some macroeconomic implications of alternative compensation systems a basic theme of this paper is the idea that some structural reform of employee compensation arrangements is necessary to make reasonable price stability compatible with reasonably full employment in this view even the best designed macroeconomic policies are much too aggregative to get at the heart of the stagflation problem the ultimate solution involves going inside the workings of a modern capitalist economy and correcting the underlying structural flaw directly on the level of the individual firm stagflation represents an especially intractable policy dilemma for macroeconomics without a decisive tendency of the economic system to remain near full employment there is a strong prima facie case for fighting recessions by exogenously stimulating aggregate demand but the usual keynesian expansionary policies tend to impart an inflationary inertia that is difficult to choke off and of course the basic strategy for fighting inflation is to cool down the economy by restrictive monetary and fiscal policy thereby increasing unemployment and closing the viscous circle because the practical macroeconomic policies for dealing with unemployment and inflation are so diametrically opposed stagflation is a pervasive structural problem when for whatever reason there is basically an unfavourable short run tradeoff between unemployment and inflation economic policy tends to vacillate between expansion of demand to fight unemployment and restriction of demand to fight inflation polarising the electorate and distracting society from dealing effectively with its underlying real economic problems even the difficulty of attaining external balance in foreign accounts is largely a spillover into the international payments arena of an inability to achieve an acceptable internal balance between full employment and price stability this paper takes what might be called a comparative systems approach to the problem of stagflation at the heart of modern industrial capitalism is an incredibly complicated system of overlapping monopolistic competitors 2 a starting point for the paper is the realisation that the coordination difficulty which can cause some systems to suffer involuntary unemployment is not inherent in laissez faire private enterprise per se it is closely tied to one particular property of a conventional wage payment system namely compensation of each firm s employees is stuck to an outside numeraire whether money or a cost of

an empirical analysis of life cycle fertility and female labor supply this paper examines us household fertility and female labor supply over the life cycle using data from the panel study of income dynamics the authors investigate how maternal time inputs and market expenditures on offspring as well as the benefits they yield their parents vary with ages of offspring and influence female labor supply and contraceptive behavior the econometric framework combines a female labor supply model and a contraceptive choice index function it also accounts for the fact that conceptions are not perfectly controllable events using longitudinal data on married couples the authors estimate these equations and test alternative specifications of the technologies governing child care the findings suggest that while parents cannot perfectly control conceptions variations in child care costs do affect life cycle spacing of births furthermore the results demonstrate the gains of modeling the linkages between female labor supply and fertility behavior at the household level authors modified

identifying the response of fertility to financial incentives summary while using financial incentives to increase fertility has become relatively common the effects of such policies are difficult to assess we propose an identification strategy that relies on the fact that the variation in wages induces variation in benefits and tax credits among comparable households we implement our approach by estimating a discrete choice model of female participation and fertility using individual data from the french labor force survey and a detailed representation of the french tax benefit system our results suggest that financial incentives have had a significant effect on fertility decisions in france as an example we simulate the effects of an additional unconditional child credit of 150 euros per month the effects are strongest for the third child copyright 2013 john wiley sons ltd

panel estimates of male female earnings functions this paper applies single and simultaneous equation fixed effects fe and random effects re panel data estimation techniques to obtain male and female earnings function parameters using the panel study of income dynamics psid the paperfinds that earnings appreciation with experience and depreciation with labor market intermittency are comparable for men and women further skill atrophy rates increase not decrease once one controls for heterogeneity and endogeneity finally the unexplained male female wage differential declines from 40 percent to 20 percent when one adjusts for heterogeneity adjusting for endogeneity depends very much on the choice of instruments however when adjusting for endogeneity the gender earnings gap falls and approaches zero percent these results hold for two separate subsamples so that the estimates appear robust independent of sample selectivity

education and contraceptive choice a conditional demand framework a multiperiod model of fertility and contraceptive choice which considers unobserved differential preferences for the timing of births is formulated conventional and conditional demand equations for contraceptives are derived from the model and the relationships in each between female education birth intentions and the level of contraceptive efficiency are compared demand equations derived from the model conditioned on birth intentions were shown to be superior to conventional demand equations in testing some of the assumptions pertaining to the technology of contraceptives embedded in the utility maximization framework a weak test of the hypothesis that education lowers the fixed costs of information associated with new technologies as exemplified by the oral contraceptive was shown to be obtainable only from consistent estimates of conditional contraceptive choice demand parameters as a consequence of the dual technological attributes of contraceptive methods if education affects both the costs of children and preference orderings over the spacing of births the education contraceptive use association conditional on the number of intended children cannot be used to make welfare comparisons across households the log linear model in which contraceptives were categorized on the basis of their cost characteristics and simulatenous equations techniques were used to obtain estimates of the conditional demand equations for contraceptives based on data from the national fertility survey 1970 estimates indicated that the education of the wife among households with identical fertility plans was significantly and positively associated with the adoption of the newer birth control methods in 1970 with quantitiative affects significantly greater than those indicated in reduced form and inconsistently estimated conditional equations appearing in a priori studies the results support the hypothesis that the relative magnitudes of fixed and variable contraceptive costs influence contraceptive decisions with the value of the wifes time an important component of the former and suggest that women with higher levels of education are more likely to use traditional contraceptive methods

the effect of women s schooling on fertility abstract this study investigates the effect of women s schooling on fertility in the united states particular attention is given to the issue of whether women s schooling can be legitimately treated as an exogenous determinant of fertility

