regional variation in earnings inequality in reform era urban china this article studies the regional variation in earnings inequality in contemporary urban china focusing on the relationship between the pace of economic reforms and earning determination through

are ghettos good or bad spatial separation of racial and ethnic groups may theoretically have positive or negative effects on the economic performance of those groups we examine the effects of segregation on outcomes for blacks in schooling employment and single parenthood we find that blacks in more segregated areas have significantly worse outcomes than blacks in less segregated areas we control for the endogeneity of location choice using instruments based on political factors topographical features and residence before adulthood a one standard deviation decrease in segregation would eliminate one third of the black white differences in most of our outcomes

media markets and localism does local news en espanol boost hispanic voter turnout the same time the availability of these products reduces the consumption of local news not only because some consumers prefer national and global content to local information but also because local media products that lose a significant number of consumers are forced to cut qual ity and they may even cease to exist if their audience falls below a critical threshold for these reasons some scholars claim that the rise of integrated media markets undermines local civic engagement robert d putnam 2000 against this backdrop many regulatory agencies including the federal communications commission fcc of the united states seek to protect local media and promote localism for instance by limiting ownership concentration 1 however localism is desirable only if there are in fact positive spillovers from the provision of local content that can help justify the loss of private welfare that integrated media markets would provide in this paper we propose a simple test for the existence of spillovers from local news pro gramming asking if the presence of local television news affects civic behavior the ubiq uity of local news programming across all us metro areas makes it impossible to study its effects on the general population in contrast the availability of spanish language news has increased considerably in recent years providing us with an experiment to study the effect of local news on one important measure of civic engagement voter turnout in local elections in particular we use a differencing approach asking whether hispanic voter turnout is higher in relation to non hispanic turnout in metro areas with spanish language local television news our results indicate that spanish language local television news raises hispanic turnout by more than 4 percentage points local news targeted at hispanics has no effect on the participa tion of non hispanics and as one would expect a significantly smaller effect in years with a presidential race in markets with spanish language news about a quarter of hispanics turn to these programs our estimates thus imply that news in spanish caused about a fifth of spanish language news viewers to start voting interestingly hispanics with access to news in spanish do not increase the time they spend watching news content analyses of spanish language news programs in the united states find that these shows are much more likely to report on

signaling and indirect taxation commodities communicate we investigate optimal indirect taxation when both the intrinsic qualities of goods and signaling motivate consumption choices optimal indirect taxes are introduced into a monotonic signaling game we provide sufficient conditions for the uniqueness of the d1 sequential equilibrium strategies in the case of pure costly signaling signaling goods can in equilibrium be taxed without burden when commodities serve both intrinsic consumption and signaling optimal taxes are characterized by a ramsey rule which deals with distortions resulting from signaling

taxing sin goods and subsidizing health care we consider a two period model in the first period individuals consume two goods one is sinful and the other is not the sin good brings pleasure but has a detrimental effect on second period health and individuals tend to underestimate this effect in the second period individuals can devote part of their saving to improve their health status and thus compensate for the damage caused by their sinful consumption we consider two alternative specifications concerning this second period health care decision either individuals acknowledge that they have made a mistake in the first period out of myopia or ignorance or they persist in ignoring the detrimental effect of their sinful consumption we study the optimal linear taxes on sin good consumption saving and health care expenditures for a paternalistic social planner we compare those taxes in the two specifications we show under which circumstances the first best outcome can be decentralized and we study the second best taxes when saving is unobservable

an alternative way to model merit good arguments abstract besley j public econ 35 1988 371 uses a scaling approach to model merit good arguments in commodity tax policy in this paper i question this approach on the grounds that it produces wrong recommendations taxation subsidisation of merit demerit goods whenever the demand for the de merit good is inelastic i propose an alternative approach that does not suffer from this deficiency and that allows for a straightforward interpretation

spatial differentiation and vertical mergers in retail markets for gasoline this paper studies an empirical model of spatial competition applied to gasoline markets the main feature is to specify commuting paths as the locations of consumers in a hotelling style model as a result spatial differentiation depends in an intuitive way on the structure of the road network and the direction of traffic flows the model is estimated using panel data on the quebec city gasoline market and used to evaluate the consequences of a recent vertical merger difference in difference and counterfactual simulation methods are compared and the results to a large extent validate the assumptions of the demand model jel g34 l13 l42 l81 q41 r41

