are observed and are associated with income inequality poverty economic growth public educational expenditures and assortative mating

like grand parent like child multigenerational mobility across the eu abstract this study shows that the multigenerational transmission of inequality in most of the 28 eu countries is higher than what a parent to child paradigm would suggest while a strand of the literature claims that this is due to a direct grandparental effect economic historian gregory clark argues that multigenerational mobility follows a markovian process in his view not only are previous estimates severely attenuated by an errors in variables problem but persistence is also constant across time and space using a unique retrospective survey containing information on three generations of european citizens we provide suggestive evidence against such a universal law of mobility while estimates based on measurement error models show that persistence is indeed as strong as clark suggests there are cross country differences furthermore for a few eu countries we cannot reject the hypothesis of a direct grandparental effect overall there is no single data generating process to describe multigenerational persistence that fits all eu countries 2

informal insurance arrangements with limited commitment theory and evidence from village economies recent work on consumption allocations in village economies finds that idiosyncratic variation in consumption is systematically related to idiosyncratic variation in income thus rejecting the hypothesis of full risk pooling we attempt to explain these observations by adding limited commitment as an impediment to risk pooling we provide a general dynamic model and completely characterise efficient informal insurance arrangements constrained by limited commitment and test the model using data from three indian villages we find that the model can fully explain the dynamic response of consumption to income but that it fails to explain the distribution of consumption across households

welfare dynamics in rural kenya and madagascar this paper presents comparative qualitative and quantitative evidence from rural kenya and madagascar in an attempt to untangle the causality behind persistent poverty we find striking differences in welfare dynamics depending on whether one uses total income including stochastic terms and inevitable measurement error or the predictable structural component of income based on a household s asset holdings our results suggest the existence of multiple dynamic asset and structural income equilibria consistent with the poverty traps hypothesis furthermore we find supporting evidence of locally increasing returns to assets and of risk management behaviour consistent with poor households defence of a critical asset threshold through asset smoothing

markov perfect equilibria in altruistic growth economies with production uncertainty this paper concerns the existence of markov perfect equilibria in altruistic growth economies previous work on deterministic models has established existence only under extremely restrictive conditions we show that the introduction of production uncertainly yields an existence theorem for aggregative infinite horizon models with very general forms of altruism journal of economic literature classification numbers

sovereign insolvency procedures a comparative look at selected proposals abstract the most practicable short term approaches for sovereign debt restructuring would include a code of conduct voluntary approach and collective action clauses contractual approach in the medium term a sovereign insolvency procedure statutory approach may have an important role to play because it would be a comprehensive instrument designed to coordinate different creditor groups prior to and during a debt crisis this paper provides a survey of six comprehensive policy proposals for a sovereign bankruptcy procedure it points to approaches that could improve existing proposals and creates a basis for new proposals which could prove conducive to reaching political consensus

pride and prejudice using ethnic sounding names and inter ethnic marriages to identify labour market discrimination labour markets discriminate against workers with particular ethnic sounding names we use non random sorting into interethnic marriage and salient differences between sephardic and ashkenazi surnames to evaluate the causal impact of sephardic affiliation on wages using the 1995 israeli census we estimate the effect of a sephardic sounding surname on wages we first compare the wages of israeli jewish males born to sephardic fathers and ashkenazi mothers sa who are more likely to carry a sephardic surname with the wages of israeli jewish males born to ashkenazi fathers and sephardic mothers as we find that israeli labor markets discriminate based on perceived ethnicity sa workers earn significantly less than their as counterparts we then exploit the custom of women to adopt their husbands surnames to disentangle actual ethnicity from the ethnicity perceived by the market consistent with ethnic discrimination based on surnames we find that it is father in law s ethnicity rather than father s ethnicity that shapes female wage rates finally we find that labor markets discriminate based on surname only when those names provide additional information about ethnicity when ethnicity can be discerned from skin tone surnames do not provide additional explanatory power with respect to wages

excusing selfishness in charitable giving the role of risk decisions involving charitable giving often occur under the shadow of risk a common finding is that potential donors give less when there is greater risk that their donation will have less impact while this behaviour could be fully rationalized by standard economic models this article shows that an additional mechanism is relevant the use of risk as an excuse not to give in a laboratory study participants evaluate risky payoffs for themselves and risky payoffs for a charity when their decisions do not involve tradeoffs between money for themselves and the charity they respond very similarly to self risk and charity risk by contrast when their decisions force tradeoffs between money for themselves and the charity participants act more averse to charity risk and less averse to self risk these altered responses to risk bias participants towards choosing payoffs for themselves more often consistent with excuse driven responses to risk additional results support the existence of excuse driven types

letting the briber go free an experiment on mitigating harassment bribes this paper examines the effectiveness of using asymmetric liability to combat harassment bribes basu 2011 advocates legal immunity for bribe givers while retaining culpability for bribe takers results from our experiment indicate that while this policy has the potential to significantly reduce corrupt practices weak economic incentives for the bribe giver or retaliation by bribe takers can mitigate the positive disciplining effect of such an implementation as a result asymmetric liability on its own may face challenges in the field

wealth distribution in cuba 2006 2014 a first assessment using microdata recently a trend towards increasing inequality has been detected in both developed and developing countries most of these studies have been focusing on formal monetary variables since capitalism is a socioeconomic system where monetary relations play a paramount role however the distribution of non monetary assets is also very important especially so in less developed countries this paper applies a pca methodology to analyse the distribution of non monetary wealth in cuba a socialist country where the role of monetary relations is relatively minor utilizing the mics unicef microdata the paper provides for the first time an estimation of wealth distribution for three years 2006 2011 2014 by area and region the main results show a non monotonic wealth inequality reduction the initial worsening 2006 11 is more than counterbalanced by a recent improvement 2011 14

