risk private information and the family in the last fifteen years our understanding of the behavior of households in both highand low income countries has increased significantly econometric studies contributing to this body of knowledge concerned with the determinants of such behavior as labor supply fertility health and food consumption however have generally taken the structure of the household as exogenously given while some progress has been made concerning how changes in the legal structure alter patterns of family formation and breakup the wide variety of family organizations observed across countries of the world or the evolution of family structure within countries cannot be readily explained by existing models while some economists have suggested that organizations based on kinship can be understood in terms of transaction economies yoram ben porath 1980 robert pollak 1985 there are now few precise implications of this approach and little or no evidence of its usefulness for predicting or explaining the existence of any particular family structure in specific settings characterized by their natural endowments and or legal structure in this paper i discuss some recent studies of family and household organization in one specific context rural india that have sought to formulate a model of household structure based on the need for individuals in lowincome private information settings to protect themselves against intertemporal fluctuations in resources arising from the natural vagaries of water supply i also present some new evidence on the relationship between family arrangements and measured risk characteristics of the agricultural environment in these settings while many economists have highlighted risk and information consideration in the study of such formal rural institutions as sharecropping permanent servitude and contractual interlinking studies of these individual contractural arrangements have ignored the family itself as a risk mitigating institution moreover much of this literature has been solely concerned with ex ante measures to reduce risk contractual instruments or production factors that reduce the effects of variability in the exogenous production input rainfall on income mechanisms serving to preserve consumption stability ex post in the face of variability in realized income have been neglected

analysts gaap earnings forecasts and their implications for accounting research abstract we use newly available gaap forecasts to document that traditionally identified gaap forecast errors contain 37 measurement error correcting for this measurement error we settle a long standing debate regarding investor preference for gaap versus non gaap earnings and provide strong evidence of a preference for non gaap earnings we also revisit the use of non gaap exclusions to meet analysts forecasts when gaap earnings fall short results indicate that 34 of these traditionally identified meet or beat firms are misidentified due to measurement error and this error masks evidence that firms more frequently exclude transitory rather than recurring expenses for meet or beat purposes

specific experience household structure and intergenerational transfers farm family land and labor arrangements in developing countries data from indian rural household survey was used to test th hypothesis that the coexistence in traditional rural societies of extended intergenerational families infrequent land sales and high reliance on family members as farm laborers is the result of the economic advantages which accrue from the knowledge gained by farming a particular ploy of land over a long period of time the land specific experience of elderly members of a intergenerational household who farmed the land as a child and then as an adult are expecially critical in adverse weather years most previous investigators attributed the existence of multigenerational households the use of family members rather than hired laboreds and the infrequency of land sales to deficiencies in the market i e labor market imperfections and an absence of capital insurance and asset markets in the present investigations these same characteristics are viewed as having an economic advantages a model for estimating the contribution of the experience of the elderly household members to agricultural profits was developed and applied to data from a 3 year panel study of 2900 indian rural farm households the data was collected between 1968 71 by the national council of applied economic research the survey collected information on farm profits farm inputs demographic characteristics and the effects of weather conditions on profits a major limitation of the study was a lack of information on the duration of land ownership age of household members was substituted as a proxy for duration of ownership findings were consistent withe the hypothesis in poor agricultural years gross returns for households which contained an elderly household member were greater than the gross returns for comparable households which did not contain an elderly member the economic advantages of specific knowledge embodied in the experienced elderly farmer were comparable to the economic advantages which accrued to households whose members were more educated the hypothesis cannot fully explain the existence of intergenerational families since there is a relatively large proportion of such families among nonfarm families in many countries including india findings suggest that intergenerational families may provide for more occupational diversity and thereby reduce income risks the specific experience hypothesis has policy implications if technological changes are introduced the value of specific experience may be lost and the frequency of intergenerational households may decline the hypothesis may also explain why farmers are reluctant to agree to land redistribution and consolidation schemes this reluctance may disappear after sufficient technological change has occurred

consumption smoothing and the welfare consequences of social insurance in developing economies studies of risk in developing economies have focused on consumption fluctuations as a measure of the value of insurance a common view in the literature is that the welfare costs of risk and benefits of social insurance are small if income shocks do not cause large consumption fluctuations we present a simple model showing that this conclusion is incorrect if the consumption path is smooth because individuals are highly risk averse hence social safety nets could be valuable in low income economies even when consumption is not very sensitive to shocks

child fostering in africa when labor and schooling motives may coexist abstract the paper proposes a theoretical framework for understanding purposive child fostering in africa whereby a non orphaned child is sent to live temporarily with relatives in the model adults decide whether to foster in or out a child in conjunction with other household choices e g own time allocation between market and non market activities children s amount of work and schooling by allowing for positive externalities from fostering and thus asymmetric motives for fostering in labor and out human capital the proposed framework predicts that school age children are sent to better off households and that some families may foster in and out simultaneously the model identifies the conditions under which all actors involved children included may benefit from fostering arrangements but also points to situations where fostering may become an opportunity to marginalize a subset of children the paper aims to provide a sound theoretical foundation that sheds light on why there exists mixed empirical evidence on the effects of fostering on children s well being and cautions against demonizing non parent residence as unequivocally detrimental to children

a discussion of assessing the relative informativeness and permanence of pro forma earnings and gaap operating earnings abstract by analyzing a carefully constructed earnings announcements sample that discloses a pro forma earnings number bhattacharya et al j account econom 36 1 3 2003 contribute to recent research documenting increasing differences between earnings as defined by generally accepted accounting principles gaap and alternative earnings definitions followed by capital markets the paper provides interesting descriptive data on pro forma earnings per share relative to both gaap earnings per share and actual earnings per share as tracked by i b e s also the authors conduct tests of the relative informativeness and persistence of these three earnings measures econometric and data limitations inhibit the inferences that can be drawn from some of these tests

marketed surpluses of agricultural households in sierra leone an agricultural household model is used with household level data from sierra leone to estimate elasticities of marketed surplus for several outputs and for labor with respect to price and nonprice variables positive own price elasticities are found with magnitudes considerably above own price output elasticities changes in household characteristics and production technology also affect marketed surpluses but not always in anticipated directions elasticities are reported for households when grouped by their total expenditure not just for the sample mean the differences are important showing that low expenditure households respond as much as high expenditure households

