preserving religious identity through education economic analysis and evidence from the us abstract this paper models the decision of religious parents to send their children to private religious schools as reflecting their desire to shield their children from external influences and thus preserve their religious identity it follows that when the share of the minority in the local population grows and outside influences become less threatening the demand for separate religious schooling among the members of the religious group decreases this pattern implies concavity in the relationship between enrollment in private and religious schooling and the share of the religious group in the population we present empirical evidence from united states county data on catholic and private school enrollment that strongly supports our theory the paper contributes to a better understanding of the demand for religious education

the role of expectations in adolescent schooling choices do youths respond to economic incentives i introduction over the postwar period the level of education attained by individuals in nations of the organisation for economic co operation and development has increased steadily this is especially true for the united states 1 in 1950 for example the average american aged 25 or older had 9 3 years of education by 2000 this had increased to 12 7 years this increase reflects sizable increases in the rate of high school completion in the cohort aged 16 24 in 1960 more than 27 were counted as high school dropouts by 2001 the proportion of high school dropouts in this age cohort had fallen to 10 7 although the proportion of whites in any given age cohort who graduated high school has exceeded that for african americans over this period this gap narrowed significantly during the 1970s and 1980s and by 2000 had nearly closed 2 observed trends in and patterns of educational attainment human capital accumulation and labor market success are determined by several factors in addition to changes in a wide variety of background factors such as ability motivation race and gender these involve decisions made by governments as reflected in school resources and macroeconomic performance and by parents e g parental education work effort and child care time also relevant are the choices made by adolescents themselves in response to the net economic returns of the options open to them in this article we explore the schooling choices of youths in response to their perception of these returns economic and sociological research on the determinants of the schooling outcomes of youths is extensive and distinguished 3 these studies focus primarily on the family neighborhood and peer group determinants of educational attainments and are largely reduced form in nature the role of youth preferences and the choices made in response to the economic incentives and constraints that young people face have not been systematically explored in these studies hence their results may attribute to background and family characteristics effects properly attributed to differences in youths own choices in response to the incentives that they face 4 in this study we address the role of youths own choice conditioned expectations in understanding their schooling choices by constructing a choice or switching model we emphasize the effect of individual student perceptions regarding the returns associated with graduating from high school versus dropping out while controlling for an extensive set of family and community factors youths are presumed to form their expectations by referring to the outcomes of a slightly older cohort of individuals who have characteristics similar to their own because these expected income returns are choice specific we require estimates of each youth s choice conditioned expected returns taken to be unobserved by the analyst but known by the youth 5 we focus on the high school graduation outcome for three reasons first individuals must complete high school to consider postsecondary schooling options hence the decision to complete high school carries with it an option value benefit 6 second high school completion the first schooling decision over which adolescents have some control plays a crucial role in understanding the declining labor market position of low skilled workers 7 finally our analysis of the high school graduation choice is nested within an extensive economic literature that addresses the determinants of this outcome by focusing on the role of youth s own expectations we have neglected other aspects of a complete analysis of the process of educational attainment for example we presume that our extensive set of family and neighborhood factors are exogenous to the outcome and independent of unobserved factors although we do not explicitly include school characteristics in our estimation our detailed neighborhood and family variables are likely to accurately proxy for neighborhood school quality

an economic model of teaching effectiveness the literature on the determinants of good teaching performance has been largely devoted to empirical measurement a complete review of the publications in this area would require at least an entire issue the size of this journal yet it is virtually impossible to discover attempts to derive hypotheses about the determinants of good teaching from explicit models of behavior this has led researchers into the trap of exploring only the empirical determinants of good teaching performance typically the results of student evaluations are correlated with affective personality traits of the teachers with peer evaluations of psychological compositions or even with the results of various psychological tests examples are the works of robert isaacson et al frank costin et al and wilbert mckeachie et al in most of these studies no substantive conclusions are reached regarding the determinants of effective teaching in the few studies which do contain significant findings the independent variable in question is difficult to explain as a direct determinant of teaching effectiveness for example isaacson et al find that virtually the only statistically significant determinant of effective teaching is the personality characteristic which they label culture this may imply that simply wearing a tweed jacket and taking up pipesmoking is sufficient to improve teaching this paper takes a somewhat different approach to the analysis of teaching assume that the individual in question wishes to maximize teaching effectiveness clearly there are constraints on this maximization process one must necessarily be the time budget constraint a second constraint however adds a good deal of interest to the model this constraint is best described as the bundle of characteristics available to the individual these characteristics could be termed the components of the individual s personality such attributes include physical appearance psychological makeup speaking ability and a myriad of other variables thus this model bears a resemblance to the standard economic models of monopolistic competition see a michael spence before proceeding to a formal statement of the problem a philosophical issue must be addressed what is meant by teaching effectiveness generally this is interpreted as maximizing student evaluations of teachers however this is clearly not always equivalent to maximizing student learning unfortunately the latter variable is difficult but not impossible to measure preand posttesting with standardized tests is becoming increasingly accepted for example the meaning of teaching effectiveness in this paper must unfortunately remain ambiguous some teachers concerned perhaps with obtaining tenure will interpret good teaching as obtaining good evaluations the criterion by which they are judged others may take a more eclectic viewpoint since the problem below is an individual maximization problem the precise definition of effective teaching may simply vary from individual to individual see w r allen formally this problem is exactly analogous to one first addressed by kelvin lancaster he assumes that the consumer attempts to maximize satisfaction through purchase of bundles of attributes each commodity is possessed of certain of these characteristics by consuming various combinations of these commodities the consumer is assistant professor department of economics and director center for economic education california state university hayward i would like to thank alex cassuto nancy sanders and an anonymous referee for helpful discussion in a previously unreported experiment in the department of economics california state universitybakersfield faculty members were required to wear coats and ties in classes it was subsequently observed that teaching evaluations improved unfortunately no detailed statistical results of this experiment are available for analysis