when equal opportunity is not enough training costs and intergenerational inequality this paper develops an individual optimization model with persistent intergenerational immobility its key feature is that training costs are negatively correlated with family background leading to differences in privately optimal training levels across population groups heterogeneity of innate abilities is shown to reduce but not eliminate the importance of family backgrounds conversely wage thresholds which result from indivisibilities in the production or training functions or noncompetitive elements in the economy such as segmented labor markets increase the scope for inequality in the steady state

income distribution and macroeconomics this paper analyzes the role of wealth distribution in macroeconomics through investment in human capital it is shown that in the presence of credit markets imperfections and indivisibilities in investment in human capital the initial distribution of wealth affects aggregate output and investment both in the short and in the long run as there are multiple steady states this paper therefore provides an additional explanation for the persistent differences in per capita output across countries furthermore the paper shows that cross country differences in macroeconomic adjustment to aggregate shocks can be attributed among other factors to differences in wealth and income distribution across countries

child labor cause consequence and cure with remarks on international labor standards although the literature on child labor is enormous it lacks a common theoretical foundation in this paper analytical survey of this field is provided keeping in mind that this is an area where the primary reason for theorizing is ultimately to influence policy overall it is noted that the literature on child labor is an illustration of abundance and anarchy although empirical writings on child labor are numerous they are not usually founded on theory it is argued that there is much that can be done in curbing the issue of child labor several theories were studied in this paper including collaborative intervention such efforts include public action which alters the economic environment such that the parents of their own accord prefer to withdraw the child from labor force another strategy involves the government a legal intervention is enforcing a total ban on the subject although such interventions have good intentions some of them may not be feasible in general it is better to take economy wide measures against child labor and if there is to be a sector specific ban it should be based on the working conditions of that sector rather than the destination of the goods

sovereign debt restructuring messy or messier ever since the mexican asian and russian crises of the mid 1990 s efforts have been underway to find means for more effective prevention and resolution of currency financial crises much has been done with respect to crisis prevention exchange rate flexibility is much greater than it was there is increased transparency and improved oversight of the financial system and greater attention is paid to unsustainable policy stances work continues to strengthen economies immunity to crises however no matter how much is done there will inevitably be a crisis or crises much has already been learned with respect to crisis resolution and the international financial community is better equipped to cope with crises than was the case earlier but as with prevention more can be done one item on the agenda which should contribute both to prevention and to resolution is dealing with unsustainable debt burdens of sovereign nations two of the hallmarks of most of the 1990 s crises were first the importance of private capital flows and their reversals in triggering the crises and in intensifying their severity and second the involvement of the financial systems in them the countries afflicted by these crises were ones that had succeeded in raising per capita incomes and rates of economic growth that success hinged in significant part on their having put in place economic policies that are conducive to economic growth including a predictable legal framework respect for property rights openness to the international economy and much more the fact that the policy framework was generally appropriate implied among other things that there were relatively high real returns to investment in these economies that is of course the main reason why private investors were interested in them at the same time capital inflows permitted more rapid development than would otherwise be possible these associations of high real returns growth and appropriate policy stances continue for these reasons there is typically a strong stake for emerging markets to maintain international creditworthiness and policymakers go to great lengths to maintain their international reputations and market standings an efficient private international capital market benefits both developing countries which are thereby able to invest more than domestic savings at high real rates of return and investors in high income countries who can realize higher real returns and greater portfolio diversification than they could achieve without these investment opportunities because countries are sovereign their high stakes in maintaining creditworthiness are crucial for attracting international capital flows this is because foreign creditors do not have the rights they do in domestic courts and hence must have other protections against default on the part of borrowers this is especially true for sovereign borrowers international lenders to private entities in emerging markets normally have the same protection as is afforded to domestic lenders for sovereign borrowing however the chief protection foreign creditors have is the losses that would accrue to the sovereign debtor both directly through the future reduction in access to international credit markets and through the effects on private economic activity of a sovereign default in the event of discussants guillermo calvo interamerican development bank and university of maryland morris goldstein institute for international economics michael mussa institute for international economics ann harrison university of california berkeley

traps and thresholds in pastoralist mobility this article presents a new approach to identifying poverty traps in east african pastoralist communities a flexible semiparametric estimation procedure is used to identify a bifurcation in the propensity to engage in the asset based mobile herding livelihood in comparison to the sedentary alternative as a function of herd size the identified threshold is consistent with previous evidence on poverty traps based on modeling herd stock dynamics the approach contributes to an emerging literature that seeks to identify poverty traps through testing the implications of the posited behavioral mechanism behind the trap as opposed to directly modeling asset dynamics the approach is further employed to provide complementary evidence on the relationship between ability and assets in sustaining mobile pastoralism

capital income taxation wealth distribution and borrowing constraints the theorem of zero taxation of capital income is reexamined and is shown to hinge critically on the assumptions of a long horizon and perfect markets for the inter temporal allocation of resources the theorem does not hold when borrowing constraints prevent individuals from insuring against idiosyncratic shocks and have a precautionary motive for savings structural assumptions are made such that with no taxation aggregate savings are socially excessive in the long run i e the rate of return is smaller than the discount rate sufficient conditions for a pareto efficient taxation or subsidization of capital in the long run depend on the correlation between individuals consumption and savings a subsidy may be efficient when individuals incomes follow a predictable pattern of life cycles with no negative bequest 2001 elsevier science b v all rights reserved

job information networks neighborhood effects and inequality this paper explores the theoretical and empirical literature to examine the use by different social groups of informal sources of information provided by friends relatives and acquaintances during job search and its consequences for the job market it also addresses the role of network structure and size the resource endowments of contacts and nature of the links between contacts to explain differences in the effects of job information networks in doing so the paper also turns to the sociology literature on job information networks and provides an economic perspective on such sociological concepts as strong versus weak ties inbreeding distance from structural holes etc the paper distinguishes between models of exogenous job information networks that is where individuals obtain job related information through a given social structure and endogenous job information networks which are social networks that result from individuals uncoordinated actions the paper pays special attention to such issues as physical and social proximity and sharing of information and discusses them in the context of the recent social interactions and neighborhood effects literature finally the paper outlines a model that integrates job information networks where interactions occur in business cycle frequencies with the dynamics of human capital formation which include the joint effects of parental community and neighborhood human capital and are set in life cycle frequencies for the purpose of organizing suggestions for future research and examining earned income inequality