ex ante and ex post labor supply response to risk in a low income area abstract this paper tests for ex ante and ex post labor supply responses to weather risk for rural indian farm households the analysis uses panel data on 2115 households spanning 13 states in rural india merged with a 22 year series of district level rainfall data ex ante households facing riskier distributions of rainfall are more likely to participate in the labor market ex post unexpectedly bad weather and low rainfall increase labor force participation

remittances and household wealth after conflict a case study on urban burundi few studies have researched the use of remittances in conflict affected contexts this study analyzes unique data from burundi testing three hypotheses relative deprivation investment and insurance derived from new economics of labor migration studies employing propensity score matching results show that remittances are common among wealthier households rejecting the relative deprivation hypothesis remittances have strong effects on non productive assets such as living conditions and food security and weak effects on productive assets such as asset ownership poorer households invest mostly in non productive assets suggesting that remittances are insurance for the poor whereas wealthier households seem largely unaffected by remittances

parental human capital investment and old age transfers from children is it a loan contract or reciprocity for indonesian families abstract this paper proposes two alternative models of intergenerational transfers linking parental investment in human capital of children to old age support the first model formulates these transfers as a pure loan contract and the second model as self enforcing reciprocity both models predict neutrality of intergenerational redistribution of resources within the family also known as the difference in income transfer derivatives property two models however provide different reasons for the failure of this property and yield different policy implications for parental human capital investment and provision of old age support specification tests on the indonesian family life survey data reject the pure loan model in favor of the reciprocity model the estimated difference in income transfer derivatives for this data is found to be significantly higher than the difference estimated by altonji hayashi and kotlikoff altonji et al 1992 altonji j g hayashi f and kotlikoff l j 1992 is the extended family altruistically linked direct tests using micro data the american economic review vol 82 5 1177 98 for the u s psid data

vulnerability of victims of civil conflicts empirical evidence for the displaced population in colombia summary internal conflicts and the forced displacement often caused by such conflicts impose a heavy burden on the civilian population and greatly damage a community s overall welfare the present study employs a household level survey administered to 2 322 colombian displaced households to estimate changes in household welfare after displacement and to assess aggregate consumption levels in destination sites we also assess whether households are able to smooth consumption and we analyze the strategies they are compelled to adopt in order to cope our results indicate that victims of civil conflict face difficulties in generating income are unable to rely on usual risk sharing mechanisms and are forced to draw upon costly coping strategies in order to smooth consumption the vulnerability of displaced households and the possibility of falling into poverty traps highlight the need to design and implement specific policies for victims of internal conflict in order to cope with the displacement shock

nutrition information and household behavior experimental evidence from malawi incorrect knowledge of the health production function may lead to inefficient household choices and thereby to the production of suboptimal levels of health this paper studies the effects of a randomized intervention in rural malawi that over a six month period provided mothers of young infants with information on child nutrition without supplying any monetary or in kind resources a simple model first investigates theoretically how nutrition and other household choices including labor supply may change in response to the improved nutrition knowledge observed in the intervention areas we then show empirically that the intervention improved child nutrition household food consumption and consequently health we find evidence that labor supply increased which might have contributed to partially fund the increase in food consumption this paper is the first to study whether non health choices particularly parental labor supply might be affected by parents knowledge of the child health production function

a household model of on farm storage under price risk we present an agricultural household model of consumption storage savings and labor decisions and argue that food crop storage under price risk cannot be fully explained by risk taking or speculative behavior alone as the commodity storage literature suggests often and especially in the case of small farmers the explanation lies in the household s aversion to risk and in food security considerations the empirical analysis using icrisat quarterly panel data from shirapur provides evidence against risk neutral preferences we find that risk response is particularly significant in the storage and labor decisions of small farm households

integrating behavioral choice into epidemiological models of aids increased hiv risk creates incentives for people with low sexual activity to reduce their activity but may make high activity people fatalistic leading them to reduce their activity only slightly or actually increase it if high activity people reduce their activity by a smaller proportion than low activity people the composition of the pool of available partners will worsen creating positive feedbacks and possibly multiple steady states early public health efforts may allow societies to reach more favorable steady states excerpt

market integration development and smallholder forest clearance a significant proportion of deforestation in latin america is caused by smallholders living at the frontier of modern rural markets this paper develops a household model that examines the roles of market integration subsistence time preference and non timber forest uses in the household s decision to clear forest for future agriculture the model explores the possible impacts of development programs that encourage market integration the model shows that rates of forest clearance should be exacerbated in areas in which market integration is most rapid an empirical estimation using household data from the tsimane people of bolivia tests hypotheses from the model

precautionary behavior migrant networks and household consumption decisions an empirical analysis using household panel data from rural china abstract we develop a test of precautionary behavior in the consumption decisions of rural agricultural households among surveyed households facing a median level of consumption risk 10 of savings can be attributed to a precautionary motive and this increases to 15 for households with consumption per capita below the poverty line we next use distant lags of local rainfall shocks uncorrelated with current consumption growth to identify the size of migrant networks outside the village and then present evidence that both poor and nonpoor households engage in less precautionary saving as the size of the village migrant network increases

who gets the job referral evidence from a social networks experiment we use recruitment into a laboratory experiment in kolkata india to analyze how job networks select individuals for employment opportunities we present evidence that individuals face a tradeoff between choosing the most qualified individual for the job and the individual who is ideal from the perspective of their social network the experiment allows randomly selected subjects to refer members of their social networks to subsequent rounds of the experiment and varies the incentive schemes offered to these participants we find that when faced with performance pay individuals are more likely to refer co workers and less likely to refer family members high ability participants who are offered performance pay recruit referrals who perform significantly better on a cognitive ability task and also prove to be more reliable as evidenced by their choices in the trust game and performance on an effort task

