credit constraints and the phenomenon of child labor abstract this paper develops an overlapping generations general equilibrium model where inefficient child labor arises due to credit constraints it derives a positive relationship between inequality in the distribution of income and the incidence of child labor looking at policy implications it shows how trade sanctions against countries using child labor may fail to reduce the incidence of child labor it discusses some alternative policies to reduce the incidence of child labor

effects of economic shocks on children s employment and schooling in brazil abstract this paper uses longitudinal employment survey data to analyze the impact of household economic shocks on the schooling and employment transitions of young people in metropolitan brazil the paper uses data on over 100 000 children ages 10 16 from brazil s monthly employment survey pme from 1982 to 1999 taking advantage of the rotating panels in the pme we compare households in which the male household head becomes unemployed during a four month period with households in which the head is continuously employed probit regressions indicate that an unemployment shock significantly increases the probability that a child enters the labor force drops out of school and fails to advance in school the effects can be large implying increases of as much as 50 in the probability of entering employment for 16 year old girls in contrast shocks occurring after the school year do not have significant effects suggesting that these results are not due to unobserved characteristics of households that experience unemployment shocks the results suggest that some households are not able to absorb short run economic shocks with negative consequences for children

the effects of human resource management practices on productivity a study of steel finishing lines the authors investigate the productivity effects of innovative employment practices using data from a sample of thirty six homogeneous steel production lines owned by seventeen companies the productivity regressions demonstrate that lines using a set of innovative work practices which include incentive pay teams flexible job assignments employment security and training achieve substantially higher levels of productivity than do lines with the more traditional approach which includes narrow job definitions strict work rules and hourly pay with close supervision their results are consistent with recent theoretical models which stress the importance of complementarities among work practices

does child labor decline with improving economic status between 1993 and 1997 child labor in vietnam declined by nearly 30 percent while the country s gdp grew by nearly 9 percent per year on average using a simple nonparametric decomposition i investigate the relationship between improvements in per capita expenditure and child labor with a panel data set that spans this episode of growth in vietnam improvements in per capita expenditure can explain 80 percent of the decline in child labor that occurs in households whose expenditures improve enough to move out of poverty this finding suggests a previously undocumented role for economic growth in the amelioration of child labor

wind insurance and mitigation in the coastal zone this paper presents the only study analyzing the decision to purchase wind coverage for individuals whose standard homeowner s policy excludes wind and one of very few analyses of the decision to undertake wind mitigation measures because these two decisions are closely related a simultaneous mixed process approach is used that allows for correlated disturbances across probit insurance and tobit mitigation equations results indicate a positive correlation between errors of the insurance and mitigation models conditioning on covariates households that hold wind insurance tend to engage in greater levels of wind mitigation

peer pressure and partnerships partnerships and profit sharing are often claimed to motivate workers by giving them a share of the pie but in organizations of any significant size the free rider effects would seem to choke off

complementarity and external linkages the strategies of the large firms in biotechnology in biotechnology large firms enter into different kinds of linkages with universities and small medium sized research intensive firms we test the hypothesis that the strategies of external linkage of the large firms with other parties are complementary to one another we show that if any two strategies are complementary i e undertaking more of one strategy raises the marginal value of the other then they are positively correlated using data for a sample large us european and japanese chemical and pharmaceutical producers we find that the strategies above are positively correlated even after controlling for firm specific characteristics

child labor and the labor supply of other household members evidence from 1920 america this paper analyses the effect of child labor on household labor supply using 1920 us census micro data the aim of the analysis is to understand who in the household benefits from child labor in order to identify a source of exogenous variation in child labor i use state specific child labor laws i find that a rise in the proportion of working children by household is associated with no variation in parents labor supply i also find a strong negative externality among children as the proportion of working children by household rises everything else equal the probability that each child works falls while the probability that he attends school rises this suggests that parents redistribute entirely the returns from child labor to the children in the household consistent with a model of household labor supply with fully altruistic parents