performance pay and unemployment during the great recession abstract with data from the panel study of income dynamics i show that individuals in performance pay jobs were much less likely to be unemployed at the time of the interview than those in fixed wage jobs during the 2008 recession while their unemployment rate is always lower in non recession years there is little evidence that this association was any weaker during the recession additional evidence shows that performance pay has a similar effect on the incidence of layoffs vs quits in both non recession and recession years

investments holdup and the form of market contracts the authors analyze incomplete contracts to induce efficient investment with exogenous switching costs fixed price contracts are efficient generate some rigidity in prices are renegotiated intermittently by possibly small amounts and when inflation is positive generate asymmetric responses to shocks all consistent with evidence on prices and wages with two sided specific investments efficiency requires prices to have sufficient escalator clauses to avoid renegotiation as observed in many long term contracts a third case with one sided specific investments can generate take or pay contracts and explain why firms sometimes pay for specific investments that appear to benefit employees directly

the effect of female education on fertility and infant health evidence from school entry policies using exact date of birth this paper uses age at school entry policies to identify the effect of female education on fertility and infant health we focus on sharp contrasts in schooling fertility and infant health between women born just before and after the school entry date school entry policies affect female education and the quality of a woman s mate and have generally small but possibly heterogeneous effects on fertility and infant health we argue that school entry policies manipulate primarily the education of young women at risk of dropping out of school

are there civic returns to education abstract the hypothesized effects of educational attainment on adult civic engagement and attitudes provide some of the most important justifications for government intervention in the market for education in this study i present evidence on whether these externalities exist i assess and implement two strategies for identifying the effects of educational attainment one is based on the availability of junior and community colleges the other on changes in teen exposure to child labor laws the results suggest that educational attainment has large and statistically significant effects on subsequent voter participation and support for free speech i also find that additional schooling appears to increase the quality of civic knowledge as measured by the frequency of newspaper readership

the career costs of children this paper analyzes the life cycle career costs associated with child rearing and decomposes their eects into unearned wages as women drop out of the labor market loss of human capital and selection into more child friendly occupations we estimate a dynamic life cycle model of fertility occupational choice and labor supply using detailed survey and administrative data for germany for numerous birth cohorts across dierent regions we use this model to analyze both the male female wage gap as it evolves from labor market entry onward and the eect of pro fertility policies we show that a substantial portion of the gender wage gap is explainable by realized and expected fertility and that the long run eect of policies encouraging fertility are considerably lower than the short run eects typically estimated in the literature

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

a population macroeconomic growth model for currently developing countries abstract this paper constructs a theoretical model that predicts as observed in some currently developing countries that the average school enrollment ratio may fall even when the average fertility rate declines unlike existing models the current analysis indicates that economic growth may slow down when a fertility transition starts asymmetric behavior with respect to fertility and education between households stemming from income inequality plays an important role in generating this result we examine the implications of an education subsidy policy contrary to intuition in some circumstances this policy may decrease the average school enrollment ratio and future economic growth

the impact of education in rural ghana examining household labor allocation and returns on and off the farm most of the human capital literature pertaining to developing countries focuses on the returns to education in either farm work or wage work few studies examine how education affects the allocation of time between these activities this paper estimates the returns to education in farm and off farm work and consequently the role of education in determining the allocation of labor the results from this study show that off farm work has a much higher return to education than does farm work and suggest that this divergence in returns affects the allocation of labor in farm households between farm and off farm work

what have we learned from the economics of the family the family is distinguished from other social institutions such as firms by its crucial role in the production and nurture of children and its rationale is ultimately to be found in the preferences of individuals for own children sexual reproduction means that the production of one s own child requires the participation of another person of the opposite sex the production of a child who will survive become a successful adult and produce his or her own children requires the expenditure of both personal and purchased resources over a lengthy period of time although interesting insights on the family can be culled from the classics systematic development of the economics of the family is a recent phenomenon beginning in the late 1950 s when harvey leibenstein 1957 and gary becker 1960 attempted to address the determinants of fertility behavior within the framework of consumer theory in this paper i provide a brief overview of the history of family economics since 1960 and along the way offer a selective assessment of what has been learned from it i attempt this assessment by asking how far we have progressed in answering a few of the larger theoretical empirical and policy questions that have motivated economists interests in an area customarily studied by sociologists and demographers or that have caused economists dealing with more traditional subject matter to incorporate the family into their work among the set of questions that have been addressed within the literature during the past twenty five years are 1 what are the causes of the historical association between economic growth and development and demographic transition from high to low levels of fertility and mortality of what relevance is the historical experience of currently developed countries to contemporary ldcs should fertility reduction be a primary goal of policy in the developing countries are the developed countries in danger of extinction because of fertility below replacement levels 2 what was the cause of the post world war ii baby boom and subsequent baby bust was the baby boom a one time aberration from a secular decline in fertility or can we expect substantial fluctuations in the birth rate in the future what are the consequences of the baby boom for the economic welfare of cohorts born during and after the boom 3 is the traditional family dead in the united states and other developed countries why did the divorce rate double in a decade why the growth in female headed households why do so many divorced fathers fail to support their children has the sexual division of labor within the family changed as a consequence of the growth of female labor supply to what extent are these changes in the family caused by social policy and to what extent are they a product of basic market forces associated with modern economic development what are the consequences of these changes for the welfare of future generations i attempt to touch on some issues from each of the three areas in which the questions are grouped however constraints imposed by limitations of space time and most imtdiscussants kenneth wolpin ohio state university robert pollak university of pennsylvania t paul schultz yale university