the crowding out effect of formal insurance on informal risk sharing an experimental study abstract this paper investigates the crowding out effect of formal insurance on informal risk sharing arrangements via theory and laboratory experiment our model and simulation predict that the crowding out of private transfers is often more than one for one and will reduce the total risk coverage furthermore the existence of a moderate degree of altruism exaggerates the crowding out effect especially when there is an ex ante income inequality these predictions are mostly supported by the laboratory experiment except that the crowding out effect is not more than one for one and hence the total risk coverage is not significantly reduced by formal insurance

the welfare effects of the introduction of storage this paper examines the welfare effects of introducing storage into a market with stochastic supply in which all agents are competitive profit maximizers with rational expectations these welfare effects are the net result of the initial increase in demand for stock building and the partial and asymmetric reduction in the dispersion of consumption brought about by storage the distributional impacts depend crucially on the information available to producers before storage is introduced the elasticity of supply the specification of the consumption demand curve and the cost of storage

differences in agricultural returns an empirical test of efficiency in factor input allocation using vietnamese data we study whether rural households in vietnam allocate their factor inputs efficiently factor returns and technical rates of substitution trs between production activities are compared we estimate two translog production functions and conduct three tests first we test the equality of bootstrapped returns second we use a bootstrapped t test comparing the equality of trs finally we derive a set of nonlinear restrictions on our estimated parameters which if held would imply that we cannot reject efficiency the article concentrates on the allocation of factors between the cultivation of the two most important agricultural crops sugar cane and rice we cannot reject the possibility that households are efficient in their input allocation these results are consistent and stable over different estimation techniques and support the assumption of profit maximization

storm damage and risk preferences panel evidence from germany individuals risk preferences may change after experiencing external socio economic or natural shocks theoretical predictions and empirical studies suggest that risk taking may increase or decrease after experiencing shocks so far the empirical evidence is sparse especially when it comes to developed countries we contribute to this literature by investigating whether experiencing financial and health related damage caused by storms affects risk preferences of individuals in germany using unique panel data we find that household heads were more risk seeking after they experienced storm damage we do not find evidence of exposure to storm per se regardless of damage experience which suggests that household heads have to suffer damage for their risk preferences to be affected these results are robust across a battery of alternative model specifications and alternative storm damage measures magnitude of financial damage we rule out other potential explanations such as health related and economic shocks the self reported storm damage data is broadly confirmed by regional storm damage data provided by the insurance industry while we cannot identify the channels through which experiencing storm damage affects risk preferences from our data we suggest and discuss some potential channels the results may have important policy implications as risk preferences affect for instance individuals savings and investment behaviour adoption of self protection and self insurance strategies and technology adoption

assortative matching and risk sharing abstract this paper explores the sorting patterns in a two sided matching market where agents facing different risks match to share them when preference belongs to the class of harmonic absolute risk aversion hara the risk premium is perfectly transferable within each partnership thus a stable match minimizes the social cost of risk in the systematic risk model where agents are ranked by their holdings of a common risky asset the convexity of the joint risk premium in joint risk size leads to negative assortative matching nam in the idiosyncratic risk model where agents are ranked by their independent riskiness in the sense of second order stochastic dominance ssd nam arises when preference exhibits decreasing absolute risk aversion dara in the sense of ross and riskier background risk leads to more risk averse behavior however nam may fail to arise when riskier background risk leads to more risk tolerant behavior

periodic high risk as a cause of fertility decline in a changing rural environment survival strategies in the 1980 1983 south indian drought in the attempt to explain persistent high fertility in much of the third world attention has been drawn both to current returns from child labor and to the mitigation or avoidance of future risks the latter can be subdivided into meeting emergencies while the parental generation is still of working age and providing for old age or even safeguarding the transmission of family property on parental death the problems of old age have recently received most attention and they may well be of paramount importance in many societies yet in a research program that we have conducted in rural south india since 1979 the reasons given for demographic behavior have more frequently emphasized the need to plan strategies to meet periodic crisis than to ensure old age support 2 nevertheless one should not underemphasize the latter merely because the problem is predictable and the solutions understood in the study area for the great majority of the aged the support system still worked well 3 in contrast in our investigations of marriage fertility control and education we repeatedly discovered that a fundamental consideration with regard to parental decisions in these areas was to strengthen the ability of the family to withstand periodic crises 4 by far the most important type of crisis in this dry drought prone area was recurrent famines resulting

wage labour activities by agricultural households in nicaragua this article considers wage labour activities by agricultural households in nicaragua it analyses the role of 1 comparative advantage as determined by individual and household characteristics and 2 agricultural conditions and market imperfections in shaping wage labour supply an econometric specification is developed which allows for random household specific effects results reveal that non agricultural wage work is largely determined by comparative advantages whereas agricultural wage work is used to deal with a number of agricultural conditions and market imperfections

on the economics of nonmarket transfers the role of altruism abstract we examine altruistically motivated consumption transfers in an effort to account for nonmarket transfers we find that altruistic linkages lead to autonomous negotiation free transfers and that such transfers positively respond to stronger altruism we also find that given fairly natural assumptions concerning the altruism parameters mutual altruism does not necessarily result in group social harmony even though its rise narrows the conflict range in spite of enhanced transfers prompted by such a rise both parties may end up worse off these results help explain why in some social environments a shift toward market oriented transfers and exchanges may be quicker than in others as the disadvantages decline in utility associated with intragroup altruistic linkages outweigh the advantages

the information content of losses abstract this study hypothesizes that because shareholders have a liquidation option losses are not expected to perpetuate they are thus less informative than profits about the firm s future prospects the results are consistent with the hypothesis they also show that the documented increase in the earnings response coefficent as the cumulation period increases appears to be due exclusively to the effect of losses the liquidation option effect extends to profitable cases where earnings are low enough to make the option attractive alternating explanations for the low informativeness of losses such as mean reversal of earnings are not supported by the tests