the economics of child labor if child labor as a mass phenomenon occurs not because of parental selfishness but because of the parents concern for the household s survival the popular argument for banning child labor loses much of its force however this assumption about parental decision making coupled with the assumption of substitutability in production between child and adult labor could result in multiple equilibria in the labor market with one equilibrium where children work and another where adult wage is high and children do not work the paper establishes this result and discusses its policy implications copyright 1998 by american economic association

motivations monitoring technologies and pay for performance monitoring technologies and pay for performance pfp contracts are becoming popular solutions to improve public services delivery their track record is however mixed to show why this may be the case this paper develops a principal agent model where agents motivations vary and so the effectiveness of monitoring technologies in such a set up it shows that i monitoring technologies should be introduced only if agents motivations are poor ii optimal pfp contracts are non linear non monotonic in agents motivations and monitoring effectiveness iii investments aimed at improving agents motivations and monitoring quality are substitutes when agents are motivated complements otherwise iv if the agents type is private information the more and less motivated agents could be separated through a menu of pfp non pfp contracts designed in a way that only the less motivated ones choose the pfp

randomized evaluations of educational programs in developing countries some lessons this paper reviews recent randomized evaluations of educational programs in developing countries including programs to increase school participation to provide educational inputs and to reform education it then extracts some lessons for education policy and for the practice and political economy of randomized evaluations

child labor in the global economy few issues in developing countries draw as much popular attention as child labor this paper begins by quantifying the extent and main characteristics of child labor it then considers the evidence on a range of issues about child labor fundamentally child labor is a symptom of poverty low income and poor institutions are driving forces behind the prevalence of child labor worldwide this study concludes by assessing the policy options to reduce worldwide child labor

consumer willingness to pay to reduce the probability of retail foodborne pathogen contamination abstract the us department of agriculture applies a cost of illness approach to value reductions in morbidity which may understate the projected benefits from proposed food safety improvements by ignoring costs such as pain suffering and worry we use a national survey with a hypothetical food choice experiment to estimate a more comprehensive measure of consumer willingness to pay for food safety improvements our approach differs from previous evaluations of food safety improvements because we 1 provide the respondent with information about the promised change in the probability of pathogen contamination in retail food packages rather than changes in the probability of becoming ill 2 elicit changes in respondents subjective probability of becoming ill and 3 elicit predicted changes in the quantity demanded for products that have enhanced food safety properties we estimate the consumer s choice between a safety enhanced and an existing product the change in subjective probability of contracting foodborne illness associated with the enhanced product and the change in demand for the enhanced product in a manner that recognizes the correlation among unobserved elements the aggregated results suggest benefit estimates that are significantly larger than previous estimates for similar improvements

the power of incentives variable pay is usually defined as pay that is tied to some measure of worker output the most typical form of variable pay historically was the piece rate which was more prevalent during the early part of the 20th century than it is at the beginning of the 21st there is a resurgence in variable pay particularly as it relates to executives whose pay is tied to output through some mechanism like stock options or bonuses that depend on individual or firm performance why use variable pay the typical reaction is that variable pay provides incentives to put forth effort although true discrete pay schemes also generate incentives much of the confusion in the literature results from the use of the terms high powered and low powered incentives which connote difference in ability to elicit worker effort it is more informative to make distinctions between discrete and continuous pay and between inputbased and output based pay 2 pay structures can be summarized by the following equation

information customization and food choice in this article we employ a hypothetical discrete choice experiment dce to examine how much consumers are willing to pay to use technology to customize their food shopping we conjecture that customized information provision can aid in the composition of a healthier shop our results reveal that consumers are prepared to pay relatively more for individual specific information as opposed to generic nutritional information that is typically provided on food labels in arriving at these results we have examined various model specifications including those that make use of ex post de briefing questions on attribute non attendance and attribute ranking information and those that consider the time taken to complete the survey our main results are robust to the various model specifications we examine