schooling externalities technology and productivity theory and evidence from u s states abstract the literature on schooling externalities in u s cities and states is rather mixed positive external effects of average education levels are hardly found while positive externalities from the share of college graduates are more often identified we propose a simple model to reconcile this mixed evidence our model predicts positive externalities from increased college education and negligible external effects from high school education using compulsory attendance child labor laws push driven immigration of highly educated workers and the location of land grant colleges as instruments for schooling attainments we test and confirm the model predictions with data on u s states for the period 1960 2000

the excess sensitivity of layoffs and quits to demand excessive layoffs in bad times and excessive quits in good times both stem from the same weakness in practical employment arrangements the specific nature of worker firm relations creates a situat

a microeconomic analysis of the timing of births abstract the effects of personal characteristics wage rates and career structures on the time profile of childbearing among married couples are examined theoretically through an intertemporal microeconomic model of family decisions and empirically by an econometric analysis of british women s childbearing and work histories the effects of the mother s age on the quality of the child and the financial implications of interrupting the mother s career to care for a child are taken explicitly into account the demographic consequences of economic policies are also examined

testing long run neutrality using intra year data previous tests of the long run neutrality hypothesis have generally relied on annual time series data this paper analyses the long run neutrality of money in australia using different sources of intra year data which permits an examination of the effects of seasonality and the robustness of previous empirical results a reduced form arima model is used with both quarterly seasonally unadjusted and adjusted australian real gdp and nominal money supply to test the neutrality hypothesis using two measures of money stock namely m1 and m3 it is shown that the hypothesis is supported using m1 as the measure of money supply while it is rejected using m3 recent trends and developments in the money and credit markets in australia provide a possible explanation of the sensitivity of the outcome to the measure of money stock employed in the analysis

the intergenerational effects of compulsory schooling this article attempts to improve our understanding of the causal processes that contribute to intergenerational immobility by exploiting historical changes in compulsory schooling laws that affected the educational attainment of parents without affecting their innate abilities or endowments we examine the influence of parental compulsory schooling on children s grade for age using the 1960 1970 and 1980 u s censuses our estimates indicate that a 1 year increase in the education of either parent reduces the probability that a child repeats a grade by between 2 and 4 percentage points

life cycle employment and fertility across institutional environments in this paper we formulate a dynamic utility maximization model of female labor force participation and fertility choices and estimate approximate decision rules using data on married women in italy spain and france the pattern of estimated state dependence effects across countries is consistent with aggregate patterns in part time employment and child care availability suggesting that labor market rigidities and lack of child care options are important sources of state dependence simulations of the model reveal that italian and spanish women would substantially increase their participation rates were they to face the french institutional environment

efficient contracts with costly adjustment short run employment determination for airline mechanics this paper presents an empirical analysis of firm specific employment and wage outcomes for mechanics in the domestic airlines industry a dynamic contracting model is presented that incorporates both costly employment adjustment and potential gaps between contract wage rates and the opportunity value of workers time the model gives a useful description of the employment output linkage in the data but is less successful in capturing the dynamic relation between employment contract wage rates and wage rates outside the airline industry copyright 1986 by american economic association

the relationship between education and adult mortality in the united states prior research has uncovered a large and positive correlation between education and health this paper examines whether education has a causal impact on health i follow synthetic cohorts using successive u s censuses to estimate the impact of educational attainment on mortality rates i use compulsory education laws from 1915 to 1939 as instruments for education the results suggest that education has a causal impact on mortality and that this effect is perhaps larger than has been previously estimated in the literature copyright 2005 wiley blackwell

fertility and childlessness in the united states we develop a theory of fertility distinguishing its intensive margin from its extensive margin the deep parameters are identified using facts from the 1990 us census i fertility of mothers decreases with education ii childlessness exhibits a u shaped relationship with education iii the relationship between marriage rates and education is hump shaped for women and increasing for men we estimate that 2 5 percent of women were childless because of poverty and 8 1 percent because of high opportunity cost of childrearing over time historical trends in total factor productivity and in education led to a u shaped response in childlessness rates while fertility of mothers decreased

public versus private education when differential fertility matters we assess the merits of different education systems in a framework that accounts for the joint decision problem of parents regarding fertility and education specifically we compare the implications of a public and a private schooling regime for economic growth and inequality we find that private schooling leads to higher growth when there is little inequality in human capital endowments across families in contrast when inequality is high public education yields higher growth by reducing fertility differentials in addition public schooling leads to income convergence while private schooling can result in ever increasing inequality our analysis highlights theimp ortanceof accounting for endogenous fertility differentials when analyzing educational policies

does education improve citizenship evidence from the united states and the united kingdom abstract many studies document an association between schooling and civic participation but none credibly investigate causal links we explore the effect of extra schooling induced through compulsory schooling laws on the likelihood of becoming politically involved in the united states and the united kingdom we find that educational attainment is related to several measures of political interest and involvement in both countries we find a strong and robust relationship between education and voting for the united states but not for the united kingdom our us results approach the uk findings when conditioning on registration possibly indicating that registration rules present a barrier to participation

peers at work we study peer effects in the workplace specifically we investigate whether how and why the productivity of a worker depends on the productivity of coworkers in the same team using high frequency data on worker productivity from a large supermarket chain we find strong evidence of positive productiv ity spillovers from the introduction of highly productive personnel into a shift worker effort is positively related to the productivity of workers who see him but not workers who do not see him additionally workers respond more to the presence of coworkers with whom they frequently interact we conclude that social pressure can partially internalize free riding externalities that are built into many workplaces jel j24 l81 m54

international migration transfers of norms and home country fertility this paper examines the relationship between international migration and source country fertility the impact of international migration on source country fertility may have a number of causes including a transfer of destination countries fertility norms and an incentive to acquire more education it provides provide a rigorous test of the diffusion on of fertility norms using original and detailed data on migration the results provide evidence of a significant transfer of fertility norms from migrants to their country of origin a one percent decrease in the fertility norm to which migrants are exposed reduces home country fertility by about 0 3 percent for origin countries