extended families and child well being studies of household behavior have established the distribution of resources among household members predicts spending and savings patterns however there is a paucity of evidence on the relationship between the well being of individual family members and the distribution of resources within an extended family including non co resident family members given the central role the family plays in many models of economic behavior this is an important gap in the literature using rich longitudinal survey data from the indonesia family life survey ifls evidence is presented on the relationship between three measures of health and education related human capital of children and the distribution of resources among extended family members ifls is ideally suited for this research since the survey collects detailed information about income and wealth from both coresident and non co resident family members the empirical model is founded on a natural extension of the collective model of household decision making chiappori 1988 1992 to the extended family the model is particularly appealing in this context because it places few restrictions on preferences of individual family members and does not specify a specific bargaining mechanism that underlies negotiations the collective model yields empirical tests of whether the behavior of family members is pareto efficient a special case of the model allows all family members to be completely altruistic which is observationally equivalent to a unitary model of family behavior that special case is rejected by the data however the restrictions of the efficient model are not rejected indicating that non co resident family members are able to co ordinate allocation decisions with respect to child human capital investments in such a way as to make no family member better off without another member being worse off

motivations to remit evidence from botswana in this article a theory of motivations to send remittances is described and tested with data from botswana altruism is one of the motivations tested and found to be an insufficient explanation for remittances among migrants in botswana a refinement of the model stipulates a modified altruism or enlightened self interest in this model the relationship between the migrant and family is tempered by an implicit understanding of mutual benefit the household strategy may be to encourage some members to migrate as a means of spreading risk and sharing gains the household strategy is similar to an insurance policy where migration is to places where market potential is high the risks incurred might be high the example is given of migration during a drought in botswana migrant remittances were greater in households with more cattle or households with more to lose drought alone was not statistically related to remittances increases in remittances were related to increased levels of education it is suggested that repayment was the motive for parents investment in migrants education migrants gains are identified as the potential for an inheritance the security of channeling investments through a trusted family member and security in having a home to return to it is pointed out that the altruism and family remittances from urban migration were strategies that bridged the simple dynamic of either urban development or rural development impacting on family welfare it is suggested that household models of economy adopt some measure to express the relationship of household wealth to remittances from urban migrants

no toilet no bride intrahousehold bargaining in male skewed marriage markets in india abstract haryana state in india is characterized by widespread discrimination against women including a severe population level sex imbalance in this context an innovative social marketing campaign which targeted pro sanitation messages to households active in local marriage markets was implemented with the goal of increasing toilet ownership this paper estimates the impact of this program known colloquially as no toilet no bride on household level latrine ownership private sanitation coverage in haryana increased by 21 specifically among households with boys active on the marriage market this effect is larger and concentrated in marriage markets where women are relatively scarce and absent when women are relatively abundant which together suggest the program operated by successfully linking sanitation outcomes with marriage market competition induced by local scarcities of women due to male biased sex ratios

household inventories and marketed surplus in semisubsistence agriculture a model of semisubsistence agriculture explicitly accounting for the ability of farm households to hold inventories of staple foods is developed comparative statics analysis highlights the potential importance of wealth effects attributable to price induced changes in the value of household inventories empirical results for three groups of households in an indian village confirm that failure to account for household inventories leads to an overstatement of the responsiveness of both consumption demand and marketed surplus

animal disease incidence and indemnity eradication programs abstract there are many options for controlling the spread of animal diseases some diseases have been treated as public sector problems and many nations have tried to control disease spread by purchasing sick animals from farmers government agencies have purchased breeding stock that might transmit diseases government agencies have purchased animals that might otherwise have gone to the slaughterhouse thereby keeping pathogens out of the food supply our hypothesis is that when it is not immediately obvious to farmers or private sector buyers which animals carry or transmit diseases a government indemnity program s success is not assured instead disease control depends on farmers ability to respond to the relative prices they face we examine the incentives created by prices indemnity payment levels government agencies choose the scrapie indemnity eradication program in the united states 1952 1992 provides a natural laboratory for measuring the responsiveness to government set prices we show that government set prices played a major role in determining the program s outcome the supply of infected animals was price elastic we argue that short run movements in relative prices and the number of infected animals offer a practical method for assessing program effectiveness

temporal and spatial modelling of tropical deforestation a survival analysis linking satellite and household survey data we estimate a spatially explicit model of the forest clearance process among smallholder farmers in an agricultural frontier of southern mexico our analysis takes as its point of departure a simple utility maximising model that suggests many possible determinants of deforestation in an economic environment characterised by missing or thin markets hypotheses from the model are tested on a data set that combines a time series of satellite imagery with data collected from a survey of farm households whose agricultural plots were geo referenced using a global positioning system gps we implement a survival analysis to identify the effect of household level explanatory variables on the probability of deforestation this approach allows us to introduce a measure of the time until clearance as a covariate thereby affording a control for the effect of potentially important explanatory variables that vary through time but are not directly observable in addition to identifying several variables relevant for policy analysis including household demographics proximity to roads and government provision of agricultural support model results suggest that the deforestation process is characterised by non linear duration dependence with the probability of forest clearance first decreasing and then increasing with the passage of time

income smoothing and consumption smoothing one way that risk averse households protect consumption levels is to borrow and use insurance mechanisms another way common in low income economies is to diversify economic activities and make conservative production and employment choices households thus tend toward limiting exposure only to shocks that can be handled with available credit and insurance typically both types of mechanisms are studied independently but much more can be learned by studying them together first we obtain a more complete picture of risks costs and insurance possibilities second it opens the way to considering biases in standard tests of credit and insurance

is comprehensive income superior to net income as a measure of firm performance abstract with the exception of financial firms we find no evidence that comprehensive income is more strongly associated with returns market value or better predicts future cash flows income than net income moreover the only component of comprehensive income that improves the association between income and returns is the marketable securities adjustment our results do not support the claim that comprehensive income is a better measure of firm performance than net income our results also raise questions about the appropriateness of items included in sfas 130 comprehensive income as well as the need for mandating uniform comprehensive income disclosures for all industries

labor market dynamics when unemployment is a worker discipline device efficiency wage models of the effort elicitation type have important implications for labor market dynamics these models have a wide array of discontinuous sunspot equilibria driven by extraneous variables in addition to well behaved equilibria characterized by continuous slowly adjusting patterns of employment many aspects of actual labor markets can be replicated by these models for example the longer run movements they predict in employment allow macroeconomic evidence for a large labor supply elasticity to be reconciled with panel data evidence for a small labor supply elasticity many testable but as yet untested predictions about labor market dynamics can also be generated this abstract was borrowed from another version of this item