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

is child labor inefficient we build a model of child labor and study its implications for welfare we assume that there is a trade off between child labor and the accumulation of human capital even if parents are altruistic and child labor is socially inefficient it may arise in equilibrium because parents fail to fully internalize its negative effects this occurs when bequests are zero or when capital markets are imperfect we also study the effects of a simple ban on child labor and derive conditions under which it may be pareto improving in general equilibrium we show that the implications of child labor for fertility are ambiguous

testing for complementarities in reduced form regressions a note abstract in many cases it is important to know whether choice variables for a decision maker are mutual complements but a structural model cannot be estimated a unified framework for testing for complementarity through reduced form regressions is provided

paradox lost firm level evidence on the returns to information systems spending the productivity paradox of information systems is is that despite enormous improvements in the underlying technology the benefits of is spending have not been found in aggregate output statistics one explanation is that is spending may lead to increases in product quality or variety which tend to be overlooked in the aggregate statistics even if they increase output at the firm level furthermore the restructuring and cost cutting that are often necessary to realize the potential benefits of is have only recently been undertaken in many firms our study uses new firm level data on several components of is spending for 1987 1991 the dataset includes 367 large firms which generated approximately 1 8 trillion dollars in output in 1991 we supplemented the is data with data on other inputs output and price deflators from other sources as a result we could assess several econometric models of the contribution of is to firm level productivity our results indicate that is spending has made a substantial and statistically significant contribution to firm output we find that the gross marginal product mp for computer capital averaged 81 for the firms in our sample we find that the mp for computer capital is at least as large as the marginal product of other types of capital investment and that dollar for dollar is labor spending generates at least as much output as spending on non is labor and expenses because the models we applied were similar to those that have been previously used to assess the contribution of is and other factors of production we attribute the different results to the fact that our data set is more current and larger than others explored we conclude that the productivity paradox disappeared by 1991 at least in our sample of firms

experimental auction procedure impact on valuation of quality differentiated goods despite increased use of experimental auctions a myriad of different procedures are being employed without formal consideration of how the procedures might affect results this study investigates the effect of several procedural issues on valuation estimates from experimental auctions results indicate the second price auction generates higher valuations than english becker degroot marschak bdm and random nth price auctions especially in latter bidding rounds and that random nth price auction yields lower valuations than english and bdm auctions we find that endowing subjects with a good prior to eliciting bids can have an impact on valuations but the effect varies across auction mechanism

industry and firm effects on it diffusion processes firm level evidence in italian enterprises this article examines the antecedents and performance consequences of capabilities developed from the use of information technology it in a sample of 186 italian large enterprises attention is given to the influence of industry and firm characteristics on the creation of capabilities and on the returns from it investments our work makes three principal contributions first the it diffusion patterns reveal that these technologies have a dual nature some capabilities derived from it use i e administrative capabilities diffuse evenly across industries because the underlying technologies easily adapt to industry and firm specific conditions in contrast the use of it in supporting other capabilities such as those related to product development is less developed and more concentrated in the high tech and information service sectors second using a resource based perspective this articles shows the positive effects that firm specific preconditions have on the accumulation of it resources and capabilities that exhibit a rare diffusion at the industry level third given industry level differences in competitive environments we show how the value appropriation of capabilities that firms have developed using it depends on industry type with hi tech and information services industries exhibiting lower profit returns

the provision of incentives in firms i ncentives are the essence of economics despite many wide ranging claims about their supposed importance there has been little empirical assessment of incentive provision for workers the purpose of this paper is to critically overview existing work on the provision of incentives since the interests of workers and their employers are not always aligned a large theoretical literature has emphasized how firms design compensation contracts to induce employees to operate in the firm s interest this literature has reached into many areas of compensation and has pointed to a multitude of different mechanisms that can be used to induce workers to act in the interests of their employers these include piece rates options discretionary bonuses promotions profit sharing efficiency wages deferred compensation and so on my objective here is to evaluate this literature in the light of a growing empirical literature on compensation where possible i will address the literature from two perspectives first an underlying assumption of this literature is that individuals respond to contracts that reward performance accordingly i consider whether agents behave in this way and whether these responses are always in the firm s interest second i address whether firms write contracts with these responses in mind in other words do contracts look like the predictions of the theory incentives are provided to workers

