the carnegie conjecture some empirical evidence this paper examines tax return generated data on the labor force behavior of people before and after they receive inheritances the results are consistent with andrew carnegie s century old assertion that large inheritances decrease a person s labor force participation for example a single person who receives an inheritance of about 150 000 is roughly four times more likely to leave the labor force than a person with an inheritance below 25 000 additional albeit weaker evidence suggests that large inheritances depress labor supply even when participation is unaltered warren kendall heir to an insurance company fortune says he s worth about 5 million and has an income of about oh 300 and some thousand a year h e has never held a job or wanted to going down to sea in cruise ships is his full time pursuit he estimates that he has taken about 250 cruises over the past couple of decades spending at least 50 percent to 70 percent of the year afloat morgenthaler 1991 p al

income housing wealth and gender inequality gender inequalities in income are relatively widely documented but their realisation in the housing system is less well understood this paper examines the relationship between incomes access to housing and housing costs among widowed divorced separated and never married single people in australia while the relative financial advantages of single men are sustained throughout the housing system there is some evidence that gender discrepancies in income are reduced once housing costs are taken into account lone mothers however fare least well and face a disproportionate loss of disposable income through housing expenditures

the effect of inheritance receipt on retirement abstract this paper provides new evidence on how wealth shocks influence retirement behavior economic theory generally posits that leisure is a normal good yet it is difficult to obtain reliable empirical estimates of the wealth effect because wealth is correlated with numerous unobservable characteristics that affect labor supply we use inheritance receipt as a wealth shock and find that it is associated with a significant increase in the probability of retirement especially when the inheritance is unexpected this evidence has important implications for how public policies such as pension or tax reform may influence retirement behavior through the wealth effect

the sensitivity of consumption of oil products to price changes an econometric investigation abstract this paper presents a small econometric model of the supply and demand of motor spirit diesel fuel oil and other gas diesel oil by modelling at this level of disaggregation it is possible to identify the dynamic structure of each market and estimate own price and cross price elasticities

a dynamic putty semi putty model of aggregate energy demand energy conservation dominated the adjustments of the energy decade the present study develops further the aggregate analysis to revisit the question of energy flexibility within the context of a multi factor dynamic model the resulting model preserves various adding up constraints cross equation parameter restrictions and consistent indexes within an ad hoc stock adjustment dynamic process applications to data for the usa and japan confirm the estimates of large long run elasticities under the assumption of a slow adjustment process

what explains changes in retirement plans during the great recession we examine changes in subjective probabilities regarding retirement between the 2006 and 2008 waves of the health and retirement study using a first difference approach to eliminate individual heterogeneity we find that the steep drop in asset prices in 2008 increased the reported probability of working at age 62 during the great recession increasing unemployment at least partly attenuated this effect but subjective probabilities of working did not respond to changes in housing markets older workers probabilities of working were more sensitive to fluctuations in the stock market but less responsive to changes in labor market conditions

effects of allocative inefficiency on resource allocation and energy substitution in pakistan s manufacturing empirical economists often ignore that firms may not minimise costs in the presence of allocative inefficiency assuming strict cost minimisation when actually cost is not minimum may produce biased parameter estimates and elasticities we consider a method for estimating effects of allocative inefficiency on resource allocation and factor substitution and apply it to data from pakistan s manufacturing results show strong evidence of allocative inefficiency leading to over utilization of raw material and capital viz a viz energy and labour and increasing cost of production of firms by 1 per annum computed elasticities diverge from their true values in the presence of allocative inefficiency

life cycle individual thrift and the wealth of nations this paper provides a review of the theory of the determinants of individual and national thrift that has come to be known as the life cycle hypothesis lch of saving applications to some current policy issues are also discussed part i deals with the state of the art on the eve of the formulation of the lch some 30 years ago part ii sets forth the theoretical foundations of the model in its original formulation and later amendment calling attention to various implications distinctive to it and sometimes counter intuitive it also includes a review of a number of crucial empirical tests both at the individual and the aggregate level part iii reviews some applications of lch to current policy issues though only in sketchy fashion as space constraints prevent fuller discussion this abstract was borrowed from another version of this item

the behavioral life cycle hypothesis self control mental accounting and framing are incorporated in a behavioral enrichment of the life cycle theory of saving called the behavioral life cycle blc hypothesis the key assumption of the blc theory is that households treat components of their wealth as nonfungible even in the absence of credit rationing specifically wealth is assumed to be divided into three mental accounts current income current assets and future income the temptation to spend is assumed to be greatest for current income and least for future income considerable empirical support for the blc theory is presented primarily drawn from published econometric studies

housing the market versus the welfare state model revisited most housing policy analyses conclude that housing is a commodity that cannot be efficiently and equitably allocated via the market process major contentions in this respect are that market allocation will result in suboptimal housing investment and that the market process leads to the creation of slums furthermore the proponents of the welfare housing model argue that welfare state interventions have raised the average level of housing consumption above the level that would have been achieved under a more market oriented allocative model however both theory and evidence fail to support these beliefs

what the stock market decline means for the financial security and retirement choices of the near retirement population this paper investigates the effect of the current recession on the retirement age population data from the health and retirement study suggest that those approaching retirement age early boomers ages 53 to 58 in 2006 have only 15 2 percent of their wealth in stocks held directly or in defined contribution plans or iras their vulnerability to a stock market decline is limited by the high value of their social security wealth which represents over a quarter of the total household wealth of the early boomers in addition their defined contribution plans remain immature so their defined benefit plans represent sixty five percent of their pension wealth simulations with a structural retirement model suggest the stock market decline will lead the early boomers to postpone their retirement by only 1 5 months on average health and retirement study data also show that those approaching retirement are not likely to be greatly or immediately affected by the decline in housing prices we end with a discussion of important difficulties facing those who would use labor market policies to increase the employment of older workers