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

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

gaap versus the street an empirical assessment of two alternative definitions of earnings managers security analysts investors and the press rely increasingly on modified definitions of gaap net income known by such names as operating and pro forma earnings we document this phenomenon and discuss competing explanations for the recent rise in the use of such modified earnings numbers and implications for the interpretation of related accounting research our results show that over the past 20 years there has been a dramatic increase in the frequency and magnitude of cases where gaap and street earnings differ further there is a very strong bias toward the reporting of a street earnings number that exceeds the gaap earnings number we also show that the market response to the street earnings number has displaced gaap earnings as a primary determinant of stock prices finally through an analysis of earnings releases we show that management has taken a proactive role in defining and emphasizing the street number when communicating to analysts and investors

risk sharing across communities this paper studies cross community risk sharing there is now a large body of theoretical and empirical work on informal insurance where people mitigate risk by sharing income a consistent empirical finding is that risk sharing is not complete within villages often the observed sets of individuals 2 one reason researchers suspect is that risk sharing does not take place at the village level but between individuals and families 3 we build a theoretical model where risksharing takes place between pairs of agents there are idiosyncratic shocks to individual income and community level shocks we consider how the opportunity for cross community links affects the shape and efficiency of risk sharing arrangements we find that when links across villages form there can be less risk sharing within a village welfare is higher for those directly or indirectly connected across villages but lower for those with no path connecting them to the other village overall welfare can be higher thus empirical findings that insurance within a village is not complete is not necessarily evidence of an inefficient pattern of risk sharing relations rather the finding is consistent with risk sharing patterns that involve cross community relations and such patterns may yield higher aggregate welfare despite incomplete insurance within a village this paper makes two contributions first it demonstrates the importance of a network analysis by examining pairwise incentives to form relations and the resulting pattern we can see new risk sharing outcomes second with this network model we show how informal risk sharing across communities has both aggregate and distributional effects to study network outcomes we posit a simple two stage model first we provide a benchmark model for risk sharing for a given network then working backwards we consider incentives to form risk sharing links 4 to illustrate consider a rural population and ask how people might link

wage and employment effects of malawi s fertilizer subsidy program this article uses three waves of nationally representative household level panel data from malawi to estimate how a large scale fertilizer subsidy program impacts the agricultural labor market known as ganyu in that country i find that when looking across the entire population of smallholders receiving an additional 100 kg of subsidized fertilizer causes the average household to supply about three fewer days of ganyu the fertilizer subsidy program also has a small positive effect on the probability that a household demands agricultural labor with the results approaching statistical significance in addition a 10 kg increase in the average amount of subsidized fertilizer acquired per household in a community boosts the median agricultural wage rate by 1 4 in that community the increase in wage rates translates to a us 1 40 per year increase in average household income in the years after malawi s subsidy program was scaled up and a us 1 86 per year increase in average household income for those who sold their labor before the subsidy program was scaled up this finding suggests that households who sell their labor off farm may experience some small spillover benefit from the program in the form of higher agricultural wage rates

determinants and effects of income diversification amongst farm households in burkina faso using four years of household data from three agroecological zones in burkina faso sahelian sudanian and guinean the article examines the determinants and effects of household income diversification harvest shortfalls and terms of trade are found to drive diversification but land constraints do not income diversification is associated with higher incomes and food consumption and more stable income and consumption over years

economies of feedlot scale biosecurity investment and endemic livestock disease infectious livestock disease creates externalities for proximate animal production enterprises the distribution of production scale within a region should influence and be influenced by these disease externalities taking the distribution of the unit costs of stocking an animal as primitive we show that an increase in the variance of these unit costs reduces consumer surplus the effect on producer surplus total surplus and animal concentration across feedlots depends on the demand elasticity a subsidy to smaller herds can reduce social welfare and immiserize the farm sector by increasing the extent of disease while nash behavior involves excessive stocking disease effects can be such that aggregate output declines relative to first best disease externalities can induce more adoption of a cost reducing technology by larger herds so that animals become more concentrated across herds for strategic reasons excess overall adoption of the innovation may occur larger herds are also more likely to adopt biosecurity innovations explaining why larger herds may be less diseased in equilibrium

on the costs of food price fluctuations in low income countries abstract conventional welfare measures of the costs of food price fluctuations in low income countries are extended to allow for both economic growth and food security effects the analysis reveals that growth and food security effects may dominate more conventional welfare costs of food price fluctuations although estimating the empirical magnitude of the effects is hampered by the lack of consensus on the extent to which food price fluctuations actually reduce economic growth and food security even if the welfare costs of food price fluctuations are high there are many challenges to the design and successful implementation of price stabilization schemes

migration risk and liquidity constraints in el salvador abstract this article utilizes panel data from el salvador to investigate the use of transnational migration as an ex post risk management strategy i show that adverse agricultural conditions in el salvador increase both migration to the united states and remittances sent back to el salvador i show that in the absence of any agricultural shocks the probability that a household sent members to the united states would have decreased on average by 24 26 i also show that the 2001 earthquakes reduced net migration to the united states a one standard deviation increase in earthquake damage reduced the average probability of northward migration by 37 11 the evidence suggests that the effects of the earthquakes had more to do with households retaining labor at home to cope with the effects of the disaster than with the earthquakes disrupting migration financing

will you marry me a perspective on the gender gap abstract this paper develops a general equilibrium model of the gender wage gap the difference in earnings is a consequence of a demographic regularity that men tend to marry younger women which may limit women s labor mobility and hence their average earnings however couples are always free not to marry and do so only if it is in each s self interest the intrafamily allocation of resources is determined via non cooperative bargaining this leads to interesting interactions between the game played by husband and wife on the one hand and the competitive environment in which they are immersed on the other the predictions resulting from this model s interplay between locational choice and family bargaining are consistent with the observation that the increasing stress put by women on their careers over the past 30 years has been contemporaneous with reductions in both marriage rates and the gender gap the model provides insight into the consequences of this for the relative welfare of men and women as well as exploring its wider economic implications

