alcohol prices consumption and traffic fatalities we examine the relationships among alcohol prices consumption and traffic fatalities using data across u s states from 1982 to 2000 some previous studies have found large negative associations between alcohol taxes and fatalities however commonly used price data suggest little or no connection between alcohol prices and fatalities these apparently conflicting findings may result from measurement error and or endogeneity in the price data which biases ordinary least squares estimators toward a finding of no price effects using alcohol taxes as instrumental variables fatali ties are found to be negatively related to prices in addition alcohol consumption is strongly posi tively related to fatalities however biases may still remain because taxes are not entirely suitable as instruments

violence related injury and the price of beer in england and wales this paper examines the influence of the real price of beer on violence related injuries across the economic regions in england and wales the data are monthly frequency of violent injury collected from a stratified sample of 58 national health service emergency departments 1995 2000 an econometric model based on economic socio demographic and environmental factors was estimated using panel techniques we show that the rate of violence related injury is negatively related to the real price beer as well as economic sporting and socio demographic factors the principal conclusion of the paper is that the regional distribution of the incidence of violent injury is related to the regional distribution of the price of beer the major policy conclusion is that increased alcohol prices would result in substantially fewer violent injuries and reduced demand on trauma services

why u s wage and employment behavior differs from that in britain and japan if a poll were to be conducted among american academic economists to select the most mystifying economic phenomenon of our time surely the sticky nominal wage rate would emerge at or near the top of the list the slow and partial response of the nominal wage rate to changes in aggregate nominal spending has been a central postulate of macroeconomic theory for the past 45 years from keynes general theory down to the standard postwar textbook keynesian paradigm to the more modern fixed wage price models of robert barro and herschel grossman i976 and edmond malinvaud i977 unwilling passively to accept nominal wage rigidity as an unexplained assumption many labour market theorists have followed the lead of costas azariadis i975 and martin baily i974 in building models to explain rigid wages and layoff unemployment as the rational outcome of a profit maximising calculus as i pointed out in an early critique of the azariadis baily model i976a their assumptions cannot explain cycles in employment but rather why workers would want fixed incomes i e a fixed wage rate and fixed employment soon thereafter barro i977 went one step further and argued that contract theory is a facade which cannot explain why workers would choose a rigid wage and variable employment in preference to the classical equilibrium quantity of employment that equates the marginal product of labour with the marginal value of time now an examination of the evidence has led me to the realisation that rigid wages cannot provide the underpinnings for a universally valid theory of the business cycle simply because wages are not universally rigid i document below with postwar quarterly data that the share of fluctuations in the manufacturing wage bill taking the form of nominal wage changes as compared to changes in hours worked is five to ten times greater in britain and japan than in

trends in unemployment wages and productivity the case of japan along with the high savings ratio the functioning of the labour market is one of the most important factors behind the macroeconomic performance of the postwar japan which foreign observers have christened the miracle of the rising sun in the first place the nature of the japanese labour market is important for the long run trend of japanese economic growth because labour and its quality are crucial factors for economic development the high quality of a well disciplined workforce as well as the migration of labour from rural to urban areas has contributed much to the rapid growth of the japanese economy second the nature of the labour market has influenced the pattern of japanese business cycles by buffering demand fluctuations the slow response of firms demand for labour combined with the fast response of the labour force participation ratio has prevented a sharp increase in the unemployment rate during recessions relatively flexible nominal and real wages have also enabled the japanese economy to adjust quite smoothly to supply shocks notably after the second oil crisis in this paper we shall review trends in unemployment wages and productivity in the postwar japanese economy and relate them to its macroeconomic performance we shall also summarize the current literature concerning features of the labour market evaluate quantitative estimates of trends in labour statistics and explore future prospects

the current economic crisis its nature and the course of academic economics the current crisis has triggered significant debate concerning economic theory and policy largely absent from this debate is an informed discussion of the methods used by economists in analysing the economy and formulating their proposals but method matters here i argue that current academic research practices need to be transformed before real insight can be achieved specifically i indicate why and how a more grounded framework than that presupposed by current research practices facilitates a potentially more fruitful approach to understanding the crisis

minimum wage effects throughout the wage distribution this paper provides evidence on a wide set of margins along which labor markets can adjust in response to increases in the minimum wage including wages hours employment and ultimately labor income not surprisingly the evidence indicates that low wage workers are most strongly affected while higher wage workers are little affected workers who initially earn near the minimum wage experience wage gains nevertheless their hours and employment decline and the combined effect of these changes on earned income suggests adverse consequences on net for low wage workers

inflation and unemployment the world economy today is vastly different from the 1930s when seymour harris the chairman of this meeting infected me with his boundless enthusiasm for economics and his steadfast confidence in its capacity for good works economics is very different too both the science and its subject have changed and for the better since world war ii but there are some notable constants unemployment and inflation still preoccupy and perplex economists statesmen journalists housewives and everyone else the connection between them is the principal domestic economic burden of presidents and prime ministers and the major area of controversy and ignorance in macroeconomics i have chosen to review economic thought on this topic on this occasion partly because of its inevitable timeliness partly because of a personal interest reaching back to my first published work in 1941