modeling multiple outputs in educational production functions for some time now economists have conceptualized learning as a production process most educational production functions specify only one output usually a measure of cognitive achievement some recent studies have recognized the multidimensional aspects of schooling specifying outputs in both the cognitive and affective domains introducing multiple outputs into the production function raises interesting theoretical and empirical issues one issue is the manner in which various outputs are interrelated how one models output interactions in educational production functions may be important are the outputs multiple products if so are they independently or simultaneously produced or are the outputs joint products answers to these questions may affect empirical estimates of the educational production function s this paper briefly describes how one might approach this problem we argue on conceptual grounds that modeling outputs in the cognitive and affective domains as joint products is preferable in addition we compare the three approaches empirically to evaluate the sensitivity of educational production function parameter estimates to output specification

partial fiscal decentralization reforms and educational outcomes a difference in differences analysis for spain abstract several arguments derived from fiscal federalism theory suggest that decentralization may improve the provision of public goods and services however theory remains inconclusive regarding these effects under partial decentralization the aim of this study is to examine this hypothesis by evaluating the effects on educational outcomes of the partial fiscal decentralization reform that took place in spain during the 1980s since education competences were devolved to the regions at different points in time we can consistently estimate the effects of this reform by applying the differences in differences method and by using the non decentralized regions as the comparison group we find that the reform had a sizeable impact on the percentage of students dropping out early from school the effects are much stronger for regions with a high level of revenues we also find that the effects are concentrated in the high school program and that the reform was not able to improve educational outcomes in the vocational program we interpret these results as evidence that decentralization improved the match between education policy and population preferences

carbon trading in the policy mix the kyoto protocol is stimulating the development of emissions trading schemes at the national and international levels these are being introduced alongside existing policy instruments such as carbon taxes and negotiated agreements leading to complex problems of policy interaction but the topic of policy interaction remains under researched this paper aims to improve understanding of such interactions by examining the conditions under which a cap and trade scheme for carbon dioxide emissions may usefully coexist with carbon energy taxes support mechanisms for renewable electricity and policies to promote energy efficiency the paper argues that each of these instrument combinations may be acceptable provided they contribute to either improving the static or dynamic efficiency of the trading scheme or delivering other valued policy objectives but since the coexisting instruments may raise overall abatement costs while contributing nothing further to emission reductions the objectives and trade offs within the policy mix must be explicit

productive government expenditures and long run growth the purpose of this paper is to review some of the recent developments in endogenous growth models specifically our focus is on the growth effects of productive government spending in dynamic general equilibrium models we use a simple overlapping generations model as our basic framework and illustrate the role of taxes and spending we then examine several related issues nonrivalry in publicly provided goods existence and uniqueness of competitive equilibrium endogenous public policy ways of financing public expenditures composition of publicly provided goods and services and private alternatives finally we review some empirical results related to output elasticity of public capital and educational expenditures

how do firms comply with international sustainability standards processes and consequences of adopting the global reporting initiative this paper addresses the issue of the influence of global governance institutions particularly international sustainability standards on a firm s intra organizational practices more precisely we provide an exploratory empirical view of the impact of the global reporting initiative gri on a multinational corporation s corporate social responsibility csr management practices we investigate standard compliance by comparing the stated intention of the use of the gri with its actual use and the consequent effects within the firm based on an in depth case study our findings illustrate the processes and consequences of the translation of the gri within the organization we show that substantive standard adoption can lead to unintended consequences on csr management practices specifically it can influence the management structure and csr committee function the choice of csr activities the relationships between subsidiaries the temporal dimension of csr management and the interpretation of csr performance we also highlight the need to look at the relationship dynamics or lack of between standards finally we illustrate and discuss the role of reporting and its influence on management in order to better understand the internal issues arising from compliance with standards