the ratchet effect and the market for secondhand workers workers in a long term relationship often have an incentive to hide their ability early in the relationship to avoid having the firm increase the level of output expected from them in the future we show that competition for older workers will permit the implementation of efficient piece rate contracts when the difficulty of the job is unobserved by the firm gibbons 1987 has shown that all piece rate contracts will be inefficient together these results may explain why piece rates are common in some jobs such as agricultural work and sales and not as popular for many manufacturing jobs

optimal labour contracts under asymmetric information an introduction the review of economic studies has instituted a new series of lectures to be given annually by a younger british economist at the association of university teachers of economics meetings the choice of lecturer is determined by a panel whose members are currently professors hahn mirrlees and nobay this paper is a revised version of the first lecture in the series it was presented at the aute meeting held at the university of surrey in april 1982 and was refereed in the usual way mak

do dropouts drop out too soon wealth health and happiness from compulsory schooling abstract this paper uses compulsory schooling laws to evaluate high school dropout decisions the main empirical result is that lifetime wealth increases by about 15 with an extra year of compulsory schooling students compelled to stay in school are also less likely to report being in poor health unemployed and unhappy the main conclusion is that high school aversion alone is unlikely to explain why dropouts forgo substantial gains to lifetime wealth the results are more consistent with the possibility that adolescents ignore or heavily discount future consequences when deciding to drop out of school if teenagers are myopic making school compulsory or offering incentives to stay in school may help improve lifetime outcomes

the effect of family planning programs on the fertility of welfare recipients evidence from medicaid claims this paper explores the effectiveness of family planning fp services subsidized by the medicaid program in lowering the fertility of female welfare recipients previous studies used single equation estimates and produced conflicting and sometimes confounding results thus this study employed a bivariate probit model to estimate the effect of contraceptive acceptance on the individuals probability of giving birth without the bias that may result from single equation estimates a unique data set created from maryland medicaid claims records was also used results suggest that medicaid fp programs are much more effective at lowering fertility than indicated by previous studies using single equation estimates

mother s education and the intergenerational transmission of human capital evidence from college openings we examine the effect of maternal education on birth outcomes using vital statistics natality data from 1970 to 1999 we also assess the importance of four channels through which maternal education may improve birth outcomes use of prenatal care smoking marriage and fertility in an effort to account for the endogeneity of education attainment we use data about the availability of colleges in the womans country in her 17th year as an instrument for maternal education we find that higher maternal education improves infant health as measured by birth weight and gestational age it also increases the probability that a new mother is married reduces parity increases use of prenatal care and reduces smoking suggesting that may be important pathways for the ultimate effect on health our results add to the growing body of literature which suggests that estimates of the returns to education which focus only on increases in wages understate the total return

contract form wage flexibility and employment we begin with two uncontroversial hypotheses firm productivity is expensive to measure and employment entails relationship specific investments these assumptions imply that firms would optimally choose fixed wage contracts and complement these with bonus pay when measuring employee performance is not too costly these assumptions imply that under an optimal employment contract hours of work is less responsive while total compensation is more responsive to shocks under bonus pay contracts compared to fixed wage contracts using data from the panel study of income dynamics psid where shocks are proxied using the local unemployment rate we find strong support for these two implications

an estimable dynamic stochastic model of fertility and child mortality this paper develops a finite horizon dynamic stochastic model of discrete choice with respect to life cycle fertility within an environment where infant survival is uncertain the model yields implications for the number timing and spacing of children a tractable estimation method is developed for the linear constraint quadratic utility case that is intimately tied to the dynamic optimization problem and the method is applied to malaysian household data estimation is based on integrating the numerical solution of the dynamic programming model of behavior with a maximum likelihood procedure

the effect of implicit contracts on the movement of wages over the business cycle evidence from micro data in this paper we address the question of whether wages are affected by labor market conditions in a manner more consistent with a contract approach than with a standard spot market model from a simple implicit contract model we derive implications about the links between wages and past labor market conditions using individual data from the current population survey and the panel study of income dynamics we find that an implicit contract model with costless mobility describes these links better than either a simple spot market model or an implicit contract model with costly mobility

family labor supply with taxes over the period 1960 1983 the proportion of federal tax revenue raised by taxation of labor supply has risen from 57 77 percent in this paper we specify and estimate a model of family labor supply which treats both federal and state taxation husbands and wives labor supply are treated jointly rather than in aseparate manner as in previous research a method to calculate the virtual wage for nonworking spouses is used within a utility maximizing framework to treat correctly the joint family labor supply decision joint family efforts are found to be important the efficiency cost deadweight loss of labor taxation is estimated to be 29 6 of tax revenue raised the effect of the new 10 deduction to ease the marriage tax for working spouses leads to a prediction of 3 8 increase in wives labor supply and a 9 decrease in husbands labor supply overall taxes paid are predicted to decrease by 3 4 this abstract was borrowed from another version of this item

can financial incentives reduce the baby gap evidence from a reform in maternity leave benefits abstract in this paper i assess whether earnings dependent maternity leave positively impacts fertility and narrows the baby gap between highly educated high earning and less educated low earning women i exploit a major maternity leave benefit reform in germany that considerably increased the financial incentives by up to 21 000 eur for highly educated and higher earning women using the large differential changes in maternity leave benefits across education and income groups in a differences in differences design i estimate the causal impact of the reform on fertility for up to 5 years in addition to demonstrating an up to 23 increase in the fertility of tertiary educated women i find a positive statistically significant effect of increased benefits on fertility driven mainly by women at the middle and upper end of the earnings distribution overall the results suggest that earnings dependent maternity leave benefits which compensate women according to their opportunity cost of childbearing could successfully reduce the fertility rate disparity related to mothers education and earnings

