banking technology and the existence of a consistent output aggregate abstract this paper addresses the question of the existence of a consistent output aggregate in banking specific necessary and sufficient conditions for output aggregation are developed and tested in the context of a second order approximation to any arbitrary multi product bank cost function the analysis provides evidence that a composite aggregate measure of output fails to provide a proper representation of banking technology and therefore previous studies that used aggregate output measures may well be subject to specification errors

welfare equivalent nnp under distributional objectives abstract this note concerns social accounting when there are social objectives for the distribution of utility across consumers the most important result is that a suboptimal distribution across agents causes the net national product to fail as a welfare measure

did unilateral divorce laws raise divorce rates a reconciliation and new results application of the coase theorem to marital bargaining suggests that shifting from a consent divorce regime to no fault unilateral divorce laws should not affect divorce rates each iteration of the empirical literature examining the evolution of divorce rates across us states has yielded different conclusions about the effects of divorce law liberalization i show that these results reflect a failure to jointly consider both the political endogeneity of these divorce laws and the dynamic response of divorce rates to a shock to the political regime taking explicit account of the dynamic response of divorce rates to the policy shock i find that liberalized divorce laws caused a discernible rise in divorce rates for about a decade but that this increase was substantially reversed over the next decade that said this increase explains very little of the rise in the divorce rate over the past half century both administrative data on the flow of new divorces and measures of the stock of divorcees from the census support this conclusion these results are suggestive of spouses bargaining within marriage with an eye to their partner s divorce threat

economies of scale and scope in the securities industry abstract economies of scale and scope for the securities industry are estimated for the first time using previously unavailable survey data and employing the translog multiproduct cost function model the results reveal economies of scale for smaller specialized firms and diseconomies of scale for larger more diversified firms economies of scope do not appear to be important in the industry if the glass steagall restrictions are relaxed the results suggest that banks can enter the securities industry with a brokerage division of moderate scale of about 30 million in revenues the five million in new equity required suggests that only banks with assets over 1 billion and over 60 million in capital can enter the industry with a relatively modest investment there are however a substantial number of banks with over 1 billion in assets who can be considered as potential entrants

habit persistence and teen sex could increased access to contraception have unintended consequences for teen pregnancies we develop a dynamic discrete choice model of teen sex and pregnancy that incorporates habit persistence habit persistence has two sources here the first is a fixed cost of having sex which relates to a moral or psychological barrier that has been crossed the first time one has sex the second is a transition cost whereby once a particular relationship has progressed to sex it is difficult to move back we estimate significant habit persistence in teen sex implying that the long run effects of contraception policy may be different from their short run counterparts especially if the failure rate of contraception is sufficiently large programs that increase access to contraception are found to decrease teen pregnancies in the short run but increase them in the long run

a dynamic model of firewalls and non traditional banking abstract over the last decade there has been considerable public debate in the u s on the need to maintain legal barriers firewalls between commercial and non traditional banking however no theoretical model has yet been developed that examines the joint influence of various factors suggested such as competition production economies and regulatory subsidies that affect the bank s incentive to undertake non traditional activities this paper applies a stochastic control model to examine the joint effects of these factors on a bank s optimal investment decisions in non traditional banking and develops some empirically testable hypotheses

the paradox of the pill heterogeneous effects of oral contraceptive access the twentieth century saw dramatic increases in nonmarital births concentrated heavily among poor and working class women in this paper we investigate whether the oral contraceptive pill played a causal role in the rise of nonmarital births exploiting exogenous variation in laws governing access to the pill we find that changes in marital access to the pill increased the nonmarital birthrate by between 15 and 18 accounting for about one third of the overall increase in nonmarital births these effects are concentrated almost entirely among women whose fathers did not graduate high school and among minority women we also document that the pill increased spacing between first and second births and lowered the probability that a woman obtained a high school diploma consistent with increases in nonmarital births we find no evidence that postsecondary education levels were influenced by pill access and no evidence that nonmarital births move with male employment patterns our findings add to a growing literature which documents the power of the pill to shape women s lives in broadly heterogenous ways with minority and less well educated women bearing the brunt of the losses a phenomenon we call the paradox of the pill jel j12 j13 i24