distribution and growth in models of imperfect capital markets abstract a full analysis of the distribution of income should include both the inequality in income between different generations of the same family what is usually called intergenerational ocial mobility and the inequality in income between different families in the same generation becker tomes 1979 p 1154

the economics of poverty traps and persistent poverty empirical and policy implications the moral and economic imperatives to intervene in poverty traps motivate the identification of poverty traps and their structural causes so as to inform the design of appropriate policy responses however empirical identification remains challenging because of poverty traps complexity after reviewing mechanisms that can generate poverty traps we focus on one multiple financial market failures emphasising its heretofore underappreciated testable implications including specific behaviours that are rational only in the presence of a poverty trap we therefore recommend tests for these behaviours rather than more econometrically challenged efforts to directly test for poverty traps in estimated asset dynamics

combining household income and asset data to identify livelihood strategies and their dynamics abstractcurrent approaches to identifying and describing rural livelihood strategies and household movements between strategies over time in developing countries are imprecise here we i present a new statistical quantitative approach combining income and asset data to identify household activity choice variables characterise livelihood strategy clusters and analyse movements between strategies and ii apply the approach using an environmentally augmented three wave household n 427 level panel dataset from nepal combining income and asset data provides a better understanding of livelihood strategies and household movements between strategies over time than using only income or asset data most households changed livelihood strategy at least once over the two three year periods a common pathway out of poverty included an intermediate step during which households accumulate assets through farming petty trading and migratory work

economic interpretations of intergenerational correlations science itself for example see galton s 1869 study of the eminence of relatives or his 1889 analysis of the heights of parents and children but extensive use of economic theory to interpret these correlations is much more recent using basic economic concepts such as supply demand investment incentives missing markets and so on theorists hope to explain how and why status is correlated across generations economic theory might provide a unified treatment of a variety of socioeconomic indicators such as earnings income occupation or wealth or it might predict how taxes subsidies and economic regulation affect intergenerational mobility and the operation of markets however while the subject matter earnings consumption wealth occupa tion is clearly interesting to economists it could nonetheless be the case that beyond basic questions of measurement economic theory has not improved our understanding of intergenerational mobility goldberger 1989 is quite explicit in this contention by emphasizing the distinction between genes and environment and by using statistical theory as its main analytical tool the paper by samuel bowles and herbert gintis in this issue implicitly concurs with goldberger we take this challenge very seriously what characterizes an economic approach to mobility while biologists and bowles and gintis distinguish endowments and investments by their source genetic versus environmental factors one focus of economic theorists is motiva

talent growth and income distribution a model with heterogeneous individuals and bequests between generations is constructed to analyze income distribution and educational choice the introduction of an imperfection in the credit market is shown to influence the allocation of talent both ability and bequest are of relevance in deciding whether or not to invest in education with learning by doing between generations the allocation of talent affects not only the level of production but also the growth rate copyright 1993 by the editors of the scandinavian journal of economics

obtaining a driver s license in india an experimental approach to studying corruption we conduct two experiments to understand the process of obtaining a driver s license in india in the first experiment we randomly assign license candidates to one of three groups bonus offered a financial reward if they could obtain their license fast lesson offered free driving lessons upfront and control the control group alone illustrates bureaucratic failures 71 of the license getters in that group avoided the mandated driving test and 62 failed a surprise driving test the system responds to private needs there are more license getters in the bonus group but at a social cost there are more license getters who cannot drive in the bonus group the system however also appears to respond to social considerations as there are more license getters in the lesson group large extra legal payments are made by license getters those in the control group pay 2 5 times the official fee more of these extra legal payments take place in the bonus group surprisingly these extra legal payments are not direct bribes to bureaucrats but instead payments to agents in the second experiment we perform an audit study to better understand the role of agents the audit shows that agents can provide licenses to individuals even if they cannot drive but the audit also shows that agents cannot as easily circumvent all other rules we argue that our findings are most consistent with agents being the channel for corruption in this system we also report some suggestive evidence that bureaucrats create red tape possibly to induce more license candidates to use agents

the effects of compulsory schooling on growth income distribution and welfare abstract in this paper we consider an olg model with productive capital and human capital affecting the quality of labor in each generation parents invest in their children s education but disregard its external effect on the aggregate production function government intervention in providing compulsory schooling increases economic growth along the equilibrium path while the intragenerational income distribution becomes more equal also in the long run the majority of individuals in each generation are better off due to compulsory schooling

the poor stay poor household asset poverty traps in rural semi arid india summary although identifying household level poverty dynamics would have important implications for poverty reduction policies empirical evidence is still scant this paper employs a novel semiparametric panel data estimator that combines the advantages of estimation methods in the existing literature and applies it to a uniquely long panel data set to examine poverty dynamics in three villages in rural semi arid india structural immobility is pervasive the currently poor are likely to remain poor suggesting a structural poverty trap while all households face static asset holdings higher castes larger landholders and more educated households are significantly less likely to be poor

intergenerational earnings mobility inequality and growth abstract we examine a model in which per capita income inequality intergenerational mobility and returns to education are all determined endogenously individuals earn wages depending on their ability which is a random variable they purchase an education with transfers received from their parents and are subject to liquidity constraints in the model multiple steady state equilibria are possible countries with identical tastes and technologies can reach differing rates of mobility inequality and per capita income equilibria with higher levels of output also have lower inequality higher mobility and more efficient distribution of education

a theory of intergenerational mobility we study the link between market forces cross sectional inequality and intergenerational mobility emphasizing complementarities in the production of human capital we show that wealthy parents i