household specific food price differentials and high value crop production in rural ghana using panel data from ghana we have examined the relationship between household specific producer consumer price differentials and rural household cropland allocation between food and high value crops we test the hypothesis that cereal price bands induce a shift of resources away from high value crop production making smallholders appear unresponsive to price incentives our results lend support to this hypothesis implying that a policy aiming at increasing farmers income through high value crop production may fail if hard and soft infrastructure does not improve in rural areas and if staple crop productivity does not increase significantly

credit constraints job mobility and entrepreneurship evidence from a property reform in china this paper provides new evidence on the impact of private property rights on entrepreneurship i explore this issue in the context of a housing reform in urban china that allowed state employees renting state owned housing the opportunity to buy their homes at subsidized prices using the reform as an exogenous change in the capital constraints and mobility costs that inuence individuals entry

behavioral incentives equilibrium endemic disease and health management policy for farmed animals the article develops a dynamic capital valuation model in which farms can act with farm varying cost to increase the probability of avoiding an infectious endemic animal disease multiple endemic disease equilibria can exist and the one with the largest set of action takers is socially optimal costly capital markets are shown to be a factor in determining the extent of disease frictions such as dealing with a veterinary public health bureaucracy can enhance social welfare by encouraging precautionary biosecurity actions technical innovations can reduce social welfare and a disease indemnification scheme is also studied suggestions for empirical implementation are provided

biased forecasts or biased earnings the role of reported earnings in explaining apparent bias and over underreaction in analysts earnings forecasts the extensive literature that investigates whether analysts earnings forecasts are biased and or inefficient has produced conflicting evidence and no definitive answers to either question this paper shows how two relatively small but statistically influential asymmetries in the tail and the middle of distributions of analysts forecast errors can exaggerate or obscure evidence consistent with analyst bias and inefficiency leading to inconsistent inferences we identify an empirical link between firms recognition of unexpected accruals and the presence of the two asymmetries in distributions of forecast errors that suggests that firm reporting choices play an important role in determining analysts forecast errors r 2003 elsevier b v all rights reserved

the economic role of commodity storage one of the earliest and most successful exainples of economic policy is the oftquoted biblical account of joseph s interpretation of the pharoah s dream joseph foretold that seven years of abundant harvests would precede seven years of drought and recommended that the pharoah accumulate grain during the good years since that time the central role of storage in stabilising the economy in the face of exogenous disturbances has been obvious but our understanding of the nature of that role has not greatly advanced without divine assistance in forecasting stochastic production the storage decision is considerably more complex than the one joseph faced and the role of storage quite different in fact several commonly held impressions about the role of storage of commodities such as grains are incorrect rather than stabilising production storage actually accentuates its variability rather than causing a mean price preserving decrease or a mean output preserving decrease in the dispersion of price storage generally causes a more complex modification of the distribution of price rather than being most effective at eliminating short falls in consumption storage actually is more effective at eliminating the incidence of exceedingly high consumption in this paper we explore the role of storage in a model where production is stochastic and both production and storage are performed by competitive profitmaximisers who form rational expectations about the returns to their activities we derive the subtle but very important interactions among production price expectations and storage which simpler models cannot capture finally we make a comparative statics assessment of the distributional implications of storage these results while confirming the importance of the specification of the demand function and the supply elasticity identified in recent analytical studies e g wright i979 and newbery and stiglitz i979 are surprisingly favourable to consumers considering the asymmetric nature of the effects of storage on consumption and price storage is simply a productive activity one that transfers a commodity from one period to the next like other forms of production it is costly the total cost of storing an amount st from period t to period t i is as of period t i

efficiency wages deferred payments and direct incentives in agriculture empirical evidence from agricultural labor markets is consistent with efficiency wage theory and inconsistent with several alternative explanations according to this theory the higher wage or deferred payment benefits that direct hire growers pay relative to that of farm labor contractors is an efficiency wage growers use this extra compensation to lower their monitoring expenses and reduce shirking by workers copyright 2002 oxford university press

migration and economic mobility in tanzania evidence from a tracking survey this study explores the extent to which migration has contributed to improved living standards of individuals in tanzania using longitudinal data on individuals the authors estimate the impact of migration on consumption growth between 1991 and 2004 the analysis addresses concerns about heterogeneity and unobservable factors correlated with both income changes and the decision to migrate the findings show that migration adds 36 percentage points to consumption growth during a period of considerable growth in consumption these results are robust to numerous tests and alternative specifications unpacking the findings the analysis finds that moving out of agriculture is correlated with much higher growth than staying in agriculture although growth is always higher in any sector if one physically moves economic mobility is strongly linked to geographic mobility the puzzle is why more people do not move if returns to geographic mobility are high the evidence is consistent with models in which exit barriers are set by home communities through social and family norms that prevent migration of certain categories of people

infectious disease productivity and scale in open and closed animal production systems trade in feeder animals creates externalities when animal diseases can spread beyond the purchasing farm if growers choose between open and closed production systems then nash equilibrium likely involves excessive trading while first best equilibrium involves market wide adoption of either an open trade or closed farm system equilibrium may entail heterogeneous systems if so then the feeder trade should be restricted supply response to an increase in marginal costs may be positive within a farm infectious disease risk can create decreasing returns to scale when the technology is otherwise increasing returns contractual procurement and damage control technologies will likely increase scale in finishing

impact of cooperatives on smallholders commercialization behavior evidence from ethiopia this article examines the impact of marketing cooperatives on smallholder commercialization of cereals using detailed household data in rural ethiopia we use the strong government role in promoting the establishment of cooperatives to justify the use of propensity score matching to compare households that are cooperative members to similar households in comparable areas without cooperatives the analysis reveals that although cooperatives obtain higher prices for their members they are not associated with a significant increase in the overall share of cereal production sold commercially by their members however these average results hide considerable heterogeneity across households in particular we find that smaller farmers tend to reduce their marketed output as a result of higher prices whereas the opposite is true for larger farmers