comparing open ended choice experiments and experimental auctions an application to golden rice we use two experimental valuation methods to estimate consumer demand for genetically modified golden rice the first is an open ended choice experiment oece where participants name the quantities of golden rice and conventional rice demanded at each of several price combinations one of which will be randomly chosen as binding this allows us to estimate market demand by aggregating demand across participants this estimate of market demand also allows us to estimate own price elasticity and consumer surplus for golden rice comparing willingness to pay wtp estimates from the oece with those from a uniform price auction we find that oece wtp estimates exhibit less affiliation across rounds and the effects of positive and negative information under the oece are more consistent with prior expectations and existing studies we also find that while auction wtp estimates more than double across five rounds oece wtp estimates are stable across rounds and are always roughly equal to those from the final auction round

school subsidies for the poor evaluating the mexican progresa poverty program abstract this paper evaluates how the progresa program which provides poor mothers in rural mexico with education grants has affected enrollment poor children who reside in communities randomly selected to participate in the initial phase of the progresa are compared to those who reside in other control communities pre program comparisons check the randomized design and double difference estimators of the program s effect on the treated are calculated by grade and sex probit models are also estimated for the probability that a child is enrolled controlling for additional characteristics of the child their parents local schools and community and for sample attrition to evaluate the sensitivity of the program estimates these estimates of program short run effects on enrollment are extrapolated to the lifetime schooling and the earnings of adults to approximate the internal rate of return on the public schooling subsidies as they increase expected private wages

preference stability and choice consistency in discrete choice experiments we investigate preference stability and respondents levels of choice consistency within discrete choice experiments these are investigated via a discrete choice experiment featuring four information treatments and a retest survey completed 6 months after the first three information treatments concern a novel stem cell food technology with the fourth information treatment featuring a non novel technology we find stable welfare estimates over the three information treatments the use of emotive keywords does not systematically change wtp to avoid the stem cell food technology we find a significant wtp to avoid the non novel technology we find high levels of intertemporal preference stability and choice consistency the determinants of choice consistency are examined two factors are significant a measure of the choice task s complexity entropy and a novel measure of respondents cognitive capability derived within the survey we find a significant selection issue not previously identified in discrete choice experiment test retest studies with those opting to take the retest exhibiting greater choice consistency in the initial survey this suggests that studies which report high levels of test retest choice consistency without accounting for the selection issue are overstating population choice consistency

optimal sharing of foodborne illness prevention between consumers and industry the effect of regulation and liability consumers and the food industry can both prevent foodborne illness two questions are explored what is the socially optimal level of preventative effort by each and can tort and regulatory instruments induce such behavior analysis is complicated by two aspects of food safety technology one party s effort can affect the marginal effectiveness of the other party s effort and damage functions can be nonconvex previous analysis of accidents under torts and regulation fails to consider these generalizations indeed results concerning the ability of tort and regulatory instruments to induce first best and second best behavior often contradict previous results in the literature

digital technology diffusion a matter of capabilities incentives or both insufficient diffusion of new technologies has been quoted as one possible reason for weak productivity performance over the past two decades andrews et al 2016 this paper uses a novel data set of digital technology usage covering 25 industries in 25 european countries over the 2010 16 period to explore the drivers of digital adoption across two broad sets of digital technologies by firms cloud computing and back or front office integration the focus is on structural and policy factors affecting firms capabilities and incentives to adopt including the availability of enabling infrastructures such as high speed broadband internet managerial quality and workers skills and product labour and financial market settings we identify the effects of structural and policy factors based on the difference in difference approach pioneered by rajan and zingales 1998 and show that a number of these factors are statistically and economically significant for technology adoption specifically we find strong support for the hypothesis that low managerial quality lack of ict skills and poor matching of workers to jobs curb digital technology adoption and hence the rate of diffusion similarly our evidence suggests that policies affecting market incentives are important for adoption especially those relevant for market access competition and efficient reallocation of labour and capital finally we show that there are important complementarities between the two sets of factors with market incentives reinforcing the positive effects of enhancements in firm capabilities on adoption of digital technologies