the effect of school quality on educational attainment and wages the paper examines the effects of school pupil teacher ratios and type of school on educational attainment and wages using the british national child development survey ncds the ncds is a panel survey which has followed a cohort of individuals born in march 1958 and has a rich set of background variables recorded throughout the individual s life the results suggest that once we control for ability and family background the pupil teacher ratio has no impact on educational qualifications or on male wages it has an impact on women s wages at the age of 33 particularly those of low ability we also find evidence that those who attend selective schools have better educational outcomes and in the case of men higher wages at the age of 33 the impact is higher for the type of individuals who are less likely not to attend selective schools but for whom a comparison group does exist among those attending

anticipating the consequences of school reform a new use of dea we use dea type linear programming techniques to simulate a basic component of educational reform eliminating restrictions on the allocation of school personnel our technique allows us to identify potential output gains or equivalently potential cost savings from reform we can also identify which personnel groups are likely to gain and lose under this reform when we apply our model to a sample of texas school districts we find evidence that the educational establishment has substantial economic rents to protect from school reform and that the primary beneficiaries of reform are likely to be affluent school districts with few minority students the technique which relies on the relationship between the direct and indirect distance functions can be easily generalized to measure the potential gains from removing other input restrictions such as union work rules environmental regulations or deed restrictions

examining the link between teacher wages and student outcomes the importance of alternative labor market opportunities and non pecuniary variation researchers using cross sectional data have failed to produce systematic evidence that teacher salaries affect student outcomes these studies generally do not account for non pecuniary job attribu

firm self regulation through international certifiable standards determinants of symbolic versus substantive implementation international certifiable management standards that have been advocated as a governance mechanism for firm self regulation of corporate social responsibility issues are effective only if certified firms comply with the requirements of the standards our empirical analysis shows that iso certified firms in china strategically select their level of compliance depending on customer preferences customer monitoring and expected sanctions by customers our findings have implications for the effectiveness of a global system of self regulation based on certifiable standards research on certifiable standards and for practicing managers who require suppliers to obtain standard certifications

tax limits and the qualifications of new teachers abstract this paper examines the impact of local tax limits on new teacher quality using data from the national center for education statistics we find that tax limits systematically reduce the average quality of education majors as well as new public school teachers in states that have passed these limits the average relative test scores of education majors in tax limit states declined by ten percent as compared to the relative test scores of education majors in states that did not pass limits this relationship is strengthened if we control for school finance equalization reforms or examine tax limits passed in two different periods

dollars and performance treating alcohol misuse in maine abstract if public funds are allocated efficiently then an increase in funding should improve the performance of substance abuse treatment programs in the data used in this paper performance measured as abstinence rates and expenditures per patient are not positively correlated one explanation is that funding is endogeneous i e programs treating more difficult patients receive more funding the data comes from all maine s outpatient drug free programs that received public funding between 1991 and 1994 after controlling for endogeneity this paper concludes that the marginal impact of expenditures per patient on abstinence rates is small and statistically insignificantly different from zero

intergenerational transfers production and income distribution abstract we consider an overlapping generations economy where the aggregative production process uses physical capital and human capital intergenerational transfers from parents to their children are motivated by altruism we distinguish between two types of transfers investment of parents in the education of their offspring and capital transfer the gift bequest motive we show that the intensity of each type of altruism and hence the composition of the two types of transfers affect significantly the equilibrium output and the intragenerational income distributions comparing competitive equilibria from the same initial distributions of capital transfers and human capital we derive a the economy with the higher education inclined altruism attains lower output and more equal intragenerational income distributions if either the production function s elasticity of substitution is not large or the altruism is weak b for more bequest inclined altruism the effects are usually reversed c under public provision of education higher bequest inclined altruism results in lower output and less equal distribution of income in all dates

intra school competition and student achievement within the economics of education literature numerous studies have investigated the relationship between educational market competition and educational achievement educational market competition has been defined as either the availability of vouchers within a community or the number of schools or school districts within the relevant market structure while these studies have shown that increases in inter district competition result in increased student achievement no studies to our knowledge have yet investigated the effect of intra school competition on student achievement within this study a measure of intra school competition is developed and the findings indicate that increased intra school competition leads to increased student achievement