upstream innovation and product variety in the u s home pc market this article investigates the welfare implications of the rapid innovation in central processing units cpus and asks whether it results in inefficient elimination of basic personal computer pc products i analyse a game in which firms make multiple discrete product choices and tackle challenges such as partial identification and sample selection estimation results demonstrate that the demand for pcs is highly segmented and that fixed costs consume a substantial portion of the per unit producer profit the estimated model implies that intel s introduction of its pentium m chip contributed significantly to the growth of the mobile pc segment and to consumer welfare the lion s share of the benefits to consumers was enjoyed by the 20 least price sensitive consumers i also find that the pentium m crowded out the pentium iii and pentium 4 technologies and that the benefits to consumers from keeping those older products on the shelf would have been comparable to the added fixed costs while total welfare cannot be increased by keeping older technologies on the shelf such a policy would have allowed the benefits from innovation to trickle down to price sensitive households improving their access to mobile computing

the old boy and girl network social network formation on university campuses this paper documents the structure and composition of social networks on university campuses and investigates the processes that lead to their formation using administrative data and information from facebook com we document the factors that are the strongest predictors of whether two students are friends race is strongly related to social ties even after controlling for a variety of measures of socioeconomic background ability and college activities we develop a model of the formation of social networks that decomposes the formation of social links into effects based upon the exogenous school environment and effects of endogenous choice arising from preferences for certain characteristics in one s friends we use student level data from an actual social network to calibrate the model we simulate the social network under alternative university policies aimed at reducing social segmentation we find that changes in the school environment that affect the likelihood that two students interact have only a limited potential to reduce the racial segmentation of the social network

a simple model for merit good arguments abstract in this paper we examine a way of representing merit goods by allowing governments to apply a specific form of correction to consumers preferences the model builds upon an approach to the analysis of taste and quality change due to fisher and shell we look at the first best allocation of resources where this is done we also consider second best policies in which the government must charge the same price to all consumers of the merit good and when optimal lump sum transfers are not available

optimal taxation when people do not maximize well being abstract i derive the optimal nonlinear income tax when individuals do not necessarily maximize their own well being this generates a corrective argument for taxation optimal marginal taxes are higher lower if individuals work too much too little from a well being point of view i allow for multidimensional heterogeneity and derive the optimal tax schedule in terms of measurable sufficient statistics one of these statistics measures the degree to which individuals fail to optimize their labor supply i empirically estimate this by using british life satisfaction data as a measure of well being i find that low income workers tend to work too little and high income workers too much providing a motive for lower marginal tax rates at the bottom and higher marginal tax rates at the top of the income distribution

optimal non linear income taxation for the alleviation of income poverty there has been much discussion recently of structuring tax and transfer programs to ensure that resources go to the poor with minimal leaks to the nonpoor the poor have no incentive to earn income with 100 percent marginal tax rates but how high or low the marginal rate of taxation should be and how they should vary with income is a complex issue and opinions vary social security schemes that withdraw benefits represent an extremely high effective marginal tax rate other schemes call for relatively low marginal tax rates at the bottom of the income distribution which tax transfer schedule does most to reduce poverty the issue is one of optimal nonlinear income taxation the authors show that one of the key theoretical results of the welfarist literature is overturned if it is desirable for everybody to work the optimal marginal tax rate on the very poorest individuals is strictly negative they argue that the nonwelfarist perspective points toward lower marginal tax rates in the lower part of the income distribution than does the welfarist perspective but numerical simulations suggest that the effect is of limited quantitative significance using conventional functional forms and parameter values optimal marginal tax rates on the poor are in the 60 70 percent range

a measure of segregation based on social interactions we develop an index of segregation based on two premises 1 a measure of segregation should disaggregate to the level of individuals and 2 an individual is more segregated the more segregated are the agents with whom she interacts we present an index that satisfies 1 and 2 and that is based on agents social interactions the extent to which blacks interact with blacks whites with whites etc we use the index to measure school and residential segregation using detailed data on friendship networks we calculate levels of within school racial segregation in a sample of u s schools we also calculate residential segregation across major u s cities using block level data from the 2000 u s census