the application of development economics general principles and context specificity the purpose of this paper is to consider the application of development economics at the methodological level in particular given the shortcomings of both the modernist and postmodernist approaches to development policy we consider an alternative approach drawing on critical realism which combines the benefits of generality with the benefits of attention to specificity of context the approach is illustrated by showing how principles in development economics addressing issues of globalisation and peripherality can serve to illuminate some of the causal tendencies at work in a developed economy such as scotland copyright 2005 oxford university press

a theory of rational addiction we develop a theory of rational addiction in which rationality means a consistent plan to maximize utility over time strong addiction to a good requires a big effect of past consumption of the good on current consumption such powerful complementarities cause some steady states to be unstable they are an important part of our analysis because even small deviations from the consumption at an unstable steady state can lead to large cumulative rises over time in addictive consumption or to rapid falls in consumption to abstention our theory also implies that cold turkey is used to end strong addictions that addicts often go on binges that addicts respond more to permanent than to temporary changes in prices of addictive goods and that anxiety and tensions can precipitate an addiction

the revenge of the market on the rentiers why neo liberal reports of the end of history turned out to be premature starting from the perspective of heterodox keynesian minskyian kindlebergian financial economics this paper begins by highlighting a number of mechanisms that contributed to the current financial crisis these include excess liquidity income polarisation conflicts between financial and productive capital lack of appropriate regulation asymmetric information principal agent dilemmas and bounded rationalities however the paper then proceeds to argue that perhaps more than ever the macroeconomics that led to this crisis only makes analytical sense if examined within the framework of the political settlements and distributional outcomes in which it had operated taking the perspective of critical social theories the paper concludes that ultimately the current financial crisis is the outcome of something much more systemic namely an attempt to use neo liberalism or in us terms neo conservatism as a new technology of power to help transform capitalism into a rentiers delight in particular into a system without compulsions on big business i e one that imposes only minimal pressures on big agents to engage in competitive struggles in the real economy while doing the opposite to workers and small firms a key component in the effectiveness of this new technology of power was its ability to transform the state into a major facilitator of the ever increasing rent seeking practices of oligopolistic capital the architects of this experiment include some capitalist groups in particular rentiers from the financial sector as well as capitalists from the mature and most polluting industries of the preceding techno economic paradigm some political groups as well as intellectual networks with their allies including many economists and the new left although rentiers did succeed in their attempt to get rid of practically all fetters on their greed in the end the crisis materialised when markets took their inevitable revenge on the rentiers by calling their blatant bluff

the effect of marital breakup on the income distribution of women with children having a female firstborn child significantly increases the probability that a woman s first marriage breaks up recent work has exploited this exogenous variation to measure the effect of divorce on economic outcomes and has concluded that divorce has little effect on women s mean household income however using a quantile treatment effect methodology abadie et al 2002 we find that divorce widens the income distribution it increases the probability that a woman has very low or very high household income it appears that some women successfully generate income through child support welfare combining households and increased labor supply after divorce while others are markedly unsuccessful thus although divorce has little effect on mean income it nonetheless increases poverty and inequality these findings imply that divorce has important welfare consequences

the future of development economics a methodological agenda this paper discusses methodological differences between universalism and particularism in development economics by focusing on the east asian miracle debate it proposes to build development economics as part of hetero economics not mono economics following max weber s methodology of social science and suggests developing intermediate theories by abstracting directly from given comparative settings it also discusses the limitations that are inherent in this method as well as ways to employ the method in actual analyses this paper argues that the future task of development economics lies in recombining existing theories and developing new complementing theories that will systematically delineate the diversity of developing countries

changes in the distribution of children s family income over the 1990 s while the 1990 s were a good decade for many u s families there has been an ongoing debate about how children particularly poor children have been faring child poverty rates did not fall substantially in the economic expansion of the 1980 s and rose to the very high rate of 23 percent in 1993 furthermore substantial changes in public assistance programs were implemented over this decade major legislative reform in 1996 increased work mandates on welfare recipient families and gave states much greater discretion to enforce these mandates and actually terminate assistance these changes could make at least some poor families worse off if they lost public assistance and were unable to find steady employment we propose to investigate changes in the entire distribution of children s family income over the 1990 s which allows us to observe the relative changes in income experienced among children in higherand lower income families we are particularly interested in two questions i how has the economic status of children changed at different points in the income distribution ii is there any evidence that welfare reform contributed to the observed changes some evidence on changes in child wellbeing over the 1990 s suggests good news child poverty rates fell to 16 percent by 2001 and poverty rates among black children hit a historical low of 30 percent in that year blank 2002 and jeffrey grogger et al 2002 provide a complete set of citations to the growing literature that looks at changes in income and consumption over the past decade at least some of this research indicates that not all low income families experienced economic gains in this paper we use data on children s household income from the march current population survey cps and average together information from 1992 1995 and 1997 2000 by averaging four years of data we have an adequate number of observations to observe income reliably at each centile 1 100 in the distribution we focus on these comparison years because they both bracket the economic expansion of the 1990 s and they bracket the 1996 legislative changes in welfare programs to account for differences in family size across families our focus is on the income to needs ratio defined as the income level of the child s family divided by the official poverty line for that family rather than on actual income levels we compare data from two samples one that includes all children and another that includes only children in families without both parents present this latter sample is largely composed of children in single parent families but also includes children who live with neither parent about 3 percent of all children in the mid 1990 s