do schools matter for high math achievement evidence from the american mathematics competitions this paper uses data from the american mathematics competitions to examine the rates at which different high schools produce high achieving math students there are large differences in the frequency with which students from seemingly similar schools reach high achievement levels the distribution of unexplained school effects includes a thick tail of schools that produce many more high achieving students than is typical several additional analyses suggest that the differences are not primarily due to unobserved differences in student characteristics the differences are persistent across time suggesting that differences in the effectiveness of educational programs are not primarily due to direct peer effects

on the contract curve a test of alternative models of collective bargaining the traditional model of collective bargaining confines unions to settlements constrained by the employer s labor demand curve but an alternative model places wage employment outcomes on a contract curve that extends beyond the labor demand curve this paper derives a multidimensional hedonic contract curve model in which employment security provisions are used to maintain efficient bargains outside the employer s demand curve and distinguishes empirically between the contract curve and demand constraint models using data for public school teachers in new york state estimates clearly support the contract curve model over the demand constraint model by linking the gap between compensation and the value of the marginal product to the strength of employment security provisions

corporate social responsibility in europe and the u s insights from businesses self presentations the paper compares the extent and content of businesses communications about corporate social responsibility csr in france the netherlands the u k and the u s in particular the study investigates the nature of csr principles processes and stakeholder issues discussed in web pages the results show that businesses in the four countries do not display the same eagerness to appear as socially responsible and employ diverse means to convey social responsibility images

using market valuation to assess public school spending abstract we examine whether school expenditures are valued by potential residents and whether the current level of public school provision is inefficient by estimating the effect of state education aid on residential property values we find evidence that overall state aid is valued by potential residents and that school districts do not overspend on education however we find that districts may overspend in areas where residents have fewer schooling options but find no difference in efficiency by the degree of district unionization one interpretation of these results is that increased competition may reduce overspending on public schools in some areas

the quality of schooling quantity alone is misleading although much research discusses the quantity of schooling as an effective impact on productivity and earnings most such research leaves out the idea of the quality of schooling which may cause biases in the estimated returns to schooling this paper consequently attempts to extend the standard mincerian approach to incorporate school quality as well as quantity it demonstrates how exclusion of quality in the standard procedure may cause biases in the estimated returns to years of schooling probably in the upward direction the paper explores the implications of this extension of the standard model for the case of young brazilian males it shows that the estimate of the private return to years of schooling using the preferred quality inclusive specification is only one half the estimate using the standard procedure indicating substantial upward bias in the standard estimates it further outlines a method for estimating a social return to quality and finds that it exceeds substantially the social return to quantity the paper then shows why this in turn suggests there may be an equity productivity trade off in schooling investments

the trade off between child quantity and quality an empirical investigation of trade offs between number of children and their scholastic performance confirms that family size directly affects children s achievement though parents show no favori

quasi experimental estimates of the effect of class size on achievement in norway using a comprehensive norwegian administrative database we exploit independent quasi experimental methods to estimate the effect of class size on student achievement at the end of lower secondary school identification based on maximum class size rules and population variation and variations on these methods give very similar estimates we cannot reject that the class size effect is equal to zero and can rule out effects as small as 1 5 percent of a standard deviation for a one student change in class size during three consecutive years

efficient co2 emissions control with emissions taxes and international emissions trading abstract we consider a stylized model of the hybrid co 2 emissions control in the eu a group of countries operates a joint emissions trading system ets covering only part of each country s economy the countries levy an emissions tax in the rest of their economy and possibly an additional tax in their ets sectors welfare maximizing governments are shown to lack incentives for group efficient policies preexisting taxes overlapping with the ets lead policy makers to allocate more permits to their ets sectors than cost effectiveness would suggest the cases of small and large countries exhibit significantly different efficiency implications

empirical evaluation of bureaucratic models of inefficiency two separate but related strands of literature exist regarding the efficiency of public sector service provision the theoretical base developed in the bureaucratic models of supply and the methodological base developed in the operations research and economic literatures most analyses focus exclusively on either the measurement or causes of inefficiency this paper seeks to empirically test bureaucratic models of supply by drawing on the measurement literature in anticipation of the results it is found that there does exist empirical evidence supporting some of the implications of these models

permit trading merely an efficiency neutral redistribution away from climate change victims in this paper we present a climate policy game with international emissions trading where governments first select their amounts of emissions permits these permits are transferred to firms and then traded competitively on an international market compared with a game without trading we find that the potential efficiency gains from permit trading which have been identified in other studies are totally undone if governments also employ a tax or subsidy on domestic emissions the only effect of permit trading in this case is a redistribution of income away from those most affected by climate change