bulls bears and retirement behavior the authors examine the relationship between stock market performance and retirement behavior they first present a descriptive analysis of the wealth holdings of older households and simulate the labor supply response among stockholders necessary to generate observed retirement patterns few house holds they find have substantial stock holdings and these holdings would have to be extremely responsive to market fluctuations to explain observed labor force patterns the authors then exploit stock market fluctuations since the early 1980s particularly the boom and bust between 1995 and 2002 along with variation in stock exposure to generate a double quasi experiment comparing the retirement and labor force re entry patterns over time of those more and less exposed to the market any difference in behavior that emerged during the boom should have reversed itself during the bust the authors find no evidence that changes in the stock market drove aggregate trends in labor supply

climate change policy market structure and carbon leakage abstract the 1997 kyoto protocol on climate change obliges the industrialized countries to initiate the international effort of abating anthropogenic greenhouse gas ghg emissions if such an initiative is to be taken the associated competitive effects may lead to significant relocation of developed countries energy intensive production this paper examines this issue i adopt an oligopolistic structure combined with increasing returns to scale production technologies to represent the strategic interaction among the firms producing energy intensive products this representation is then embedded within a multi regional computable general equilibrium model which in turn is used for quantifying these relocational effects the results suggest that significant relocation of energy intensive industries away from the oecd may occur depending on the type of market structure with leakage rates as high as 130 in which case ghg control policies in the industrialized countries actually lead to higher global emissions

the effect of the financial crisis on the retirement plans of older workers in england this letter revisits the question of how wealth shocks influence retirement behaviour exploiting the dramatic changes in uk asset prices between 2008 and 2009 as a source of such shocks we find no evidence that the wealth shocks arising from this recent financial crisis affected the retirement plans of older workers in england

what can wages and employment tell us about the uk s productivity puzzle as in many european countries labour productivity in the uk has been stagnant since the start of the great recession this article uses individual data on employment and wages to try to understand whether real wage flexibility can help shed light on the uk s productivity puzzle it finds perhaps unsurprisingly that workforce composition cannot explain the reduction in wages and hence productivity that we observe even compared to previous recessions instead real wages have fallen significantly within jobs this time round why one possibility we investigate is that the labour supply in the uk is higher compared to previous recessions

consumption responses to a large shock to financial wealth evidence from italy we estimate marginal propensities to consume from wealth shocks for italian households early in the great recession large asset price shocks in 2007 2008 underpin instrumental variables a euro fall in risky financial wealth resulted in cuts in annual total non durable consumption of 8 5 9 5 5 5 7 cents we find small effects on food spending counterfactuals indicate financial wealth effects were relatively important for consumption falls in italy in 2007 08 the estimated effects are consistent with a simulated lifecycle model that captures the wealth shock also consistent with the model are findings of stronger wealth effects for agents who were pessimistic about stock returns

the co2 abatement game costs incentives and the enforceability of a sub global coalition abstract this paper studies the economic incentives and the institutional issues governing the outcomes of a short term climate change policy package guided by the united nations framework convention on climate change and the berlin mandate initiatives game theoretic tools and the global trade environment interface are explored within a 26 region 13 commodity computable general equilibrium framework to characterize the incentives of oecd regions to comply with a non binding agreement in a carbon abatement coalition the results showed that in the absence of side payments the achievement of such a coalition might require the design of suitable trade instruments

housing and poverty a major goal of social programs in a time of fiscal austerity is to focus available assistance on those households in the greatest need this seemingly simple dictum has become increasingly difficult to follow as the dynamics of poverty have been clarified through analysis of longitudinal panel data in recent years we can illustrate the importance of these dynamics using the following findings about the future incomes of the 22 million people in poverty in 1967

asymmetric substitutability between energy and capital evidence from the manufacturing sectors in 10 oecd countries abstract this paper investigates the substitutability between energy and capital in the manufacturing sectors of ten oecd countries since 1980 by applying a cost function approach that has been widely used to analyze industrial energy demand first we attempt to determine the source of the disagreement in the literature on the substitutability between energy and capital and reach a conclusion regarding the substitutability between energy and capital dividing energy and capital into sub inputs we analyze their substitutability the empirical results indicate that fuel tends to complement capital in most countries whereas electricity and capital are substitutes thus this study confirms that heterogeneity in energy sources is a primary component of the systematic variation in the substitutability between energy and capital second we examine asymmetric substitutability between energy and capital by estimating the morishima elasticity of substitution the estimates of the morishima elasticity of substitution demonstrate that the substitution of energy for capital has dominated the substitution of capital for energy this asymmetric substitutability is natural from the producer perspective because capital costs are much greater than energy costs in most countries these results imply that the adoption of energy saving technologies has not been induced in response to increased energy prices

energy elasticities under divisia and btu aggregation abstract this paper considers two methods of energy aggregation divisia and btu a dynamic demand model is used to study the response of energy use to price and income changes under these two aggregation schemes while the short run responses of energy use are found to be similar the long run response is greater under divisia than under btu aggregation especially in periods of marked changes in energy prices

crash and wait the impact of the great recession on the retirement plans of older americans this study uses data from pre and post crash surveys from the cognitive economics study to examine the impact of recent stock and labor market wealth losses on the planned retirement ages of older americans regression estimates imply that the average wealth loss between july 2008 and may june 2009 is associated with an increase in planned retirement age of approximately 2 5 months furthermore pessimism about future stock market returns is found to amplify the impact of wealth losses on retirement timing