effects of schooling on fertility labor supply and investments in children with evidence from brazil this study examined the impact of schooling on fertility decline in brazil brazils fertility decline began with few organized family planning programs and continued during periods of economic growth and recession it is argued that the link between schooling and fertility decline occurred through parents investment in producing healthy well educated children and trading off quantity for quality data were obtained from retrospective fertility histories among over 100000 women who participated in the pnad household survey in 1984 fertility decline was only weakly associated with increased female labor force participation the theoretical background suggests that schooling affects fertility investments in children and the labor market child survival varied widely between women with no schooling and women with 11 years of schooling mean schooling for males and females rose steadily over time the most rapid increase occurred for 1940 54 birth cohorts the percentage of women with under 1 year of schooling declined steadily for men and women and was faster for women under 10 for the youngest cohort an increase in wifes schooling from 0 4 years was associated with a decline in children by age 30 years of 0 85 births for younger women and 0 60 births for older women a model predicted 68 of actual fertility decline in 1935 39 and 1951 53 cohorts the effect of husbands schooling disappeared after 8 years of schooling while wifes effects continued to be negative labor force participation was less at lower levels of education schooling strongly effected measures of child quality

women s schooling and fertility under low female labor force participation evidence from mobility restrictions in israel this paper studies the effect of mothers education on fertility in a mostly muslim population with very low female labor force participation we first show that a removal of travel restrictions on israeli arabs had raised female education and had almost no effect on male education next we show that it lowered fertility rates among exposed women which we interpret as an effect of female education on fertility we rule out labor force participation age at marriage marriage and divorce rates and spousal labor force participation and earnings as confounding factors or as mechanisms but find that spousal education and children quality play a role in the fertility decline we provide a variety of robustness tests that rule out other channels by which the removal of the travel restrictions could have affected fertility directly these results are particularly interesting and important for the context of many muslim countries with low rates of female labor force participation

dynamic female labor supply the increase in female employment and participation rates is one of the most dramatic changes to have taken place in the economy during the last century however while the employment rate of married women more than doubled during the last 50 years that of unmarried women remained almost constant to empirically analyze these trends we estimate a female dynamic labor supply model using an extended version of eckstein and wolpin 1989 to compare the various explanations in the literature for the observed trends this dynamic model provides a much better fit to the life cycle employment pattern than a static version of the model and a standard static reduced form model heckman 1979 the main finding using the dynamic model is that the rise in education levels accounts for about 33 percent of the increase in female employment and the rise in wages and narrowing of the gender wage gap account for another 20 percent while about 40 percent remains unexplained by observed household characteristics we show that this unexplained portion can be empirically attributed to cohort specific changes in preferences or the costs of child rearing and household maintenance finally the decline in fertility and the increase in divorce rates account for only a small share of the increase in female employment rates

marital status and fertility in the united states welfare and labor market effects the incidence of marriage and the proportion of childbearing that occurs within marriage have decreased sharply in the united states in the last several decades this paper examines whether the probability that a woman is currently married and the number of children she has borne as reported in the 1980 u s census are related to two identifiable factors the variation in welfare programs across states specifically afdc and medicaid benefits and afdc up expenditures or the variation in the market wage opportunities available to women and to their potential husbands afdc and medicaid benefit levels are associated with fewer women being currently married medicaid benefits are related to lower fertility levels for both black and white women whereas afdc benefits in cash and food are associated with lower fertility among white women ages 15 24 those states that extend afdc benefits to families with unemployed parents in other words fathers in intact poor families do not have significantly more women married or higher fertility rates contrary to what might be expected from economic incentives men s market wages are associated with more frequent marriage and higher fertility whereas higher market wage opportunities for women have substantial effects in the opposite direction all of which are consistent with standard models of gender specialization and the demand for marriage and fertility

tests of long run neutrality using permanent monetary and real shocks abstract we present tests of long run monetary neutrality using an empirical framework that allows for the effects of real shocks on the long run behavior of both output and monetary aggregates our findings support long run monetary neutrality as a feature of the post world war ii u s economy we further find that permanent innovations in labor supply as measured by working age population are a principal factor in the long run movements in u s output and monetary aggregates

heaping induced bias in regression discontinuity designs heaping induced bias in rd designs this study uses monte carlo simulations to demonstrate that regression discontinuity designs arrive at biased estimates when attributes related to outcomes predict heaping in the running variable after showing that our usual diagnostics may not be well suited to identifying this type of problem we provide alternatives and then discuss the usefulness of different approaches to addressing the bias we then consider these issues in multiple non simulated environments

children and their parents a review of fertility and causality childbearing decisions are not made in isolation they are taken in concert with decisions regarding work marriage health investments and stocks as well as many other observable and non observable considerations drawing causal inferences regarding the effect of additional children on family outcomes is complicated by these endogenous factors this paper lays out the issues involved in estimating the effect of additional child births on family outcomes and the assumptions underlying the range of estimators and methodologies proposed in the economic literature the common pitfalls of these estimators are discussed as well as their potential to bias our interpretation of the effect additional births have on children and parents both in the existing literature and in future work in the face of changing patterns of childbearing and child rearing