disentangling the consequences of direct payment schemes in agriculture on fixed costs exit decisions and output this paper goes beyond orthodox considerations of direct payment effects on agricultural output by highlighting the role of subsidies in affecting individual producers ability to cover fixed costs and in distorting the volume of aggregate production and net trade by implicitly discouraging exits the theoretical model considers both taxpayer and consumer financed decoupled direct payment schemes and compares them to a coupled production subsidy in terms of possible producer responses to direct payments the paper proposes an analytical framework of production decision making in the presence of a stochastic distribution of fixed costs across representative farms the paper shows that decoupled payments in theory can have a larger effect on output than coupled payments the model explicitly recognizes three consequences of domestic support a induce exit or entry b bias production incentives to domestic markets and c cross subsidize export in global markets an empirical model of the u s wheat sector is developed to illustrate the relative potential impacts of coupled versus decoupled payments on output through the effects on a farmer s ability to cover fixed costs and hence exit decisions

networks in economic development this chapter surveys the implications of some studies in network economics research for economic development we focus on information flow and risk sharing two topics where work in theory empirics and policy analysis have been especially intensive and complementary in analysing information we distinguish models of information diffusion and aggregation highlight how different models imply very different guidance regarding the right way to seed information in discussing risk sharing we look at the key frictions that impede efficient informal insurance and some potential unintended consequences when policymakers intervene to help throughout we stress practical insights that can be used with limited measurement of the details of networks

the economics of exogamous marriage in small scale societies marriage is a core institution in almost every human society including small scale societies based on foraging or subsistence agriculture a crucial dimension of the marriage systems in such societies involves endogamy and exogamy that is the choice of a marriage partner from within one s own community or from an outside community we develop a model in which the exogamy rate is higher when good local matches are scarce due to small community sizes and when productivity differs across communities due to environmental shocks these theoretical predictions are supported by econometric analysis of data from the standard cross cultural sample jel d13 j11 n30 z13

female migration for marriage implications from the land reform in rural tanzania summary using the longitudinal household panel data drawn from rural tanzania 1991 2004 this study investigates impacts of the land reform on women s marriage motivated relocation during the period under study several villages that initially banned a widow s land inheritance abolished this discrimination taking a differences in differences approach this study finds that the probability of males marrying in a village increased by altering its customary land inheritance rule in favor of widows in the light of the traditional system favoring exogamous and patrilocal marriage this finding indicates that females relocate at marriage in response to the favorable land tenure system at the destination

separability and risk in the static household production model the household production model highlights the possible interdependence of consumption and production decisions in the farm household the structure of this interdependence significantly affects the analytics both theoretical and econometric of farm households singh squire and straus 20 have an excellent discussion of this interdependence and its methodological implications a particular type of interdependence called interchangeably recursiveness or separability allows production decisions to be made independently of consumption decisions although the latter depends on the former through the budget constraint this separability is of interest because it justifies a large number of well developed methodological approaches in farm household studies among these being the various duality theory approaches sasaki and maruyama 19 and jorgenson and lau 10 both and independently found the existence of perfectly competitive goods and factor markets to be sufficient for the existence of separability under deterministic conditions while there are a large number of things that can upset this result even in the deterministic setting e g nonhomogeneity of labor as in kuroda and yotopoulos 13 and lopez 14 the recognition of the role of risk appears especially threatening to separability even in a competitive setting as pointed out by barnum and squire 1 if contingent claims markets exist or if households are risk neutral separability exists under risk situations but insurance markets may not exist and for many risks faced by the farming households could not unless heavily subsidized exist furthermore households have been variously shown to be risk averse 15 7 4 roe and graham tomasi 18 utilizing a multiplicative yield risk in the context of a dynamic model concluded that on the whole independence does not hold and estimating equations from certainty theory are not appropriate thus with respect to risk one can say that the die is loaded against separability this paper aims to show that there are risk specifications which allow separability for the household production model even in the absence of the contingent claims market in section ii we introduce the standard model of the household with commercial production it involves a household that produces an output which it partly consumes and partly sells in the market risk enters the revenue function either additively or multiplicatively we then introduce two definitions of separability in the sense of efficiency and in the sense of elasticity we show in section ii that additive risk whether on yield or on monetary revenue allows sepa

strategic interactions among private and public efforts when preventing and stamping out a highly infectious animal disease upon the outbreak of a contagious animal disease a primary motive for restoring disease free status is often to regain access to international product markets efforts applied toward continuing or regaining such access generate a public good all growers benefit regardless of the extent of private effort taken while exclusion is impractical private incentives to take preventive measures and stamp out effort interact in complex ways there are intra farm temporal interactions and also inter farm contemporaneous interactions public effort also takes place and interacts with private effort this paper provides a succinct multi agent model to explore these interactions in social optimum and in nash equilibrium and also to explore how socially optimal and nash behavior differ comparative statics under social optimality are more straightforward than under nash equilibrium whether it is in social optimum or nash equilibrium public prevention effort complements both private prevention and private stamp out efforts however public stamp out effort substitutes for both private stamp out and private prevention efforts reasonable conditions are identified under which nash levels of private prevention and stamp out efforts are both below socially optimal levels concerning policy prescriptions secure property rights and low property transfer costs should promote prevention and eradication efforts other things being equal public prevention effort should be more effective at improving welfare than comparable public stamp out effort subsidies on private effort should favor prevention because subsidies on eradication effort may discourage prevention effort even if products from diseased animals are safe to consume and acceptable to consumers it may be optimal to destroy them

risk and household grain management in developing countries a dynamic model is presented of a household s joint production storage and trade decisions when facing transaction costs and risk in prices and yields grain management decisions balance the goals of maximising profits and reducing consumption price risk model solutions calibrated to chinese data show that grain s consumption role makes it an attractive form of precautionary saving even when households have access to credit the joint nature of production and savings decisions limits the income loss associated with risk coping and the desire to store grain can explain why subsistence households are frequently net purchasers but rarely net sellers of grain

the economics of polygyny in sub saharan africa female productivity and the demand for wives in cote d ivoire polygyny is still practiced throughout much of sub saharan africa with important social consequences this paper makes the first attempt to link african polygyny directly to the productivity of women in agriculture using micro data i develop a structural model of the demand for wives that disentangles wealth and substitution effects using a large household survey from cote d ivoire i find that marked geographic diversity in cropping patterns leads to regional variation in female labor productivity i also find that conditional on wealth men do have more wives when women are more productive that is cheaper this substitution effect may explain why polygyny declined in rural areas of cote d ivoire during agricultural development