the desegregating effect of school tracking this paper makes the following point detracking schools that is preventing them from allocating students to classes according to their ability may lead to an increase in income residential segregation it does so in a simple model where households care about the school peer group of their children if ability and income are positively correlated tracking implies that some high income households face the choice of either living in the areas where most of the other high income households live and having their child assigned to the low track or instead living in lower income neighbourhoods where their child would be in the high track under mild conditions tracking leads to an equilibrium with partial income desegregation where perfect income segregation would be the only stable outcome without tracking

gender assets and agricultural development lessons from eight projects ownership of assets is important for poverty reduction and women s control of assets is associated with positive development outcomes at the household and individual levels this research was undertaken to provide guidance for agricultural development programs on how to incorporate gender and assets in the design implementation and evaluation of interventions this paper synthesizes the findings of eight mixed method evaluations of the impacts of agricultural development projects on individual and household assets in seven countries in africa and south asia the results show that assets both affect and are affected by projects indicating that it is both feasible and important to consider assets in the design implementation and evaluation of projects all projects were associated with increases in asset levels and other benefits at the household level however only four projects documented significant positive impacts on women s ownership or control of some types of assets relative to a control group and of those only one project provided evidence of a reduction in the gender asset gap the quantitative and qualitative findings suggest ways that greater attention to gender and assets by researchers and development implementers could improve outcomes for women in future projects

gary becker s contributions to economics from his first published work gary becker has consistently strived to extend the domain of economic analysis his interest is in social science broadly defined and he is convinced that economic theory in its established neoclassical form provides the best set of tools for analysing social science questions when he finds an interesting problem on the borderland of what is conventionally thought of as economics and that is where he is looking for his problems he is not worried that he is trespassing on the traditional grounds of sociologists political scientists lawyers anthropologists or biologists on the contrary he clearly delights in showing how economic theory can be brought to bear on such problems he is of course not alone in trying to extend the borders of economics many other scholars have contributed to the movement which some have characterized as economic imperialism becker is one of the most outstanding of the imperialists this review of his work is organized in accordance with the main topics on which becker has worked chronologically his work on the economics of discrimination which grew out of his doctoral dissertation comes first next in order come his fundamental contributions to human capital theory he was also one of the founders of the so called new theory of consumption which is no longer so new and he has made important contributions to the economic study of crime and punishment and to the economics of political decision making some of his most original work is in the economics of the family where he provides economic explanations of such questions as marriage divorce and procreation after the topic by topic review of becker s contributions i will try to provide a more general evaluation of his work and to characterize it more fully in terms of research traditions and methodological attitudes

inequality as a determinant of malnutrition and unemployment policy this paper explores the policy implications that are obtained once it is recognized that at low nutrition intakes a person s productivity is an increasing function of intake in the context of a fully general equilibrium model it is shown that if aggregate assets in an economy are neither large nor small certain patterns of lorenz improving asset redistributions or nutrition transfers increase aggregate output and reduce the volume of involuntary unemployment and the incidence of undernourishment copyright 1987 by royal economic society

intergenerational persistence of earnings the role of early and college education recent empirical evidence from the united states indicates a high degree of persistence in earnings across generations designing effective public policies to increase social mobility requires identifying and measuring the major sources of persistence and inequality in earnings we provide a quantitative model of intergenerational human capital transmission that focuses on three sources innate ability early education and college education we find that approximately one half of the intergenerational correlation in earnings is accounted for by parental investment in education in particular early education we show that these results have important implications for education policy

on the merit of equal pay performance manipulation and incentive setting abstract work performance is often difficult to assess thus leaving room for manipulation of commonly used metrics we created a laboratory workplace in which we can precisely assess both work performance along with manipulation activities using two independent experiments we show that whenever pay for performance is used manipulation is pervasive leading to both a waste of organizational resources and a weakening of incentives by contrast paying organizational members equally effectively deters manipulation attempts leading to higher organizational production

tax and education policy in a heterogeneous agent economy what levels of redistribution maximize growth and efficiency this paper studies the effects of progressive income taxes and education finance in a dynamic heterogeneous agent economy such redistributive policies entail distortions to labor supply and savings but also serve as partial substitutes for missing credit and insurance markets the resulting tradeoffs for growth and efficiency are explored both theoretically and quantitatively in a model that yields complete analytical solutions progressive education finance always leads to higher income growth than taxes and transfers but at the cost of lower insurance overall efficiency is assessed using a new measure that properly reflects aggregate resources and idiosyncratic risks but unlike a standard social welfare function does not reward equality per se simulations using empirical parameter estimates show that the efficiency costs and benefits of redistribution are generally of the same order of magnitude resulting in plausible values for the optimal rates aggregate income and aggregate welfare provide only crude lower and upper bounds around the true efficiency tradeoff

bribery behavioral drivers of distorted decisions we experimentally investigate behavioral drivers of bribery focusing on the role of self interest reciprocity and moral costs associated with distorting judgment in our laboratory experiment two participants compete for a prize a referee picks the winner participants can bribe the referee when the referee can keep only the winner s bribe bribes distort her judgment when the referee keeps the bribes regardless of the winner bribes no longer influence her decision an experiment in an indian market confirms these results these findings imply that our participants are influenced by bribes out of self interest and not because of a desire to reciprocate further evidence shows that self interest guides decisions to a greater extent when referees have scope for avoiding the moral costs associated with distorting judgment as a result limiting referees ability to form self serving evaluations can significantly reduce the effectiveness of bribes less

a theory of misgovernance this paper tries to explain why government bureaucracies are often associated with red tape corruption and lack of incentives the paper identifies two specific ingredients that together can provide an explanation the fact that governments often act precisely in situations where markets fail and the presence of agency problems within the government we show that these problems are exacerbated at low levels of development and in bureaucracies dealing with poor people we also argue that we need to posit the existence of a welfare oriented constituency within the government in order to explain red tape and corruption