high quality nutrition in childhood body size and wages in early adulthood evidence from guatemalan workers espanolcausalidad entre salud y productividad no resulta directa de establecer por un lado mayores ingresos pueden trasladarse en una dieta de mejor calidad por el otro es probable que un trabajador saludable sea mas productivo este trabajo analiza el efecto del tamano corporal altura e indice de masa corporal como indicadores de nutricion en salarios los datos provienen del estudio longitudinal realizado en guatemala entre 1969 77 y 2002 04 estimaciones sugieren que la elasticidad tamano del cuerpo en relacion al salario aumenta cuando la heterogeneidad no observable es considerada sin embargo los resultados son mas robustos para los hombres adicionalmente la elasticidad estimada presenta algun grado de disparidad entre quantiles de la distribucion condicional del salario englishestablishing a causal relationship between health and productivity is not straightforward on one hand as income grows people invest in better diets on the other a healthier worker is likely to be more productive this paper focuses on the effect of body size height and body mass index as indicators of nutrition upon wages data comes from a longitudinal study conducted in guatemala during 1969 77 and followed up in 2002 04 body size elasticity increases when unobserved heterogeneity is considered although evidence is stronger for males additionally estimated elasticity shows some degree of heterogeneity at different quantiles of the conditional wage distribution

the effects of child bearing on married women s labor supply and earnings using twin births as a natural experiment we use exogenous variations in fertility due to twin births to measure the impact of an unplanned child on married women s labor supply and earnings although the overall effects of an unplanned birth on labor supply are small we find significant effects in the years immediately following the unplanned birth especially in 1970 we estimate that declining fertility explains between 6 and 13 percent of the increase in married women s labor supply between 1970 and 1980 twin births are also associated with a substantial short run loss in earnings this effect persists longer than the labor supply effects though it does eventually disappear

long run monetary neutrality in this article we provide a test of long run monetary neutrality employing cointegration and vector error correction modelling methodology using quarterly data for the united states we estimate the long run relationships among money supply and output and other key macroeconomic variables our findings in general raise doubts about the long run monetary neutrality proposition

wage levels and method of pay the traditional literature on method of pay distinguishes workers who are paid time rates from those who are paid piece rates the theory predicts that the piece rate workers will earn more and empirically they do a simple generalization is to divide time rate workers into two groups those whose wage depends on their supervisor s ratings and those whose wage does not theory predicts that the workers whose pay is linked to supervisor ratings will earn more than the other time rate workers wage data for workers in over 3 000 manufacturing establishments show they do not and several simple explanations fail to resolve this empirical puzzle

performance pay and wage inequality an increasing fraction of jobs in the u s labor market explicitly pay workers for their performance using bonus pay commissions or piece rate contracts using data from the panel study of income dynamics we show that compensation in performance pay jobs is more closely tied to both observed and unobserved productive characteristics of workers than compensation in non performance pay jobs we also find that the return to these productive characteristics increased faster over time in performance pay than in non performance pay jobs we show that this finding is consistent with the view that underlying changes in returns to skill due for instance to technological change induce more firms to offer performance pay contracts and result in more wage inequality among workers who are paid for performance thus performance pay provides a channel through which underlying changes in returns to skill get translated into higher wage inequality we conclude that this channel accounts for 21 of the growth in the variance of male wages between the late 1970s and the early 1990s and for most of the increase in wage inequality above the eightieth percentile over the same period

empirical evidence on the long run neutrality hypothesis using low frequency international data abstract we use the backus and kehoe american economic review 1992 82 864 888 long low frequency data on real gnp gdp prices and money for australia canada denmark germany italy japan norway sweden the united kingdom and the united states to examine the long run neutrality proposition in doing so we apply the fisher and seater american economic review 1993 83 402 415 non structural methodology paying explicit attention to the univariate time series properties of the variables we conclude that the data are generally supportive of the quantity theoretic proposition that money is long run neutral

estimating a household production function heterogeneity the demand for health inputs and their effects on birth weight the household production literature emphasizes that technical or biological processes condition input selection by households in their production activities along with prices and income exogenous variations in health to the extent that they are perceived by individuals heterogeneity lead to correlations between inputs and health outcomes that cannot be used to derive causal conclusions therefore estimates of health technology must be obtained from a behavioral model in which health inputs are themselves choices consistent estimates are reported of the effect of endogenous inputs such as medical care smoking and fertility on birth weight and fetal growth in the presence of health heterogeneity

the simple analytics of contraceptive social marketing abstract contraceptive social marketing csm programs have been advocated for the dissemination of contraceptives in developing countries this paper considers csm programs from a simple economic perspective it begins with a review of the major economic models of private fertility determinants and the associated private demand for contraceptives and then adds private contraceptive supply to obtain market equilibrium next inefficiencies due to negative externalities of added children and due to imperfect information and distributional concerns are considered finally this framework is utilized to point to lacunae in our knowledge of csm programs and their impact and to suggest some promising areas for research

why governments should invest more to educate girls abstract women and men often receive the same percentage increase in their wage rates with advances in schooling because these returns decline with more schooling the marginal returns for women will tend to exceed those for men especially in countries where women are much less educated the health and schooling of children are more closely related to their mother s education than father s more educated women work more hours in the market labor force broadening the tax base and thereby potentially reducing tax distortions these three conditions it is argued justify the disproportionate allocation of public expenditures toward women s education

education and fertility evidence from a natural experiment declining fertility is often attributed to the increased education of women it is difficult to establish a causal link because both fertility and education have changed secularly in this paper we study the connection between fertility and education using educational reform as an instrument to control for selection our results indicate that increasing education leads to postponement of first births away from teenage motherhood and towards women having their first birth in their 20s as well as for a smaller group up to the age of 35 40 we find no evidence however that more education results in more women remaining childless or having fewer children