national product related welfare measures in the presence of technological change externalities and uncertainty the purpose of this paper is to discuss under what conditions welfare can be measured by observables related to the national product or hamiltonian along the optimal trajectory under nonattributable technological or environmental change welfare will depend on time itself meaning that the hamiltonian along the optimal trajectory will be a biased measure of welfare this result will also hold if we make the time dependence of welfare endogenous by replacing technological change will externalities that are not internalized during optimization on the other hand if we take the externalities fully into account then the hamiltonian will represent the appropriate measure of welfare similar results also hold in the case of uncertainty where we show that a generalized hamiltonian provides a welfare measure and that the deterministic measures are special cases of their stochastic counterparts

flows of air pollution ill health and welfare we provide a theoretical framework for measuring welfare when pollution influences economic growth by impairing health and driving up defensive medical expenditures we demonstrate the usefulness of our framework in practice by applying it to data from swedish valuation studies designed according to the accounting principles suggested here we estimate that the negative health effects of nitrogen dioxide emissions amount to 0 6 of gdp in sweden we also show that a corrective pigouvian tax should internalize the direct disutility reduced labor productivity and increased healthcare expenditures caused by pollution according to our calculations harmful health impacts alone excluding ecosystem effects justify 65 of the current swedish tax on nitrogen dioxide

sustainability and technical progress a rigorous model connects together the following three basic concepts 1 sustainability meaning the generalized future power of an economy to consume over time 2 green nnp meaning a current measure of national income that subtracts off from gnp not just depreciation of capital but also more generally depletion of environmental assets evaluated at current efficiency prices 3 technological progress meaning a projection onto the future of the so called solow residual a simple general formula is derived some crude calculations suggest a possibly strong effect of the residual which hints that our best present estimates of long term sustainability may be largely driven by predictions of future technological progress

social accounting and welfare measurement in a growth model with human capital this paper addresses social accounting and welfare measurement in an economy where human capital is an important factor in the economic system human capital accumulation depends on the time consumers spend in education however human capital is also a separate argument in the production function facing firms which gives rise to a production externality in a command optimum where the externality is internalized we show that an augmented nnp measure is the appropriate welfare indicator we also discuss the taxtransfer system required for the decentralized economy to reach a command optimum

economic growth pollution and renewable resources abstract this paper first analyzes a model of economic growth with stock pollution allowing smooth substitution between emissions and reproducible capital when emissions are optimally controlled the steady state consumption is lower than without pollution control but the optimal steady state equilibrium may not exist if the marginal productivity of capital is bounded the steady state is shown to be a local saddle point independent of the rate of discount if pollution is not controlled a competitive economy moves along a stable growth path toward a too heavily polluted steady state next a growth model in which pollution affects the growth of renewable resources is presented the conditions for the existence and saddle point property of the steady state are given and the consequences of nonoptimal externality taxes are discussed when renewable resources are included higher than optimal pollution may decrease steady state consumption contrary to the case where renewable resources are ignored

understanding the returns to delayed childbearing for working women since women began entering the workforce in large numbers in the latter half of the twen tieth century they have faced important and difficult trade offs between family and work one such trade off involves the timing of fer tility biological constraints such as declining fecundity by age encourage early childbearing however researchers have found evidence of a wage premium to delay amalia miller 2007 uses miscarriages as a source of variation in the timing of first birth and finds an additional year of delay is associated with a 3 percent increase in wage rates and a 10 percent increase in earnings david ellwood ty wilde and lily batchelder 2004 show that wage profiles for high skilled women flatten out at the point of the first birth resulting in significantly greater lifetime earn ing for delayers 1 understanding the causes of this wage pre mium is essential to understanding the choices working women face and the decisions they make this paper examines how much of the delay premium can be explained by differ ences in human capital among early and late child bearers using data from the national longitudinal survey of youth nlsy i find a raw return of approximately 3 percent per year of delay for hourly wages in 2003 using the full nlsy panel and a fixed effects framework i show that there is a wage penalty to motherhood that increases with time since the birth and that these penalties are greatest for high skilled women however this effect is attenuated for women who delay childbirth next i show that there are significant differ ences in women s observable characteristics by age at first birth women who delay are more skilled more educated more likely to be in pro fessional or managerial careers and have more experience even conditional on completed fer tility i return to estimating the return to delay adjusting wages for differences in observable characteristics i find that as much as 90 percent of the return to delay can be explained by differ ences in observable characteristics education experience and age at first marriage have the most explanatory power these results support a human capital theory for the delay premium