intergenerational transfers production and income distribution abstract we consider an overlapping generations economy where the aggregative production process uses physical capital and human capital intergenerational transfers from parents to their children are motivated by altruism we distinguish between two types of transfers investment of parents in the education of their offspring and capital transfer the gift bequest motive we show that the intensity of each type of altruism and hence the composition of the two types of transfers affect significantly the equilibrium output and the intragenerational income distributions comparing competitive equilibria from the same initial distributions of capital transfers and human capital we derive a the economy with the higher education inclined altruism attains lower output and more equal intragenerational income distributions if either the production function s elasticity of substitution is not large or the altruism is weak b for more bequest inclined altruism the effects are usually reversed c under public provision of education higher bequest inclined altruism results in lower output and less equal distribution of income in all dates

assessing environmental dependence using asset and income measures evidence from nepal understanding rural environmental dependence in a rural population is an important factor in the framing of environmental policy with the dual aim of tackling poverty and conserving nature firstly this study compares the assessment of environmental dependence between poverty groupings based on income and asset measures using a composite asset index we were able to distinguish the asset poor from the asset non poor we then combined income data with the asset index enabling us to disentangle the stochastic and structural nature of poverty the distribution of poor and non poor households based on income measures was significantly different from that based on asset measures the income poor are substantially more dependent on environmental resources than the income non poor about 15 difference while strikingly minimal difference was observed in environmental dependence between the asset poor and non poor less than 2 difference the level of environmental dependence between the poor and non poor households differs with the choice of welfare measure and combining two of these measures to identify wealth groups provides policy makers with better insight on the variations in environmental dependence

exploring poverty traps and social exclusion in south africa using qualitative and quantitative data abstract recent theoretical work hypothesises that a polarised society like south africa will suffer a legacy of ineffective social capital and blocked pathways of upward mobility that leaves large numbers of people trapped in poverty to explore these ideas this paper employs a mix of quantitative and qualitative methods novel econometric analysis of asset dynamics over the 1993 98 period identifies a dynamic asset poverty threshold that signals that large numbers of south africans are indeed trapped without a pathway out of poverty qualitative analysis of this period and the period 1998 2001 more deeply examines patterns of mobility and confirms the continuation of this pattern of limited upward mobility and a low level poverty trap in addition the qualitative data permit a closer look at the specific role played by social relationships while finding ample evidence of active social capital and networks these are more helpful for non poor households for the poor social capital at best helps sta

long run growth and human capital this paper analyzes long term growth in a closed economy with human as well as physical capital the human capital corresponds to general education private utility maximization determines each child s schooling costs of educating a given individual are convex although self sustaining growth is not possible steady states with per capita output growing faster than the underlying rate of technological progress do emerge and the magnitude of some comparative static results is increased section 3 attempts to pin down the degree of growth rate amplification implied in practice concluding with estimates of 30 50 percent

competitive procurement with corruption we study competitive procurement administered by a corrupt agent who is willing to manipulate his evaluation of contract proposals in exchange for bribes with complete information and no corruption the efficient firm will win the contract for sure if the agent is corrupt and has large manipulation power however bribery makes it costly for the efficient firm to secure a sure win so in equilibrium the efficient firm loses the contract with positive probability the optimal scoring rule for the buyer deemphasizes quality relative to price and does not fully handicap and may even favor the efficient firm

introduction to development theory abstractthisarticle introduces the symposium on economic development theory 2007 elsevier inc all rights reserved jel classi cation o11 o12keywords development economics development economics a subject that studies institutions growth inequality and povertyin the developing world is a large lively and exciting area of research the objective of thissymposium is to put together some contributions in economic theory with a distinct focus ondevelopment questions much of early development economics as typi ed in the work of paul rosenstein rodan arthurlewis ragnarnurkse tiborscitovsky allynyoung gunnarmyrdal harveyleibenstein alberthirschman amartyasenandothers wastheoretical thoughnotnecessarilyinthesenseofformalmodel building theseauthorsallfelttheneedtobringnewconceptsintoeconomictheory ideas that would capture the essential features of underdevelopment and provide explanationsof the development process existing economic theory with its focus on competitive markets depersonalized exchange steady technical progress and balanced growth simply did not seemrightwhenmatchedwiththegroundrealitiesofunderdevelopment fragmented imperfect orjustplain missing markets highly personalized transactions in credit insurance or agrarian tenancy ambiguousornonexistentpropertyrights andwidespreadevidenceofpovertytrapsandhistoricallock ins a fair bit of modern economic theory was born in some of these early development writings young s article 40 on increasing returns was perhaps the rst systematic study of noncon vexities in economic growth rosenstein rodan s celebrated paper 32 on post war interven tion in europe provided a conceptual foundation for modern thinking on coordination failures

livelihood strategies and dynamics in rural cambodia summary this paper addresses one of the major challenges in rural livelihood analysis to quantitatively examine the dynamics of household livelihood strategies it investigates the interactions between livelihood assets activities and outcomes and captures the dynamics of long term changes and their underlying factors the study aims to identify the classification of rural livelihood strategies their transitions and factors influencing these processes and changes we employ the dynamic livelihood strategy framework and use panel data for 2008 and 2012 covering 464 households in 15 villages in cambodia for latent class cluster analysis and regression estimation in this paper livelihood strategies are quantified based on allocation of available resources which overcomes the limitations of income based analysis our study identifies five household livelihood strategies pursued in the study areas and the results show that over 70 of households change livelihood strategies over time in response to evolving pressures incentives and opportunities the study identifies covariates that shape the choices of livelihood strategies and affects the households access to more remunerative strategies such as education ownership of physical assets and access to infrastructure these findings suggest policy implications for improving the range of livelihood choices available to lower income groups to move out of poverty trap