zero returns to compulsory schooling in germany evidence and interpretation abstract we estimate the impact of compulsory schooling on earnings using changes in compulsory schooling laws in west germany after world war ii most estimates in the literature indicate returns in the range of 10 to 15 while our research design is very similar to studies for various other countries we find a zero return we find no evidence that this is due to labor market institutions or the apprenticeship training system in germany the result might be due to the fact that the basic skills most relevant for the labor market are learned earlier in germany than in other countries

classification error in dynamic discrete choice models implications for female labor supply behavior two key issues in the literature on female labor supply are i whether persistence in employment status is due to unobserved heterogeneity or state dependence and ii whether fertility is exogenous to labor supply until recently the consensus was that unobserved heterogeneity is very important and fertility is endogenous hyslop 1999 challenged this using a dynamic panel probit model of female labor supply including heterogeneity and state dependence he found that adding autoregressive errors led to a substantial diminution in the importance of heterogeneity this in turn meant he could not reject that fertility is exogenous here we extend hyslop 1999 to allow classification error in employment status using an estimation procedure developed by keane and wolpin 2001 and keane and sauer 2005 we find that a fairly small amount of classification error is enough to overturn hyslop s conclusions leading to overwhelming rejection of the hypothesis of exogenous fertility

the effect of education on crime evidence from prison inmates arrests and self reports we estimate the effect of high school graduation on participation in criminal activity accounting for endogeneity of schooling we begin by analyzing the effect of high school graduation on incarceration using census data instrumental variable estimates using changes in state compulsory attendance laws as an instrument for high school graduation uncover a significant reduction in incarceration for both blacks and whites when estimating the impact of high school graduation only ols and iv estimators estimate different weighted sums of the impact of each schooling progression on the probability of incarceration we clarify the relationship between ols and iv estimates and show that the weights placed on the impact of each schooling progression can explain differences in the estimates overall the estimates suggest that completing high school reduces the probability of incarceration by about 76 percentage points for whites and 3 4 percentage points for blacks we corroborate these findings using fbi data on arrests that distinguish among different types of crimes the biggest impacts of graduation are associated with murder assault and motor vehicle theft we also examine the effect of drop out on self reported crime in the nlsy and find that our estimates for imprisonment and arrest are caused by changes in criminal behavior and not educational differences in the probability of arrest or incarceration conditional on crime we estimate that the externality of education is about 14 26 of the private return to schooling suggesting that a significant part of the social return to education comes in the form of externalities from crime reduction

subsidizing the stork new evidence on tax incentives and fertility this paper exploits the introduction of a pronatalist transfer policy in the canadian province of quebec that paid up to c 8 000 to families having a child i implement a quasi experimental strategy by forming treatment and control groups defined by time jurisdiction and family type the incentive was available broadly rather than to a narrow population as studied in previous work providing an exceptional opportunity to investigate heterogeneous responses i find a strong effect of the policy on fertility and some evidence of a heterogeneous response that may help reconcile these results with previous estimates

inequality and growth why differential fertility matters we argue that inequality and growth are linked through differential fertility and the accumulation of human capital we build an overlapping generations model in which dynasties differ in their initial endowment with human capital growth the income distribution and fertility are endogenous due to a quantiy quality tradeoff families with less human capital decide to have more children and invest less in education when initial inequality is high large fertility differentials lower the growth rate of average human capital since poor families who invest little in education make up a large fraction of the population in the next generation a calibrated model shows that this fertility differential effect is quantitatively important we also provide empirical evidence to confirm the links between inequality differential fertility and growth suggested by the model

profit sharing employment stability and wage growth the authors conjecture that profit sharing reduces turnover and thus increases expected returns to firm specific human capital investments so that the optimal levels of skill acquisition and investment in firm specific skills rise and ultimately increase productivity empirical evidence from nlsy data on white men in nonunion jobs between 1988 and 1994 supports this hypothesis employees participating in profit sharing plans were less likely than non participants to separate from their jobs they also received training more frequently and for longer durations finally the authors show that profit sharing was related to higher wage growth indicating a faster rate of skill accumulation

the effects of education on fertility evidence from taiwan this study investigates the impact of women s education on fertility for identification we use the 1968 compulsory education law change in taiwan which generated a regression discontinuity design rdd setting we use the whole population of women from the 1980 and 2010 population censuses results of our rdd estimation using the exact date of birth suggest that the law change was effective in boosting women s education but it did not have any impact on fertility this is in stark contrast to most previous studies using only the birth year as the running variable or using it to construct instruments which find that women s education depresses fertility this study demonstrates that using a discrete running variable in rdd may generate a false discontinuity for an otherwise continuous regression function jel j13 c21 i2

fertility regulation in an economic crisis abstractsubstantial international aid is spent reducing the cost of contraception in developing countries as part of a larger effort to reduce global fertility and increase investment per child worldwide the importance for fertility behaviors of keeping contraceptive prices low however remains unclear targeting of subsidies and insufficient price variation have hindered prior attempts to estimate the effect of monetary and nonmonetary contraceptive costs on fertility behavior using longitudinal survey data from the indonesia family life survey we exploit dramatic variation in prices and incomes that was induced by the economic crisis in the late 1990s to pin down the effect of contraceptive availability and costs as well as household resources on contraceptive use and method choice the results are unambiguous monetary costs of contraceptives and levels of family economic resources have a very small and well determined impact on contraceptive use and choice of method