do limits matter evidence on the effects of tax limitations on student performance abstract the goal of this research is to determine if limits on the revenue raising ability of school districts translate into constraints on the ability of these districts to affect student performance we use the recent imposition of property tax limitations on school districts in the chicago metropolitan area to determine if these limits have translated into slower growth in student performance we find only limited evidence that student performance in districts subject to the tax limitations has fallen relative to student performance in districts not subject to the limitations

how responsive is higher education the linkages between higher education and the labour market higher education is considered vital for developing a productive and dynamic labour force to meet the demands of the global economy how effectively does the us higher education sector respond to labour market signals we match us postsecondary degree completions from 1984 to 2008 with occupational employment statistics and employ an instrumental variable iv strategy to examine the supply response to changes in occupation specific demand the supply of educated workers appears weakly responsive to short term wage signals and moderately responsive to long term employment conditions analysis reveals a sizeable degree of heterogeneity and lag in the responsiveness across specific occupation degree pairings failure to respond rapidly to changes in labour demand may be one factor driving inequality in wages across occupations and in the aggregate economy we suggest some simple policy measures to help increase the responsiveness of the higher education sector both in terms of the output of specific degree

equity and educational performance in this paper we review the main issues under discussion in the field of economics of education with a special focus on latin america we seek to organize the debate about educational policies by showing how these policies respond to different models based on different assumptions and hypotheses about how the educational system functions methodological and informational problems make it difficult to test the validity of different policies this would explain the enormous number of studies in the field that conclude with conflicting policy prescriptions we also use data from chile to analyze the importance of the school in educational outcome and to explore the heterogeneous impacts of student and school characteristics on educational achievement the results obtained allow us to conclude that the school plays a very important role in explaining educational achievement we also find that low income students stand to benefit the most from attending a private school however this conclusion is valid for a marginal analysis and does not necessarily apply to a massive reallocation of students among schools

building institutions based on information disclosure lessons from gri s sustainability reporting abstract global reporting initiative gri is the best known framework for voluntary reporting of environmental and social performance by business worldwide using extensive empirical data including interviews and documentary analysis we examine gri s organizational field and conclude that since its modest beginnings in 1999 gri has been by several measures a successful institutionalization project but the institutional logic of this new entity as an instrument for corporate sustainability management leaves out one of the central elements of the initial vision for gri as a mobilizing agent for many societal actors this emergent logic reflects gri s dominant constituency large global companies and financial institutions and international business management consultancies and not the less active civil society organizations and organized labor we attribute these developments to factors such as building gri within the existing institutional structures the highly inclusive multistakeholder process and the underdeveloped base of information users from the institutional theory perspective this case shows how the process of institutionalization is deeply affected by initial strategies of the founders and how it reproduces existing power relations from the governance perspective this case leads us to question the power of commodified information to mobilize civil society and to strengthen governance based on partnerships

human capital pricing equations with an application to estimating the effect of schooling quality on earnings this paper formulates and estimates alternative models for the pricing of labor services we present economic models that rationalize empirical specifications in the literature and we offer evidence on the validity of those specifications widely used efficiency units models of labor services are inconsistent with evidence from the u s labor market a model of heterogeneous skills provides a more accurate description of earnings data we present evidence that the pursuit of comparative advantage and selective migration are important features of the u s labor market when these features are included in the model the only support for an effect of schooling quality on earnings is through the return to college education three interactions are empirically important in explaining log wage equations a between schooling quality and education b between regional labor market shocks and education and c between region of residence and regionof birth because of this third interaction which can arise from comparative advantage in the labor market no unique quality effect on returns to education can be defined independently of the market in which it is used

the supply side of co2 with country heterogeneity several recent articles have analyzed climate policy paying explicit attention to the fact that carbon resources are non renewable in most of this body of literature the economy is treated as a single unit and in the context of climate policy it seems reasonable to interpret this as the whole world however carbon taxes and other climate policies differ substantially across countries with such heterogeneity the effects on the emission paths of changes in taxes costs and subsidies might be very different from what is found for a hypothetical world of identical countries

causal effects in education abstract in recent years a wave of new studies on the effects of educational interventions on student performance has emerged the realization that inputs in the education process are endogenous is important for the validity of traditional findings because of ignoring endogeneity bias all traditional estimates might be wrong recent studies exploit exogenous variation in interventions in education produced by controlled or natural experiments results generated by this methodological innovation differ substantially from the traditional findings this article reviews this new literature illustrates new methods for identifying causal effects of interventions in education and compares the findings with the traditional literature

nonparametric analysis of educational costs abstract traditional economic analyses of the public sector that assume cost minimization are not consistent with political models of bureaucracy if costs are not minimized then estimated cost functions will be biased the purpose of this paper is to provide a flexible nonparametric technique based on farrell type efficiency measures to estimate public sector costs standard indices need to be modified to fit the special nature of public sector service provision which is characterized by an influence of exogenous variables on cost a useful by product is an index of environmental harshness faced by local governments for illustrative purposes this technique is applied to a sample of new york state school districts it is found that nearly 64 of districts are cost inefficient spending on average 1200 per pupil above the cost minimizing level in addition it is estimated that the average school district faces environmental cost of over 1700 per pupil