the impact of group based credit programs on poor households in bangladesh does the gender of participants matter this paper estimates the impact of participation by gender in the grameen bank and two other group based micro credit programs in bangladesh on labor supply schooling household expenditure and assets the empirical method uses a quasi experimental survey design to correct for the bias from unobserved individual and village level heterogeneity we find that program credit has a larger effect on the behavior of poor households in bangladesh when women are the program participants for example annual household consumption expenditure increases 18 taka for every 100 additional taka borrowed by women from these credit programs compared with 11 taka for men

the self selection of complexity in choice experiments we investigate whether individuals will voluntarily increase the complexity of the tasks they complete within a discrete choice experiment dce we do this via a self selection of complexity design in which respondents choose whether to face choice sets comprising 3 4 or 6 alternatives we link this approach with the emerging excessive choice effect ece literature we find that 30 of the sample opt for the largest sets we test whether this choice of complexity reveals information about respondents capability commitment we find that it does since those with lowest initial error variance levels are most likely to later select the highest level of task complexity we argue that this result offers insights regarding the design of more cognitively efficient dce designs we consider the matching of respondents to the appropriate level of task complexity as analogous to the principal agent problem with asymmetric information rather than trying to understand respondents cognitive capability or commitment ex ante we propose that participants self select designs that achieve the researcher s objective of minimizing error variance copyright 2012 oxford university press

halving global poverty the goal of central importance to this paper is to cut in half the proportion of people living below 1 a day from around 30 percent of the developing world s population in 1990 to 15 percent by 2015 based on population projections in 1990 this would correspond to around one billion people exiting poverty this paper begins by discussing poverty trends on a global scale where the poor are located in the world and how their numbers have been changing over time it then discusses the relationship of economic growth and income distribution to poverty reduction finally it suggests an evidence based agenda for poverty reduction in the developing world full text available at official url

aggregation and linearity in the provision of intertemporal incentives we consider the problem of providing incentives over time for an agent with constant absolute risk aversion the optimal compensation scheme is found to be a linear function of a vector of n accounts which count the number of times that each of the n kinds of observable events occurs the number n is independent of the number of time periods so the accounts may entail substantial aggregation in a continuous time version of the problem the agent controls the drift rate of a vector of accounts that is subject to frequent small random fluctuations the solution is as if the problem were the static one in which the agent controls only the mean of a multivariate normal distribution and the principal is constrained to use a linear compensation rule if the principal can observe only coarser linear aggregates such as revenues costs or profits the optimal compensation scheme is then a linear function of those aggregates the combination of exponential utility normal distributions and linear compensation schemes makes computations and comparative statics easy to do as we illustrate we interpret our linearity results as deriving in part from the richness of the agent s strategy space which makes it possible for the agent to undermine and exploit complicated nonlinear functions of the accounting aggregates

the lulling effect the impact of child resistant packaging on aspirin and analgesic ingestions in 1972 the food and drug administration imposed a protective bottlecap requirement on aspirin and other selected drugs this regulation epitomizes the technological approach to social regulation the strategy for reducing children s poisoning risks was to design caps that would make opening containers of hazardous substances more difficult this engineering approach will be effective provided that children s exposure to hazardous products does not increase if however parents leave protective caps off bottles because they are difficult to open or increase children s access to these bottles because they are supposedly child proof the regulation may not have a beneficial effect indeed in this case there was no significant impact of the regulation on aspirin poisoning rates but there has been an alarming upward shift in the trend of analgesic ingestion rates since 1972 the source of this pattern appears to be attributable to a general reduction in parental caution with respect to such medicines which has had an adverse spillover effect on unregulated products the economic mechanisms involved can be best understood by considering the nature of individuals response to regulatory protection

food safety regulation an overview of contemporary issues abstract this article discusses a number of issues that are influencing the evolution of food safety regulation in developed and to a lesser extent developing countries whilst not definitive it aims to highlight those factors which are considered crucial to an understanding of contemporary food safety controls in both the public and private spheres these issues include criteria applied to assess the need justification for food safety regulation relationships between public and private food safety control systems alternative forms that public food safety regulation can take strategic responses to food safety regulation and the trade implications of national food safety controls the article serves as an introduction to these issues which are discussed at greater length in the other papers that make up this special issue of food policy