scale and scope economies in the multi product banking firm abstract the multi product nature of the banking firm is examined utilizing the translog cost function this analysis indicates that contrary to conventional wisdom natural monopoly scale economies and product specific decreasing costs are not robust characterizations of the banking industry there is however evidence that the cost function is characterized by economies of scope the implications of these results are discussed and extensions of this approach suggested

the technological determinants of the u s energy industry structure recent theoretical developments on multiproduct firm costs have increased our understanding of these firms yet to date empirical analysis of the relationship between multiproduct firm costs and industry structure has been limited in this paper the multiproduct nature of us energy producers is explicitly recognized and a multiproduct cost function estimated for the industry the empirical results indicate that the multiproduct structure of large energy firms has at least in part been motivated by economies of scope between petroleum and coal operations 27 references 19 footnotes 3 figures 1 table

multiproduct technology and market structure a recent line of research has exposed some technological determinants of the structure of industries that produce more than one good the analyses of both multiproduct perfect competition and natural monopoly require a generalized notion of average cost and in addition several newly identified technological characteristics pertinent only to joint production this paper provides an overview of these new results and suggests a unifying framework in which the theory can be further developed

scale economies and cost complementarities in commercial banks on and off balance sheet activities abstract bank off balance sheet obs activities have grown dramatically and have become significantly important especially at large banks we investigate whether failure to incorporate obs products may lead to a misspecification problem models that exclude deposits from the output specification suggest economies of scale which vanish when deposits are included we find that inclusion of obs products has little effect on the scale economies measures with only a few exceptions the results provide no evidence of cost complementarities in joint production the tremendous growth of bank obs activities in the 1980s may be explained by the very small approximately zero pecuniary cost of these activities

scale economies in banking a restructuring and reassessment the issue of scale economies in banking has a rich history most earlier studies report modest operating cost scale economies for small institutions those with less than about 50 million of deposits in 1968 dollars but are unclear where these economies might end if at all unfortunately these studies are limited in four important respects first those that were well specified did not measure the total cost of banking operations but concentrated on estimating scale economies for individual banking functions e g demand deposits separately from commercial loans second an average cost curve that could take a u shape over the full range of banks was not fitted either because larger banks were not included or because of the functional form used cobb douglas consequently the optimum or minimum cost size of a bank or office could not be determined third the variables measuring the costs of branching were misspecified fourth the branch

economies of scale and economies of scope in multiproduct financial institutions a study of british columbia credit unions this paper investigates the production technology facing computerized credit unions in canada a full system of translog cost equations is estimated in order to test for economies of scale economies of scope and other production characteristics in a multiproduct context the regression results indicate that most of the credit unions in our sample experience significant increasing returns to scale as they expand their level of output there is also evidence of cost complementarity or economies of scope in their mortgage and other lending activities as a result legislation which limits the ability of credit unions to grow and diversify will likely raise the operating costs of this important group of financial institutions additional structural tests of the most general translog specification suggest that none of the restrictive production conditions commonly imposed by other researchers using cobb douglas and ces specifications provide a valid representation of credit union technology the results of many earlier studies are therefore open to question this paper presents a number of structural tests of the production technology facing large computerized credit unions in canada a full system of translog cost equations is estimated using detailed cross sectional data on british columbia credit unions the parameter estimates obtained from our multiproduct specification allow us to test for economies of scale economies of scope and factor substitution unlike many earlier studies the present paper introduces the various outputs as separate variables instead of crudely proxying them with a single output measure such as total assets the total number of loans or the number of depositors by explicitly recognizing the multiproduct nature of the intermediation process we are able to address more interesting production questions and remove some of the bias caused by misspecification and measurement error in simpler approaches the flexible translog specification allows us to estimate the sensitivity of costs to proportionate increases in all outputs economies of scale as well as the cost savings firms realize by producing several outputs jointly rather than specializing in the production of one economies of scope the test results reported in the latter part of the paper suggest that increasing returns to scale exist in almost all of the credit unions in our sample though