fertility transitions along the extensive and intensive margins this paper examines the fertility transition through a new lens the extensive margin parents with high levels of children might substitute quality for quantity as the constraints on quality relax or those on quantity tighten however along the extensive margin the quantity quality trade off cannot operate at low levels of fertility we expect quality and quantity to be essential complements we apply these insights to a large school construction program in the american south during the early 20th century the rosenwald rural schools initiative we find that increased schooling opportunities lead to reductions in fertility among women with high fertility levels while at the same time inducing higher levels of fertility among women with low levels of fertility the magnitude of the fertility changes induced in the parent generation is however small compared to the changes in fertility induced by the rosenwald intervention among women that were themselves treated by the intervention the evidence from the rosenwald intervention therefore suggests that changes in female opportunity costs induced by increased educational attainment might be among the most important driving forces of the fertility transition

population growth and human capital investments theory and evidence this paper presents evidence from empirical studies that test hypotheses derived from models of household behavior pertaining to the interrelationships among population growth human capital and economic development these studies have exploited quasi natural experiments embodied in the cross area variability in the wage rates of children in a number of low income countries the intercouple variation in the biological propensity to conceive and the geographically selective introduction of new high yielding seed varieties in india in the period 1961 71 the different varieties of evidence support the hypotheses that alterations in the returns to human capital associated with exogenous technical change lead simultaneously to increases in human capital investments and to reductions in fertility and that the costliness of fertility control is a significant but modest factor in inhibiting human capital investments

the multiperiod principal agent problem in repeated principal agent models long term contracts can improve on short term contracts only if they commit either principal or agent to a payoff in some future circumstance lower than could be obtained from a short term contract negotiated if that circumstance occurs we show that efficient contracting under moral hazard alone does not require long term commitment from the principal provided a short term contract can punish the agent sufficiently in a sense made precise it requires no commitment from the agent either then linking payoffs in one period to outcomes in previous periods does not improve the tradeoff between incentives and risk sharing

paternity deferments and the timing of births u s natality during the vietnam war i background during the conflict in vietnam men between 18 5 and 25 yr of age were subject to the draft several exemptions to this rule existed for example students were exempt importantly for the purposes of this study married men with dependents could also obtain a deferment from the draft and the particulars of this policy underwent substantial changes in the 1960s in august 1965 president johnson issued executive order 11241 which formally eliminated deferments for childless men who got married after august 26 1965 and in october 1965 the selective service declared that childless married men irrespective of the date of marriage were to be called up both announcements came as a surprise new york times 1965a since married men with children remained exempt the declarations provided a strong incentive for young couples to conceive a first born child before august 1965 marriage had been a sufficient condition for a deferment even just a few hours before the august 26 midnight deadline desperate couples tried to make use of this provision by quickly scheduling their wedding between august and october couples who had missed the deadline had to satisfy an additional condition conceiving a child childless men who got married in this period were still subject to the draft and so had an incentive to conceive a child in october 1965 the risk of induction was further extended to all couples who had remained childless finally in april 1970 the family deferments were entirely eliminated by executive order 11527 the selective service system office of public and intergovernmental affairs 2004 past research has demonstrated that taxes and expenditure programs can affect fertility e g whittington alm and peters 1990 see also milligan 2005 for an excellent review as well as the timing of delivery dickert conlin and chandra 1999 the goal of this article was to provide additional evidence on the responsiveness of childbearing to incentives embedded in public policy by studying a dramatic yet unexamined government intervention the effects of the vietnam war paternity deferments on the decision to conceive a first born child as discussed in the popular press vice president dick cheney s first daughter elizabeth was born 9 mo 2 d after the selective service system announced that childless married men were to be drafted boston globe 2000 slate chatterbox 2004 did draft eligible men strategically react to the announcement and if so how widespread and fast was the response to my knowledge no one has investigated the impacts of the vietnam draft on natality using the vietnam draft rules to identify a causal effect however i build on several prior studies angrist for example uses the exogeneity of the vietnam draft rules to identify the effects of military service on lifetime earnings angrist 1990 angrist and chen 2007 and to measure the racial differences in the value of military service angrist 1991 gullason 1989 and card and lemieux 2001 2002 estimate the effects of the vietnam draft on schooling explicitly recognizing that college attendance often served as a vehicle to avoid the draft both studies find a significant effect of the probability of being drafted on school enrollment the fact that the changes in the selective service rules were both unexpected and widely publicized makes this an ideal example to study the effects of policy on fertility decisions milligan 2005 argues that the assumptions made about the timing of the response to policy are arbitrary since a reaction will be delayed not only by a 9 mo gestational lag but also by the time necessary for the diffusion of information about the change in policy in the case examined here however the criticism seems less relevant newspaper clippings from august 27 1965 suggest that the issuance of the executive order 11241 did receive broad attention for example the story was listed on the front pages of new york times 1965c and washington post 1965b

two illustrations of the quantity theory of money of two central implications of the quantity theory of money that a given change in the rate of change in the quantity of money induces i an equal change in the rate of price inflation and ii an equal change in nominal rates of interest the illustrations were obtained by comparing moving averages of the three variables in question using quarterly u s time series for the period 1953 77 readers may find the results of interest as additional confirmation of the quantity theory as an example of one way in which the quantity theoretic relationships can be uncovered via atheoretical methods from time series which are subject to a variety of other forces or as a measure of the extent to which the inflation and interest rate experience of the postwar period can be understood in terms of purely classical monetary forces the theoretical background of the study is reviewed very briefly as it is familiar material in the next section the data processing methods are described and rationalized in section ii the illustrations

some further evidence on the long run neutrality of money abstract a recently developed reduced form test for long run neutrality is applied to twentieth century australian data on real output and the nominal money stock the results show that narrowly defined money is neutral however real output is not invariant in the long run to a broader based measure of the money stock