self protection strategic interactions and the relative endogeneity of disease risks self protection is a key behavior that influences infectious disease risks spillovers in disease protection create different types of strategic interactions under certain conditions multiple nash equilibria may arise with the possibility of coordination failure involving excessively low self protection in which case individuals expectations of others efforts determine which outcome arises in prior studies assumed technical relations between self protection and infection probabilities drove the strategic interactions we demonstrate that strategic relations can be endogenously determined and depend on the relative endogeneity of risk rer defined here as the degree to which individuals can take control of their own risks in a strategic setting the potential for coordination failure may arise when rer is sufficiently small whereas larger levels of rer may eliminate this possibility to ensure larger levels of self protection we find that imposing a behaviorally dependent indemnity may increase rer to eliminate the possibility of coordination failure we apply our analysis to the problem of livestock disease and illustrate the theory using a numerical example of the 2001 united kingdom foot and mouth disease epidemic

compensated optimal response under uncertainty in agricultural household models abstract this study derives the qualitative properties of a household s optimal consumption family labour hired labour and non labour input choices under price and or output risk through a slutsky type compensation without imposing any restriction on risk preference structure or production technology these compensated responses provide the underpinning for welfare analysis in agricultural household models under risk the framework for the evaluation of welfare effects of product and factor price interventions in a setting of output and price risk is developed the paper also outlines an empirical model for estimation of the compensated demand and supply responses and for validation of the paper s analytical results

a temporal analysis of earnings surprises profits versus losses i show that median earnings surprise has shifted rightward from small negative miss analyst estimates by a small amount to zero meet analyst estimates exactly to small positive beat analyst estimates by a small amount during the 16 years 1984 to 1999 i show that a rightward temporal shift in median surprise from negative to positive describes earnings but neither profits nor losses median profit surprise shifts within the positive quadrant from zero to one cent per share median loss surprise shifts within the negative quadrant from extreme negative about 33 cents per share to zero i show that the median surprise for profits exceeds that for losses in every year i document significant positive temporal trends in both meet and beat analyst estimates for both profits and losses but i find a greater frequency of profits that either meet or beat analyst estimates in every year i find a significant positive temporal trend in positive profits that are a little bit of good news and a significant negative temporal trend in managers who report losses that are an extreme amount of bad news my results are robust to the four internal validity threats i consider namely temporal changes in 1 analyst forecast accuracy 2 the mix of earnings of one sign preceded by earnings of another sign four quarters ago 3 the timeliness of the most recent analyst forecast and 4 the i b e s definition of actual earnings i find that managers of growth firms are relatively more likely than managers of value firms to report good news profits i show that when they do report positive profit surprises managers of growth firms are more likely to report a little bit of good news in every year

livestock disease indemnity design when moral hazard is followed by adverse selection averting or limiting the outbreak of infectious disease in domestic livestock herds is an economic and potential human health issue that involves the government and individual livestock producers producers have private information about preventive biosecurity measures they adopt on their farms prior to outbreak ex ante moral hazard and following outbreak they possess private information about whether or not their herd is infected ex post adverse selection we investigate how indemnity payments can be designed to provide incentives to producers to invest in biosecurity and report infection to the government in the presence of asymmetric information we compare the relative magnitude of the first and second best levels of biosecurity investment and indemnity payments to demonstrate the tradeoff between risk sharing and efficiency and we discuss the implications for status quo u s policy

collective agricultural production a solution for transition economies abstract the paper examines theoretical reasons and provides examples for productivity differences between agricultural service cooperatives and collectives service cooperatives can utilize economies of scale enhance competitiveness and provide technical information advantages that often outweighed problems of free riding low investment and excessive political intervention agricultural collectives while not adding substantial advantages are in addition associated with problems of supervision and effort supply tendencies to substitute casual workers or mechanization for regular members and low investment incentives while collective forms of organization in transition economies respond to high risk and market imperfections they do so inefficiently policies that create conditions for service cooperatives to compete may lead to large productivity gains

a two season agricultural household model of output and price uncertainty abstract this paper presents a two season model of a household s production consumption labor supply and storage decisions in an environment of output and price risk the analytical results in this study are markedly different from those of models prevalent in the mainstream of the agricultural household literature the empirical analysis that uses panel data from a village in india provides support for the theoretical results and underscores the seasonal dimension of the farmers choice problems the results also show that ignoring risk or risk averse preferences may introduce substantial downward bias in optimal response estimates

an exogeneity test for a simultaneous equation tobit model with an application to labor supply a test of weak exogeneity in the simultaneous equation tobit model is proposed and illustrated using a female labour supply model estimated using cross section data the test statistic can be simply output from any standard tobit maximum likelihood package and is asymptotically efficient the procedure provides consistent estimators for the simultaneous tobit model whose asymptotic covariance matrix is a simple extension of the usual tobit formula we also provide the lagrange multiplier test of weak exogeneity this abstract was borrowed from another version of this item

imperfect commitment altruism and the family evidence from transfer behavior in low income rural areas in this paper we examine empirically whether risk pooling is more advantageous among altruistic compared to selfish agents in a framework where individuals cannot make binding commitments in particular we incorporate altuism into a model of risk sharing under imperfect commitment and use simulation methods to establish tests of the roles of both altruism and commitment problems in determining the extent of insurance and the intertemporal movements in interhousehold transfers the tests are carried out using three panel data sets from two countries of rural south asia that provide detailed information on transfers and enable the measurement of income shocks the estimates provide strong support for the notion that imperfect commitment substantially constrains informal transfer arrangements whether kin based or not but also provide evidence that altruism plays an important role in ameliorating commitment constraints and thus in increasing the gains from income pooling

educational homogamy how much is opportunities individuals match on length and type of education we find that around half of the systematic sorting on education is explained by the tendency of individuals to marry someone who went to the same educational institution or to an institution near them this may be due to low search frictions or selection of people with the same preferences into the same institutions the residual half of the systematic sorting on education is a direct effect of partners education which is potentially explained by complementarities in household production in couples with same education