school decentralization helping the good get better but leaving the poor behind abstract the decentralization of public services is a major feature of institutional innovation the main argument in support of decentralization is that it brings decisions closer to the people thereby alleviating information asymmetries and improving accountability however decentralization can also degrade service provision in poor communities that lack the ability to voice and defend their preferences in this paper we analyze the average and distributional effects of school decentralization on educational quality in argentina we find that decentralization had an overall positive impact on student test scores the decentralization gains however did not reach the poor thus although bringing decisions closer to the people may help the good get better the already disadvantaged may not receive these benefits

does school quality matter returns to education and the characteristics of public schools in the united states this paper estimates the effects of school quality measured by the pupil teacher ratio average term length and relative teacher pay on the rate of return to education for men born between 1920 and 1949 using earnings data from the 1980 census we find that men who were educated in states with higher quality schools have a higher return to additional years of schooling rates of return are also higher for individuals from states with better educated teachers and with a higher fraction of female teachers holding constant school quality measures however we find no evidence that parental income or education affects average state level rates of return

the effect on black white wage differences of differences in the quantity and quality of education using data from the national longitudinal survey of youth for the years 1979 88 the author examines the extent to which black white differences in educational attainment educational quality and unmeasured individual ability can explain black white wage differences an analysis that corrects for both selectivity and ability biases inherent in estimating the education wage relationship shows that the main source of the black white wage differential is the racial difference in the quality rather than quantity of schooling in fact the author concludes closing the racial gap in the basic skills learned in school could reduce the wage differential by two thirds

schools and housing values this study combines historical and quantitative methods to determine the market response to a major nineteenth century american urban architectural form the speculatively built row house the paper estimates a hedonic price index which decomposes the

nitrogen tax and set aside as greenhouse gas abatement policies under global change scenarios a case study for germany the ambitious climate policy objectives of the cop21 agreement require the design and the implementation of effective and efficient policy instruments the effectiveness and efficiency of agricultural abatement options depend on regional climate and natural conditions changes in the global economy global agricultural markets and regional agricultural production thus the assessment of abatement options requires consideration of the global scale the market scale and the regional producer scale we investigate two abatement options discussed controversially in literature both have been partially applied to reduce environmental pollution from agriculture a tax on nitrogen and the obligatory set aside of agricultural land our study provides an assessment of the ecological effectiveness and the economic efficiency of both abatement options under different global scenarios in our policy analysis we combine three applied policy simulation models to develop an integrated economic model framework this model framework considers the global the national and the regional scale and consists of the global general equilibrium model dart bio the partial equilibrium model capri and the regional supply model raumis in the different global scenarios the results show that both abatement options create relatively high marginal abatement costs and that the maximally reached abated greenhouse gas emissions represent only 15 of the quantity required to fulfill the policy targets compared to the obligatory set aside option the nitrogen tax is in both scenarios the more efficient policy with respect to impacts on production and environment a nitrogen tax is less forecastable than the obligatory set aside option our study illustrates the relevance of considering global economic and market change in the assessment of producer targeting environmental policies

managerial efficiency in local government implications on jurisdictional consolidation using data from maine estimates of size economies in the production of public education services are provided under the alternative assumptions of managerial efficiency and inefficiency while size economies were identified under the traditional assumption of managerial efficiency limited or no size economies were identified under the more general assumption of managerial inefficiency these results question the validity of the traditional economies of size literature and the jurisdictional consolidation policy which follows from the traditional literature

the case for international emission trade in the absence of cooperative climate policy we evaluate the efficacy of international trade in carbon emission permits when countries are guided strictly by their national self interest to do so we construct a calibrated general equilibrium model that jointly describes the world economy and the strategic incentives that guide the design of national abatement policies countries decisions about their participation in a trading system and about their initial permit endowment are made noncooperatively so a priori it is not clear that permit trade will induce participation in international abatement agreements or that participation will result in significant environmental gains despite this we find that emission trade agreements can be effective that smaller groupings pairing developing and developed world partners often perform better than agreements with larger rosters and that general equilibrium responses play an important role in shaping these outcomes