traditional and nontraditional banking an information theoretic approach abstract this paper uses a multiproduct approach to analyze the costs of a sample of large banks where bank outputs are measured to account for the different types of information produced by banks diseconomies of scope are found between traditional banking activities of originating and monitoring loans and nontraditional activities of loan selling and buying this suggests maintaining fire walls between commercial bank functions and investment bank functions after the glass steagall act is repealed will not sacrifice joint production economies it also suggests that arguments for repeal of the act based on the existence of such economies are ill founded

single moms and deadbeat dads the role of earnings marriage market conditions and preference heterogeneity why do some men father children outside of marriage without providing support why do some women have children outside of marriage when they receive little support from fathers why is this behavior more common among blacks than whites we estimate a dynamic equilibrium model of marriage employment fertility and child support decisions we consider the extent to which low earnings marriage market conditions and preference heterogeneity explain nonmarital childbearing deadbeat fatherhood and racial differences in these outcomes we find the black white earnings gap and preference heterogeneity explain a substantial portion of racial differences whereas marriage market conditions are less important

the multibank holding company effect on cost efficiency in banking abstract this paper tests the hypothesis that differences in the organizational form embodied in independent banks one bank holding companies and multibank holding companies result in differences in operating cost efficiency the transaction and agency cost paradigms for analysis of organizational efficiency provide theoretical motivation for the hypothesis the effects of organizational form on bank operating expenses for individual banks are evaluated on subsamples divided into quartiles based on total revenue results indicate that for banks having revenues in the lowest quartile both one bank and multibank holding company affiliates are cost efficient relative to independent banks multibank holding company affiliates are cost efficient relative to both one bank affiliates and independent banks for banks in the interquartile range no significant differences in cost efficiency are noted banks in the highest revenue quartile relative efficiency at the organizational level is also evaluated results provide evidence of lower operating costs for banking operations of both multibank and one bank holding company organizations relative to independent banks taken as a whole the results imply that holding company affiliation conveys cost advantages to banking units below the 75th revenue percentile

a study on long run inefficiency levels of a panel dynamic cost frontier under the framework of forward looking rational expectations abstract this paper aims to provide a theoretical underpinning of the dynamic efficiency model pioneered by ahn s c good d h sickles r c 2000 estimation of long run inefficiency levels a dynamic frontier approach econometric reviews 19 461 492 in the context of a quadratic loss function this paper formulates a multi period forward looking rational expectations model on the evolution of the technical inefficiency level which correctly produces a dynamic panel data model the model is illustrated using panel data of 112 french banks encouraging evidence of superiority in favor of the model is reached substantial cost inefficiency prevails in this industry where the constituent banks are characterized as having volatile adjustment speeds toward their long run steady states the sample banks exhibit increasing returns to scale and product mix economies

pollution tax design and green national accounting abstract this paper concerns social accounting when pollution gives rise to a consumption externality the purpose of the paper is to reconcile the willingness to pay technique as a means of collecting information put forward in earlier studies with the growth theoretical approach to social accounting this is accomplished by designing approximations of pigouvian emission taxes on the basis of currently available willingness to pay information the paper analyses the welfare effects of these taxes as well as to what extent they can be used to measure approximately the value of depletion of environmental capital in the national accounts

are combination gas and electric utilities multiproduct natural monopolies gas and electric services are provided in some locations by a single firm in others by two firms the loss of competition inherent in single firm provision can be justified by the presence of both economies of scope and product specific economies of scale for each output in multiproduct production the estimation of a multiproduct hybrid translog cost function shows no evidence of such economies at the mean combination utility output vector copyright 1987 by mit press