is there a child labor trap intergenerational persistence of child labor in brazil this article examines the intergenerational persistence of child labor empirically by looking at household survey data from brazil previous empirical work on child labor has focused primarily on isolating the determinants of child labor using survey data we take a different approach by asking does the child labor status of parents affect the child labor incidence of their children we look at this question in two ways our working assumption is that financial need creates this generational link but we also ask if there exists an intergenerational link over and above that which is transmitted through the production of income perhaps through norms we find strong evidence that this link exists and that it appears to persist even when income is held constant moreover we find that children who did not work as child laborers command higher salaries later in life which suggests that the potential human capital gains through apprenticeship as children are outweighed by the human capital gains children receive through schooling excerpt

propensities to engage in and punish corrupt behavior experimental evidence from australia india indonesia and singapore abstract this paper examines cultural differences in individual decision making in a corruption game we define culture as an individual s accumulated experience shaped by the social institutional and economic aspects of the environment in which the individual lives based on experiments run in australia melbourne india delhi indonesia jakarta and singapore we find that there is a greater variation in the propensities to punish corrupt behavior than in the propensities to engage in corrupt behavior across cultures consistent with the existing corruption indices the subjects in india exhibit a higher tolerance of corruption than the subjects in australia however the subjects in singapore have a higher tolerance and the subjects in indonesia have much lower tolerance of corruption than expected we conjecture that this is due to the nature of the recent institutional changes in these two countries we also vary our experimental design to examine the impact of the perceived cost of bribery and find that the results are culture specific

one kind of freedom poverty dynamics in post apartheid south africa abstract a 1993 south african living standards survey documented the legacy of apartheid in the form high levels of inequality and human insecurity drawing on a 1998 re survey of households in the 1993 study this paper explores whether this legacy has been superseded or whether apartheid s end has been only one kind of freedom that has left households in a poverty trap from which they cannot escape after proposing a theoretically grounded dynamic poverty typology that distinguishes stochastic from structural poverty transitions the paper goes on to estimate that significant numbers of the south african poor are potentially trapped in a structural poverty trap and lack the means to escape poverty over time

market potential and the rise of us productivity leadership abstract today s globalization driven by lower barriers to trade has increased market potential for many nations and led to gains in gdp per capita we test whether this was true in the first wave of globalization by constructing market potential measures for a sample of 27 countries in 1900 and 1910 based on a general equilibrium model of production and trade cross sectional estimates suggest that market potential was an economically significant determinant of gdp per capita at this time to assess welfare effects we then study the general equilibrium impact of raising market potential by eliminating international borders in a quantitative counterfactual calculation for 1900 there are significant gains in real income per capita for all nations we use us per capita output as a benchmark since it attained leadership in this variable from the late 19th century and the literature frequently attributes this to its relatively large domestic market a market unconstrained by trade costs associated with international borders because market potential was already near that of the us the largest european countries do not entirely close their per capita income gaps with the us after removing all border barriers to trade within europe or even globally on the other hand many small european countries could have done so

escaping and falling into poverty in india today the study examines the dynamic nature of movements into and out of poverty over a period when poverty has fallen substantially in india the analysis identifies people who escaped poverty and those who fell into it over the period 2005 to 2012 the analysis identifies people who escaped poverty and those who fell into it over the period 2005 to 2012 using panel data from the india human development survey for 2005 and 2012 we find that the risks of marginalized communities such as dalits and adivasis of falling into or remaining in poverty were higher than those for more privileged groups some but not all of these higher risks are explained by educational financial and social disadvantages of these groups in 2005 results from a logistic regression show that some factors that help people escape poverty differ from those that push people into it and that the strength of their effects varies

asset based poverty transition and persistence in rural china this article tests empirically for transition and persistence of poverty in rural china based on the theory of asset based poverty traps it proposes an analytical framework mitigating the problem of endogenous switching between accumulation regimes and disentangling the true state dependence of poverty specifically a dynamic asset threshold separating households into downward and upward mobility regimes is identified after taking households unobserved characteristics and observed regime differentiated accumulation strategies into account the static analysis identifies causality running from settling into a downward mobility regime to the probability of poverty measured by consumption furthermore allowing for endogenous initial poverty status the dynamic analysis finds strong true state dependence in poverty households with the same characteristics are nearly twice as likely to be poor as if they had not previously switched to the accumulation regime assets below the dynamic threshold serve as a conduit through which poverty propagates itself factors that help to break this vicious circle are identified

how strong is the evidence for the existence of poverty traps a multicountry assessment introducing this special collection on asset dynamics and poverty traps this article assesses evidence on these issues across eight panel data sets in six countries generally not previously considered in this perspective it examines the importance of assets in relation to chronic poverty and uses parametric and non parametric methods to test for dynamic asset based poverty traps the article finds that chronically poor households have lower levels of assets than others though does not find evidence of the non convexities which would imply a multiple dynamic poverty trap from this base the article introduces the remainder of the articles in this collection which set out many promising approaches to further develop and improve methods and approaches for looking at poverty traps in future

mixed fortunes a study of poverty mobility among small farm households in chile 1968 86 this study is based on a panel sample of small farm households drawn from eight rural communities in chile interviewed in 1968 and 1986 the incidence and intensity of poverty based on primary income increased over this period however after including earnings from the minimum employment programmes and public transfers both the headcount ratio and squared poverty gap fell markedly between the two surveys mobility analysis showed more households moving out of than into poverty of those households who became impoverished around half may have suffered a transitory decline in income in 1986 the other half experienced pauperisation as a result of investing in projects with negative rates of return investing in the accumulation of human capital by their children sustaining a large rise in the household s dependency ratio or suffering political discrimination in the labour market per capita income was positively related to schooling of the household head in 1968 land ownership in 1986 and living in