asymmetric and non atmospheric consumption externalities and efficient consumption taxation abstract we analyze the effects of a generalized class of negative consumption externalities asymmetric and non atmospheric on the structure of efficient commodity tax programs households are not only concerned about consumption reference levels that is they gain utility from keeping up with the joneses but they also exhibit altruism two sets of efficient tax regimes are compared based on a welfarist and a non welfarist optimality criterion respectively altruism turns out not to be at odds with the consumption externalities rather altruism implicates a bound on efficient utility allocations a non welfarist government tolerates less inequality than a welfarist one in the welfarist non welfarist case first best personalized commodity tax rates respond highly sensitively barely to whether or not a consumption externality is asymmetric or non atmospheric if personalized commodity tax rates are not available second best case the tax rate on a non positional good is typically different from zero for corrective reasons for plausible functional forms and parameter values numerical simulations suggest that second best tax rates are rather insensitive with respect to both the optimality criterion and the nature of the consumption externality

when individual preferences defy sustainability can merit good arguments close the gap in this paper we discuss how merit good arguments may contribute to discussions about sustainability to this end we clarify how merit good arguments deviate from individual preferences and relate the justification for deviations from individual preferences to two conceptions of well being an informed preference satisfaction and a perfectionist conception building on this framework we analyze how merit good arguments can be helpful for discussing sustainability as justice what challenges merit good arguments pose to future generations and whether they can serve as a normative justification for green nudges the analysis yields two main insights first a reflection on the concept of merit goods is helpful in sorting out the different justifications that sustainability interventions may rely on in particular it allows separating the challenges of redistribution internalization of externalities and increasing individual consumption of particular merit goods such as health care or education more clearly second the precise notion of merit goods by itself however only offers a limited contribution and does not represent a blank check to justify deviations from individual preferences

the first shall be last entrepreneurship and communist cadres in the transition from socialism this article reviews the sociological literature on the transition from socialism to capitalism it distinguishes between the erosion and transition phases and between traditional and corporate segments in the emerging private sector panel survey data from hungary show that during the transition ex communist cadres maintain their advantageous position and do especially well in the more dynamic corporate segment they are successful because human capital is important in both capitalism and socialism and because the cadres are able to convert past political power to economic advantage contrary to the findings of studies based only on agriculture the transition increases income inequalities

how segregated is urban consumption we provide measures of ethnic and racial segregation in urban consumption using yelp reviews we estimate how spatial and social frictions influence restaurant visits within new york city transit

learning from the crowd regression discontinuity estimates of the effects of an online review database internet review forums increasingly supplement expert opinion and social networks in informing consumers about product quality however limited empirical evidence links digital word of mouth to purchasing decisions we implement a regression discontinuity design to estimate the effect of positive yelp com ratings on restaurant reservation availability an extra half star rating causes restaurants to sell out 19 percentage points 49 more frequently with larger impacts when alternate information is more scarce these returns suggest that restaurateurs face incentives to leave fake reviews but a rich set of robustness checks confirm that restaurants do not manipulate ratings in a confounding discontinuous manner

federalism partial prohibition and cross border sales evidence from recreational marijuana abstract marijuana is partially prohibited though banned federally it is available to 1 in 4 u s adults under state statutes we measure the size of the interstate trade generated by state level differences in legal status with a natural experiment oregon allowed stores to sell marijuana for recreational use on october 1 2015 next to washington where stores had been selling recreational marijuana since july 2014 using administrative data covering the universe of washington s sales and a differences in discontinuities approach we find retailers along the oregon border experienced a 36 decline in sales immediately after oregon s market opened we investigate the home location of recent online reviewers of marijuana retailers and find similar cross border patterns by the end of washington s 2018 fiscal year our results imply that washington had earned between 44 million and 75 million in tax revenue from cross border shoppers these cross border incentives may create a race to legalize

structural change and post socialist stratification labor market transitions in contemporary russia in russia market transition has led to sweeping structural changes a long recession growth of the private sector expansion of certain branches of the economy and contraction of others a decrease in average firm size and regional differentiation in economic performance these structural changes had important consequences for stratification through their effects on individual labor market outcomes analyses of nine types of individual labor market transitions in russia using 1991 1997 work history data show that structural location has strong effects human capital and membership in the communist party of the soviet union also influence labor market prospects but not in ways consistent with general theories about how market transition affects stratification processes structural change plays a key role in determining the impact of market reforms on stratification but market transition produces variable patterns of structural change in different countries and in different regions within a single country the structural perspective demonstrates why market transition has variable consequences for stratification different prior conditions and reform policies produce different patterns of structural change