the relationship between production and unemployment in japan okun s law in comparative perspective abstract this paper studies the question whether the celebrated okun s law a relation between excess capacity and unemployment applies to the postwar japanese economy though the fitness of estimation is weak the coefficient that measures the responsiveness of the output gap to the unemployment rate is very large reaching 28 this large coefficient can be attributed to the elastic response in the female participation ratio to flexible working hours to the slow adjustment in employment and to changes in industrial structures the results are compared with those in the united states

contradictions of austerity the global economic and financial crisis has been marked by the following paradox a much more severe depression than the global slump of 2008 09 was prevented by determined state intervention in the form of bank bailouts and fiscal stimuli yet this bout of apparently successful keynesianism has been followed by a turn to fiscal austerity justified in terms reminiscent of the treasury view against which keynes relentlessly polemicised in the 1930s this article explores the sources of this policy shift among the factors considered are the ideology of neoliberalism the economic and political power of the banks and the relative weight of finance in individual economies the broader context of financialisation is also considered the conclusion is reached that an oscillation between bouts of austerity and laxer policies encouraging the development of asset bubbles may be built into neoliberalism as an economic policy regime the implication is that alternatives to austerity must embrace broad institutional transformation copyright the author 2012 published by oxford university press on behalf of the cambridge political economy society all rights reserved oxford university press

wage rigidity and unemployment in oecd countries real wage rigidity is often blamed for causing unemployment in the wake of adverse real shocks like changes in productivity or the terms of trade likewise nominal wage rigidity is blamed for causing unemployment in the wake of adverse nominal shocks like falls in nominal demand 1 however there has been relatively little systematic discussion of how these concepts should be defined some authors e g sachs 1979 have defined real wage rigidity as the opposite of nominal wage rigidity with the us nominally rigid and europe really rigid 2 the rigidity of european real wages has then been used to explain why europe has experienced a greater increase in unemployment since 1973 than the us but in this discussion real wage rigidity has not been measured in a way which would in fact predict how much unemployment would result from a given real shock the discussion has focused on the degree of nominal inertia in the system but the unemployment cost of real shocks does not depend primarily on the degree of nominal inertia but rather on the effect of unemployment in the phillips curve

economic history and economic theory the staples approach to economic development the ideas and institutions within which the current global crisis is being addressed reflect the power structures of the past and are under pressure to evolve but main stream economics tenaciously retains its long standing power over academe and policy while denying a theoretical role for power here we consider the contribution of economic history to theorising in particular we present a case study in the form of an economic history approach which emphasises the role of the state in relation to markets the staples approach of harold innis we apply this approach to the modern financial sector

organizational adjustment and institutional factors in japanese labour market adjustment an empirical evaluation abstract this paper examines the importance of institutional factors in the mechanism of japanese labour market adjustment the commonly held view suggests that transfers of employees both between and within firms have enhanced flexibility while contributing to the maintenance of low unemployment rates the paper produces evidence in support of the importance of transfers as an adjustment device limited to a subset of large manufacturing enterprises however the direct macroeconomic contribution of these institutional factors is marginal and the common view may have overestimated their importance

the effect of cocaine prices on crime the relationship between cocaine prices and crime has critical implications for u s drug policy but is theoretically indeterminate because cocaine price changes affect crime through changes in both cocaine consumption and expenditures this paper investigates this relationship in annual data from 1981 95 on 29 large u s cities accounting for simultaneity by using two stage least squares with measures of wholesale supply factors and retail enforcement intensity as instruments for cocaine prices controlling for prices of other drugs deterrence socioeconomic factors and city and year specific effects a strong negative relationship exists between cocaine prices and six of seven fbi index crimes

the virtuous tax lifesaving and crime prevention effects of the 1991 federal alcohol tax increase the last time that federal excise taxes on alcoholic beverages were increased was 1991 the changes were larger than the typical state level changes that have been used to study price effects but the consequences have not been assessed due to the lack of a control group here we develop and implement a novel method for utilizing interstate heterogeneity to estimate the aggregate effects of a federal tax increase on rates of injury fatality and crime we provide evidence that the relative importance of alcohol in violence and injury rates is directly related to per capita consumption and build on that finding to generate estimates a conservative estimate is that the federal tax which increased alcohol prices by 6 initially reduced injury deaths by 4 5 6480 deaths in 1991 and had a still larger effect on violent crime