how the other half lived marriage and emancipation in the age of the pill abstract the contraceptive pill was fda approved in 1960 however it would be another decade before young unmarried women had full access in the meantime marriage constituted a way to the pill the later 1960s early 1970s also saw a convergence on 18 as the minimum age of marriage many states lowering it from 21 exploiting these law changes we find that a lowered minimum age precipitated marriage delayed marital fertility and improved women s educational and occupational outcomes marriage easing credit constraints combined with the contraceptive properties of the pill form the hypothesized pathway

national accounts and environmental resources in the paper optimal growth theory is used to derive the appropriate definition of the net national product concept when there are environmental resources and environmental damage to take into account the basic conclusions are that conventional defined np should be corrected by deducting environmental damage and adding the value of the net change of all resources

adjusting green nnp to measure sustainability weitzman provides a foundation for nnp as the stationary equivalent of a wealth maximizing path when there is a constant interest rate and no exogenous technological progress here the implications of weitzman s foundation are explored in a case encountered in resource models i e the case of non constant interest rates in a setting that allows for exogenous technological progress an expression for nnp is obtained that adjusts green nnp for anticipated capital gains and interest rate effects to produce a measure that indicates sustainability this result is important when measuring the relative sustainability of resource rich and resource poor countries i introduction how should net national product nnp be adjusted for the depletion of natural and environmental resources a prerequisite for examining this problem is to decide on an underlying notion of income at the personal level hicks 1946 defines income as the consumption that if kept constant would yield the same present value as a person s actual future receipts since market prices are not influenced by any single person this notion of income equals a person s maximal sustainable consumption at the national level national income can likewise be defined as the consumption that if kept constant would yield the same present value as the actual future consumption path unless the nation is a small open economy faced with given international prices this notion of national income will exceed

a multiproduct cost study of savings and loans this paper investigates the cost structure of savings and loans most studies of financial institutions have failed to take into account the multiproduct nature of these institutions using the multiproduct approach the existence of subadditivity multiproduct global and product specific economies of scale and scope and substitutability between inputs is investigated a translogarithmic cost function is estimated using 1982 data on california savings and loans restrictive functional forms also estimated are rejected standard errors for the statistics calculated are estimated and various statistical tests are conducted previous authors have not calculated standard errors for these statistics no evidence of subadditivity in the industry is found in order to investigate the impact of deregulation on the financial services industry it is necessary to know the cost structure of the industry optimal firm size and product mix can be determined once the structure is known the presence of scale economies would imply that smaller firms or entering firms that operate at a small scale would be at a cost disadvantage compared with larger established firms a finding of economies of scope i e economies of joint production would imply that firms that were specialized would be at a cost disadvantage and that regulations that restrict the outputs a firm is allowed to produce may lead to inefficient production

social accounting and the public sector this article contributes to the theory of social accounting as such it tries to extend earlier literature on the welfare equivalence of the comprehensive net national product in two main directions both of which refer to the public sector one is by considering welfare measurement problems associated with public good provision and redistributive policy respectively when the public revenues are raised by distortionary taxes the other is by addressing the consequences of a federation like decision structure where independent tax and expenditure decisions are made both by the central government and by lower level governments

an empirical study of joint production and scale economies in commercial banking this paper utilizes the translog cost function to test the proposition that the bank productionfunction is characterized by jointness the cross section analysis for the years 1973 through 1978 indicates that bank production is in fact characterized by jointness this result calls into question the findings and implications of studies that utilize the assumption of non jointness in production since virtually all of the major bank cost studies employ the assumption of nonjointness the second part of our analysis examines scale economies for the banking firm while allowing for jointness in production our estimates indicate that scale economies characterize bank production at only small bank sizes and that the cost structure of large banks is characterized by diseconomies of scale

an analysis of out of wedlock childbearing in the united states this paper relates the erosion of the custom of shotgun marriage to the legalization of abortion and the increased availability of contraception to unmarried women in the united states the decline in shotgun marriage accounts for a significant fraction of the increase in out of wedlock first births several models illustrate the analogy between women who do not adopt either birth control or abortion and the hand loom weavers both victims of changing technology mechanisms causing female immiseration are modeled and historically described this technology shock hypothesis is an alternative to welfare and job shortage theories of the feminization of poverty excerpt