stochastic wealth dynamics and risk management among a poor population we use herd history data collected among pastoralists in southern ethiopia to study stochastic wealth dynamics among a poor population although covariate rainfall shocks plainly matter household specific factors including own herd size account for most observed variability in wealth dynamics we find no support for the tragedy of the commons hypothesis past studies may have conflated costly self insurance with stocking rate externalities biophysical shocks move households between multiple dynamic wealth equilibria the lowest suggesting a poverty trap according to nonconvex path dynamics these findings have broad implications for development and relief strategies among a poor population vulnerable to climatic shocks a vast economic literature on risk management rests explicitly or implicitly on the classic friedmanite permanent income hypothesis studies of portfolio management consumption smoothing social insurance and the like all depend on the canonical assumption that stochastic income realisations are drawn from a stationary income distribution leading to consumption smoothing off a stable asset base the possibility of asset accumulation connects this literature to the immense literature on the theory and empirics of economic growth

risks and rewards gary becker s contributions to economics gary becker is one of the most original and influential economists of our age his originality lies in extending the frontiers of economics and broadening the range of important social science problems that are amenable to economic analysis he has gone against the grain of establishment thinking in the economics profession invariably choosing to work on problems that were considered beyond the boundaries of modem economics yet this work made close contact with many of the great economists of the past and many of the concepts he invented and developed are now widely if not routinely used in modem economics several of the approaches to problems he pioneered have evolved into fields and specialities in their own right that becker has had an immense intellectual impact and influence in the economics profession is supported empirically by the voluminous citations to his work over the years and in other ways obviously citation counts have well known difficulties and cannot prove anything by themselves but if used in conjunction with more fundamental evidence they do have the virtue of being quantifiable marshall medoff s 1989 1 recent citation study is one of the best available because citations are weighted by the importance of the journals in which articles appear among non nobel prize economists working in u s universities under 65 years of age becker ranks first in total citations over the 1971 85 period to which medoff s study refers and he is first by a very wide margin though the study is limited to economists in the united states it is clear that becker would rank at or very close to the top of any worldwide list furthermore becker s work is virtually all substantive economic analysis hardly any of it is devoted to the development of methodological tools or to surveys both of which gamer citations more easily and many concepts

welfare dynamics in pakistan and ethiopia does the estimation method matter identifying household level welfare dynamics and associated dynamic poverty trap thresholds can have important implications for the targeting of poverty reduction policies the small existing empirical microeconomic literature has found evidence both for and against poverty traps using household panel data from rural pakistan and ethiopia this article examines whether these different results are likely driven by differences in estimation methods or whether they reflect actual differences across settings it applies the estimation methods from the existing literature to the same two datasets and also proposes a novel semiparametric panel data estimator that combines the advantages of the previous fully parametric and nonparametric approaches the results suggest that absent any dynamic poverty trap thresholds the effect of using different estimation methods is secondary having a small influence on the estimated long term level of household well being but not the identification of multiple dynamic welfar

a theory of trickle down growth and development this paper develops a model of growth and income inequalities in the presence of imperfect capital markets and it analyses the trickle down effect of capital accumulation moral hazard with limited wealth constraints on the part of the borrowers is the source of both capital market imperfections and the emergence of persistent income inequalities three main conclusions are obtained from this model first when the rate of capital accumulation is sufficiently high the economy converges to a unique invariant wealth distribution second even though the trickle down mechanism can lead to a unique steady state distribution under laissez faire there is room for government intervention in particular redistribution of wealth from rich lenders to poor and middle class borrowers improves the production efficiency of the economy both because it brings about greater equality of opportunity and also because it accelerates the trickle down process third the process of capital accumulation initially has the effect of widening inequalities but in later stages it reduces them in other words this model can generate a kuznets curve

regional agricultural endowments and shifts of poverty trap equilibria evidence from ethiopian panel data we examine changes in patterns of equilibria over time and across regions applied to the ethiopia rural household survey we revisit incidence of multiple equilibria using new nonparametric techniques and examine single equilibria that remain stagnant below the poverty line using quantile regressions we identify differences across the income distribution we introduce the empirical analysis of sequences of equilibria we identify a single equilibrium in 1994 1999 but find a second higher equilibrium emerging in 1999 2004 evidencing a shift from unimodal toward a bimodal asset distribution the most deprived region exhibits a low level stagnant equilibrium despite significant rural income growth nationwide

early and late human capital investments borrowing constraints and the family we develop a dynastic human capital investment framework to study the importance of family borrowing constraints and uninsured labor market risk as well as the process of intergenerational ability

risk sharing and information in village economies arrangements for achieving efficient risk sharing vary depending on the information available to agents in the economy the usual euler equation restricts efficient allocations in an economy which obeys the permanent income hypothesis while efficient allocations in an economy with private information and long term contracts satisfy a symmetric restriction but not the euler equation full insurance arrangements are unique in that they satisfy both restrictions we look at an environment in which it seems likely that long term contracts play a role in mitigating the effects of private information three village economies in south india the evidence that consumption allocations satisfy the private information restriction is quite strong for households in two of the three villages the evidence for the third village suggests that while consumption for some households satisfies the private information restrictions other households consumption obey the permanent income hypothesis

traps and sustainable development in rural areas a review summary the concept of a poverty trap commonly understood as a self reinforcing situation beneath an asset threshold has been very influential in describing the persistence of poverty and the relationship between poverty and sustainability although traps and the dynamics that lead to traps are defined and used differently in different disciplines the concept of a poverty trap has been most powerfully shaped by work in development economics this perspective is often constraining because as many studies show poverty arises from complex interactions between social and environmental factors that are rarely considered in development economics a more integrated understanding of poverty traps can help to understand the interrelations between persistent poverty and key social and ecological factors facilitating more effective development interventions the aim of this paper is to provide a critical appraisal of existing trap conceptualizations in different disciplines and to assess the characteristics and mechanisms that are used to explain poverty traps in rural contexts thereby broadening the traps concept to better account for social ecological interactions complementarities and tensions among different disciplinary perspectives on traps are identified and our results demonstrate that different definitions of traps share a set of common characteristics persistence undesirability and self reinforcement yet these minimum conditions are not sufficient to understand how trap dynamics arise from complex social ecological interactions to broaden the utility of the concept we propose a more social ecologically integrated definition of traps that includes four additional considerations cross scale interactions path dependencies the role of external drivers and social ecological diversity including these wider dimensions of trap dynamics would help to better account for the diverse social ecological feedbacks that produce and maintain poverty traps and could strengthen strategies to alleviate poverty in a more integrated way