ex post welfare economics and the theory of merit goods in recent years a number of papers have questioned the extension of the main theorems of welfare economics to a world of uncertainty stemming from the work of arrow 1953 and debreu 1959 the arrow debreu extension is based on the idea that consumer preferences may be defined on state contingent commodities as a special but important case these preferences may be represented by von neumann morgenstern utilities with this interpretation of the commodity space the main theorems of weltare economics remain valid in a world of uncertainty a competitive equilibrium is a pareto optimum a pareto optimum can be sustained as a competitive equilibrium and the diagnosis of the causes of market failure remains as before there are several reasons why one may feel uneasy about this construction a good deal of attention has been paid to the assumption of universality of markets necessary to establish the connection between equilibrium and optimum on a deeper level perhaps are the doubts that one may have about the criterion of welfare or efficiency first should social welfare be a function of individuals expected utilities or should the appropriate concept be that of expected welfare second if probability beliefs are not identical across individuals whose probabilities if any should be used for welfare evaluation in the next section we review some concepts and results in the recent literature on ex post welfare economics and in section ii it is argued that this literature can provide the foundations for a more satisfactory theory of merit goods a concept originally introduced by musgrave 1959 this idea is applied in section iii to a model with a complete set of markets in the arrow debreu sense and in sections iv and v to an incomplete markets model which provides the most natural framework for the study of merit goods various remarks on further aspects of the problem are collected in the concluding section of the paper

optimum taxation with errors in administration abstract the paper compares the welfare levels which can be achieved by two distinct tax regimes lump sum taxation where one attempts to identify individuals and allocate transfers or subsidies on the basis of characteristics and income taxation where characteristics are not observed but personal incomes are measured and taxed where there are no errors in classifying individuals lump sum taxation is superior but where mistakes are made in the allocation of lump sum grants or subsidies income taxation may be more attractive the level of errors where the regimes are equally desirable in terms of social welfare is computed in simple models following that of feldstein 1973 where there is strong aversion to inequality then income taxation becomes preferable at quite small errors in analysing income taxation it is shown that in the feldstein model with endogenous wages the marginal tax rate in optimum income taxation on the more skilled is negative and that on the less skilled is positive in contrast to the standard results see seade 1977 with exogenous wages

optimal redistributive taxation when government s and agents preferences differ abstract paternalism merit goods and specific egalitarianism are concepts we sometimes meet in the literature the thing in common is that the policy maker does not fully respect the consumer sovereignty principle and designs policies according to some other criterion than individuals preferences using the self selection approach to tax problems developed by stiglitz stiglitz j e 1982 self selection and pareto efficient taxation journal of public economics 17 213 240 and stern stern n h 1982 optimum taxation with errors in administration journal of public economics 17 181 211 the paper provides a characterization of the properties of an optimal redistributive mixed tax scheme in the general case when the government evaluates individuals well being using a different utility function than the one maximized by private agents

self selection and pareto efficient taxation abstract this paper analyses the set of pareto efficient tax structures the formulation of the problem as one of self selection not only shows more clearly the similarity between this problem and a number of other problems such as the optimal pricing of a monopolist which have recently been the subject of extensive research but also allows the derivation of a number of new results we establish i under fairly weak conditions randomization of tax structures is desirable ii if different individuals are not perfect substitutes for one another in production then the general equilibrium effects until now largely ignored in the literature of changes in the tax structure may be dominant in determining the optimal tax structure in particular if the relative wage of high ability and low ability individuals depends on the relative supplies of labor the optimal tax structure entails a negative marginal tax rate on the high ability individuals and a positive marginal tax rate on the low ability individuals the marnitude of which depends on the elasticity of substitution iii if individuals differ in their preferences pareto efficient taxation may entail negative marginal tax rates for high incomes while iv if wage income is stochastic the marginal tax rate at the upper end may be 100 our analysis thus makes clear that the main qualitative properties of the optimal tax structure to which earlier studies called attention are not robust to these attempts to make the theory more realistic