the welfare impact of food pathogen vaccines abstract vaccines against several common foodborne pathogens are being developed and could substantially alter the policy tools available to address foodborne illness however little analysis is available to suggest how social welfare would be affected by consumer and industry responses to these new vaccines to address this void we use stated preference data to estimate consumer willingness to pay wtp for food safety vaccines and then simulate the welfare impacts of subsidizing consumer purchases of the vaccine given two different industry responses maintaining current levels of food safety vigilance and reducing food safety vigilance due to a moral hazard response that undermines consumer confidence in food safety to obtain consumer preferences for the vaccine we simultaneously estimate a three equation model that recognizes the recursive nature of responses to questions probing respondents willingness to purchase vaccines and perceptions of the probability and severity of possible foodborne illness incidents and the joint distribution of unobservable components our simulations show large consumer wtp if vaccines are relatively inexpensive while the presence of moral hazard increases respondents willingness to pay and voluntary uptake of vaccine

impact of satisficing behavior in online surveys on consumer preference and welfare estimates conducting online surveys through consumer panels has become increasingly popular for researchers to assess consumers preferences and attitudes for the purpose of obtaining welfare estimates because they are inexpensive flexible and allow for fast feedback interestingly few studies have examined the behaviors of online survey panelists particularly their satisficing behaviors on welfare measures this study demonstrates the use of validation questions trap questions to detect survey respondents satisficing behavior and its impact on consumer choice willingness to pay wtp and consumer surplus cs estimates we find that respondents who fail a validation question vq are more likely to violate the weak axiom of revealed preferences warp in the choice experiment the estimates for preference parameters wtp and cs are statistically different between those who pass and those who fail the vq in addition the wtp and cs from respondents passing the vq in general have smaller variances than those from respondents failing the vq these results indicate that without controlling for potential satisficing behaviors online surveys may produce less efficient estimates estimates with larger variance of welfare measures

computing productivity firm level evidence we explore the effect of computerization on productivity and output growth using data from 527 large us firms over 1987 1994 we find that computerization makes a contribution to measured productivity and output growth in the short term using one year differences that is consistent with normal returns to computer investments however the productivity and output contributions associated with computerization are up to five times greater over long periods using five to seven year differences the results suggest that the observed contribution of computerization is accompanied by relatively large and time consuming investments in complementary inputs such as organizational capital that may be omitted in conventional calculations of productivity the large long run contribution of computers and their associated complements that we uncover may partially explain the subsequent investment surge in computers in the late 1990s

three way complementarities performance pay human resource analytics and information technology we test for three way complementarities among information technology it performance pay and human resource hr analytics practices we develop a principal agent model examining how these practices work together as an incentive system that produces a larger productivity premium when the practices are implemented in concert rather than separately we assess our model by combining fine grained data on human capital management hcm software adoption over 11 years with detailed survey data on incentive systems and hr analytics practices for 189 firms we find that the adoption of hcm software is greatest in firms that have also adopted performance pay and hr analytics practices furthermore hcm adoption is associated with a large productivity premium when it is implemented as a system of organizational incentives but has less benefit when adopted in isolation the system of three way complements produces disproportionately greater benefits than pairwise interactions highlighting the importance of including all three complements productivity increases significantly when the hcm systems go live but not when they are purchased which can be years earlier this helps rule out reverse causality as an explanation for our findings this paper was accepted by sandra slaughter information systems

what you don t know might hurt you some unresolved issues in the design and analysis of discrete choice experiments the papers and comments in this issue focus on four broad areas related to understanding and modeling choices 1 the use of laboratory experiments to improve valuation methods 2 the design of stated preference choice set and choice occasions 3 latent class models as means of identifying and accommodating preference heterogeneity and 4 accommodating uncertainty about the true model modeling ranking and rating tasks and pooling data sources in what follows i offer some comments on each area and briefly discuss several unresolved issues associated with each area closing with some comments about future research opportunities