mergers and technical efficiency in spanish savings banks a stochastic distance function approach abstract the aim of this paper is to test the temporal variation of technical efficiency of spanish savings banks during the period 1985 1998 furthermore we test whether merged and non merged firms have different levels and temporal patterns of technical efficiency a stochastic output distance function r w shephard theory of cost and production functions princeton university press princeton nj is employed to accommodate multiple output technology the distance function provides the advantage that it does not need information about prices so it can accommodate the multi product nature of the financial sector only using the quantities as data an important point when the assumptions about perfectly competitive markets are unlikely to be met the temporal variation of efficiency is modeled extending the battese and coelli journal of productivity analysis 3 1992 153 169 approach in two ways relaxing the monotonicity of the temporal variation pattern of the efficiency term and allowing for different patterns of efficiency change between merged and non merged firms

cross country comparisons of efficiency evidence from the uk and italian investment firms abstract this paper compares and reconciles two new methods for cross country comparisons of the cost efficiency of uk and italian investment firms over the period 1995 1998 it employs four different specifications of the stochastic frontier methodology using a translog cost function in order to measure x efficiency the traditional common frontier reveals that italian investment firms are nearly as efficient as uk firms to overcome traditional limitations two methods are used in this paper they provide consistent results the first method shows differences between the efficiency of the two countries by incorporating environmental variables into the cross country common frontier the second method shows differences in the efficiency of the domestic versus foreign investment firms in the two countries by testing the ability to monitor and control on a cross border basis finally to identify investment firms that are both cost and profit efficient we undertake a profitability test

natural resources national accounting and economic depreciation abstract the current value hamiltonian in an aggregate optimal growth problem with heterogeneous capital stocks including exhaustible renewable and environmental stocks is the nnp function routine substitutions reveal that the using up of natural resource stocks is representable as easy to interpret economic depreciation magnitudes we obtain true nnp inclusive of natural resource stock diminution implications for actual national accounting practices are also discussed

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

welfare measurement green accounting and distortionary taxes this paper concerns welfare measurement in the presence of distortionary taxes one purpose is to explain why the traditional green nnp measure fails as a welfare indicator when distortionary taxes are present another is to derive a green nnp analogue in a second best environment in the second best optimum the efficiency cost of taxation will affect both the form of the national welfare measure and the proper principles of accounting for pollution

on the role of green taxes in social accounting this paper addresses social accounting numerically in a dynamic generalequilibrium model the main purposes are to study i whether emissiontaxes based on static willingness to pay information can be used to improvethe welfare level and ii whether these taxes provide close enoughapproximations of the correct pigouvian emission tax to be useful in thecontext of social accounting the results indicate that if environmentalquality is relatively linear with respect to pollution the approximation ofthe pigouvian emission tax will bring the economy close to the sociallyoptimal solution and at the same time provide a close approximation of thevalue of net investments in environmental capital

welfare equivalent nnp and habit formation this note concerns the importance of habit formation for social accounting with internal habit formation earlier procedures for welfare measurement in the first best apply with minor modification

male earnings marriageable men and nonmarital fertility evidence from the fracking boom we investigate whether an increase in the potential earnings of men leads to an increase in marriage and a reduction in nonmarital births by exploiting the positive economic shock associated with fracking in the 2000s a reduced form analysis reveals that in response to local area fracking production which increased wages and jobs for non college educated men both marital and nonmarital birth rates increase but marriage rates do not the pattern of results is consistent with positive income effects on births but no associated increase in marriage we contrast our findings to the appalachian coal boom experience of the 1970s and 1980s

the efficiency effects of a single market for financial services in europe abstract this paper examines the potential efficiency effects of a single market for financial services in europe the topics covered include universal banking the merger and acquisition process itself cross border ownership and management of financial institutions and the effects of consolidation of financial institutions on the supply of relationship lending services to informationally opaque small businesses the research reviewed here suggests that the creation of a single market for the european financial services industry is not likely to bring about strong efficiency gains and that cross border efficiency barriers may prevent the single market from becoming a reality