corruption and culture an experimental analysis article i nfo article history why do some people choose corruption over honesty and others not do the social norms and values prevailing in the societies in which they grew up affect their decisions in 2005 we conducted a bribery experiment and found that among undergraduates we could predict who would act corruptly with reference to the level of corruption in their home country among graduate students we could not in 2007 we replicated our result and also found that time spent in the uk was associated with a decline in the propensity to bribe although this does not explain our inability to predict graduate behaviour we conclude that while corruption may in part be a cultural phenomenon individuals should not be prejudged with reference to their country of origin

the direct and relative effects of preferential market access abstract the proliferation of preferential trade agreements has resulted in a complex system of preferences in which market access conditions are often discriminatory in this paper we investigate how market access conditions have evolved between 2000 and 2009 and how this has affected international trade our results show that the proliferation of preferential access has increased bilateral trade not only due to lower tariffs but also because preferential access often resulted in higher preferential margins vis a vis foreign competitors the results also indicate that the evolution of the system of preferences has been disadvantageous for countries that did not actively engage in forming new trade agreements

wage structure as implicit insurance on human capital in developed versus underdeveloped countries abstract this paper explores the role of wage structure as implicit insurance on human capital it illustrates how smaller wage differentials in the developed world can be welfare enhancing by acting as implicit insurance while larger wage differentials in underdeveloped countries make investments in human capital riskier in other words with smaller wage differentials the students in a developed country are insured against poor educational outcomes through the existence of well paid alternative employments which are not present in the economy of a less developed country this result arises as multiple equilibria in a general equilibrium model when there are no insurance markets for human capital

temporal stability of risk attitudes and the impact of adverse shocks a panel data analysis from thailand and vietnam summary exogenous negative shocks and intrinsic risk attitudes are two important elements characterizing the vicious cycle of poverty associated with rural households in developing countries recent empirical studies suggest that adverse shocks a key driver of poverty can trigger substantial changes in the risk attitudes of poor people leading to decisions that perpetuate their lives in poverty although the temporal variability of risk attitudes is a controversial topic the literature advocating the temporal variability of risk attitudes suggests that covariate shocks such as natural disasters alter risk attitudes over time whereas idiosyncratic shocks show no such significant impact this paper aims to test the temporal stability of risk attitudes in rural households in thailand and vietnam to determine whether this pattern covariate shocks that affect risk attitudes and idiosyncratic shocks that do not can be confirmed for these households i use an exogenous measure of shocks to explain temporal variation in risk attitudes thus i estimate variation in consumption using a multilevel model in which variation in consumption at the individual level serves as a proxy for idiosyncratic shocks while variation in consumption at the aggregate level is used to measure covariate shocks my study finds temporal variability in risk attitudes that is driven by covariate shocks in vietnam and in contrast to past research by idiosyncratic shocks in thailand the results suggest that vietnamese respondents may be better in insuring idiosyncratic risks for example through safety nets while mutual insurance across individuals does not seem to work well in thailand in addition results indicate that the mutual insurance problem in thailand seems to increase in wealth the differences that i find between thailand and vietnam and across poverty types correspond to the difference in political systems and consequently the focus of socio political measures thailand s recent political volatility and the growing lack of social cohesion in thai society support these findings

wealth distribution and optimal inheritance taxation in life cycle economies with intergenerational transfers we introduce intergenerational transfers into a general equilihrium life cycle model in order to explain observed levels of wealth heterogeneity in our overlapping generations model heterogenous agents face uncertain lifetime and leave both accidental and voluntary bequests to their cinldren furthermore agents face stochastic employment opportunities the model is calibrated with regard to the characteristics of the us economy our resuits indicate that hequests onl account for a sniall proportion of ohserved wealth heterogeneitv the introduction of an inheritance tax increases both welfare are measured by the average value of the newborn and equality of the wealth distribution preliminary versions of this paper have been presented at conference on intergenerational transfers taxes and the distribution of wealth in uppsala 1999 and the econoinetric societv european meetirig in santiago dc compostela 1999 we would like to thank michael kaganovieli john laitner james smith frank stafford and carl cristian von weizsacker for comments on earlier versions of the paper all remaining errors are ours

the political economy of intergenerational income mobility the intergenerational elasticity of income is considered one of the best measures of the degree to which a society gives equal opportunity to its members while much research has been devoted to measuring this reduced form parameter less is known about its underlying structural determinants using a model with exogenous talent endowments endogenous parental investment in children and endogenous redistributive institutions we identify the structural parameters that govern the intergenerational elasticity of income the model clarifies how the interaction between private and collective decisions determines the equilibrium level of social mobility two societies with similar economic and biological fundamentals may have vastly different degrees of intergenerational mobility depending on their political institutions we offer empirical evidence in line with the predictions of the model we conclude that international comparisons of intergenerational elasticity of income are not particularly informative about fairness without taking into account differences in politico economic institutions jel e24 j62 j68 p16

assets and poverty traps in rural bangladesh using longitudinal survey from rural bangladesh this article examines the determinants of land and asset accumulation over time and explores why some households may be trapped in asset poverty non parametric and parametric methods are used to discern the shape of the asset accumulation path and whether unique or multiple equilibria exist we find evidence for concavity of the dynamic asset frontier but no evidence for multiple equilibria it is suggested that the existence of well functioning factor markets in rural bangladesh and elsewhere in south asia explain the contrasts between our results and those for several african countries