armington elasticities for energy policy modeling evidence from four european countries elasticities of substitution among imports and competing domestic production armington elasticities play an important role in computable general equilibrium cge assessments of energy and climate policy this paper provides estimates of armington elasticities for 15 commodity groups in four european countries since armington elasticities are found to be rather low on average researchers may want to reconsider the device of using high values of armington elasticities in cge models to avoid unrealistic competitiveness effects or emission leakage rates associated with energy or carbon taxes or other forms of energy related regulation estimated elasticities tend to be higher in the case of machinery and other investment goods than in the case of primary products ores and chemicals as well as consumer goods

emission trading with fiscal externalities the case for a common carbon tax for the non ets emissions in the eu a government is fiscally constrained if it is unable to raise sufficient tax revenue to finance the first best level of public spending when involved in emission trading a fiscally constrained government will potentially seek to close its fiscal gap through emission permit sales this fiscal incentive therefore generates a fiscal externality in the permit market that is endogenous to the extent of fiscal constrainedness among the participating countries our theory explains how and when fiscal externalities may be expected to arise moreover we show that in a permit market equilibrium with fiscal externalities the initial allocation of emission permits between countries will affect 1 the price of emission permits 2 the global distribution of abatement effort and 3 total greenhouse gas mitigation costs this is contrary to the textbook model of emission permit markets our findings are especially relevant for the eu which is about to allow for trading in emission rights between eu member countries for all emissions outside the european emissions trading system

micro processes of translation in the transfer of practices from mne headquarters to foreign subsidiaries the role of subsidiary translators recent research has increasingly emphasized the micro foundations of knowledge transformation in multi national enterprises mnes although the literature has provided ample evidence of the enablers of and barriers to the translation of practices less is known about the activities and efforts of translators that lead to specific types of translation in the context of the transfer of practices initiated at a mne s headquarters hq to foreign subsidiaries we apply a scandinavian institutionalist approach to examine the translation of corporate social responsibility reporting an hq initiated practice that is transferred to five foreign subsidiaries of a uk based mne our paper builds from a preliminary framework based on extant research to develop an extended framework of the micro processes of translation by theorizing the sequence of the micro processes undertaken by translators identifying the conditions under which they occur and connecting them to the three types of translation we provide a deep understanding of the micro foundations of translation when transferring practices from hq to subsidiaries our paper shows that translation is an evolving phenomenon and illuminates the importance of attending to the social spatial and temporal situatedness of translators it also brings insights into the individual experience of institutional distance and its effects on translation

caveat emptor cross country data on education and the labor force abstract cross country data on education and the labor force frequently are used to describe important dimensions of development and to estimate models of economic growth and growth determinants the impact of education and related phenomena this investigation finds 1 there are serious intertemporal and inter country comparability problems with these data that may importantly affect inferences about labor force size trends and productivity and schooling investments and impact 2 data gaps are systematically related to levels of development and literacy and 3 conclusions about the determinants or consequences of development based on constructed data that have been made available to fill data gaps can be seriously misleading

measuring the distribution of material well being u s trends abstract economists with a few exceptions have automatically assumed that the important measure of well being is income in contrast economic historians have broadened the measure of well being with particular interest in mortality morbidity nutrition education and leisure when one takes this broader view of the standard of living there appears to be a strong trend toward more equality in the distribution of well being since the industrial revolution gini coefficients calculated for the distributions of lifespan and educational attainment have declined dramatically since the mid nineteenth century for the united states mortality and educational differentials have also declined inequality of leisure time and consumption though not as consistently measured also show trends toward equality over the twentieth century these trends toward equality in well being as measured by indicators other than income and wealth seem to be generated by provision of public goods natural boundaries to lifespan educational attainment and leisure and by the growth in mean per capita income the divergent trends in the distributions of income and the other measures of well being caution against reliance on the distribution of income to interpret trends in inequality

production and innovation when techniques are tacit the case of education abstract the central theme of this paper is that the conventional economic theory of production does not hold even approximately in a field like education after examining the result of input output studies in education and the effect of government attempts to enhance education effectiveness we provide a sketch of a new production theory for sectors where techniques are poorly articulated and idiosyncratic

the implications for households of environmental tax reform etr in europe abstract the paper discusses the distributional implications of environmental tax reform etr for households and presents new results from modelling the impacts of a major etr for the european union the distributional effects arise from the new environmental taxes any tax reductions made as part of the etr the wider macroeconomic impacts from the etr any special provisions in the etr and the environmental benefits from the etr the paper s literature review makes clear that while the impacts from taxes on the household use of energy are very often regressive transport taxes tend not to be although the impacts differ between urban and rural households moreover the net distributional impact is often less regressive or not at all once the wider distributional effects are taken into account residual regressive effects can in principle be removed by further adjustments in the tax or benefits system the modelling results suggest that an etr in europe will actually increase real incomes across the eu as a whole and will not be generally regressive although the results differ by country and for different socio economic groups the political acceptability of etr may depend on the worst effects on these groups being mitigated in some way

schooling and economic well being the role of nonmarket effects standard estimates of the economic value of additional schooling based on earnings differences associated with differences in the level of schooling attained cover only a portion of the total effects of education that are valued by citizens we first identify a catalog of nonmarketed effects many of which have been recently studied by economists and then propose a procedure for estimating a willingness to pay value for these effects using empirical estimates of the magnitude of a selection of these effects found in the literature we calculate willingness to pay values using our proposed procedure these illustrative calculations suggest that standard estimates of the benefit of incremental schooling substantially understate the full value of such investments

the effects of family characteristics on the return to education in this paper the authors examine the role of parental education in the human capital production function by estimating the effects of parental education on the education profile of wages the analysis uses sibling pairs from the panel study of income dynamics and the national longitudinal surveys of labor market experience of young men and young women the authors obtained mixed evidence on whether parental education raises the return to education copyright 1996 by mit press

when one size does not fit all a problem of fit rather than failure for voluntary management standards voluntary management standards for social and environmental performance ideally help to define and improve firms related capabilities these standards however have largely failed to improve such performance as intended over emphasis on institutional factors leading to adoption of these standards has neglected the role of firms existing capabilities external pressures can drive firms to adopt standards more than their technical capacity to employ them this can lead to problems of fit between institutional requirements and a firm s existing capabilities we describe a conceptual model that considers the impact of an interaction between a firm s institutional requirements and its existing capabilities on standards failure we suggest solutions that align institutional requirements to appropriate governance forms as a means to improve standards success we contribute to theory by describing the role of firms internal capabilities to the success of voluntary management standards and the reliability of self regulation generally

the economics of schooling production and efficiency in public schools n recent years public and professional interest in schools has been heightened by a spate of reports many of them critical of current school policy these policy documents have added to persistent and long standing concerns about the cost effectiveness and fairness of the current school structure and have made schooling once again a serious public issue as in the past however any renewed interest in education is likely to be short lived doomed to dissipate as frustration over the inability of policy to improve school practice sets in this frustration about school policy relates directly to knowledge about the educational production process and in turn to underlying research on schools although the educational process has been extensively researched clear policy prescriptions flowing from this research have been difficult to derive 2 there exists however a consistency to the research findings that does have an immediate application to school policy schools differ dramatically in quality

validating energy oriented cge models although cge models have received heavy usage they are often criticized as being insufficiently validated key parameters are often not econometrically estimated and the performance of the model as a whole is rarely checked against historical outcomes as a consequence questions frequently arise as to how much faith one can put in cge results in this paper we employ a novel approach to the validation of a widely utilized global cge model gtap e by comparing the variance of model generated petroleum price distributions driven by historical demand and supply shocks to the model with observed five year moving average price distributions we conclude that energy demand in gtap e is far too price elastic over this time frame after incorporating the latest econometric estimates of energy demand and supply elasticities we revisit the validation question and find the model to perform more satisfactorily as a further check we compare a deterministic global general equilibrium simulation based on historical realizations over the 2001 2006 period during which petroleum prices rose sharply along with growing global energy demands as anticipated by the stochastic simulations the revised model parameters perform much better than the original gtap e parameters in this global general equilibrium context

a major environmental tax reform for the uk results for the economy employment and the environment this paper reports the results of a major modelling exercise to gain insights into the possible economic and environmental effects of a large scale environmental tax reform etr in the uk etr involves a shift in the target of taxation away from labour or firms towards pollution or the use of natural resources in such a way that overall tax revenues are unchanged it is hoped that such a tax shift will deliver environmental improvements while having a neutral or positive effect on the economy the modelling was set up to explore the extent to which this would be the case the paper starts with a brief literature review identifying the theoretical hypotheses relating to etr and summarising the results of some of the evaluations of etrs that have been implemented it then briefly describes the model used for the analysis in this paper the main body of the paper then describes the scenarios set up to explore the main impacts and the results of modelling these scenarios these results suggest that substantial reductions in greenhouse gas ghg emissions can be achieved with minimal impacts on output and an overall increase in employment such that etr emerges as a very attractive policy for ghg emission reduction

the influence of private school enrollment on public school performance school choice reform refers to changes that allow parents greater freedom to choose schools for their children school choice reform is contentious because it fundamentally alters the environment in which public and private schools operate and could result in significant changes for both demanders and suppliers of education this article develops a model of public education with imperfect exit to predict how private school enrollment influences performance of public schools empirical evidence from data on all private and public schools in california provides substantial support for the hypothesis that public school test scores are inversely related to private school enrollments and charter school enrollments when private and charter schooling reflects exiting by parents unhappy with local public schools implications regarding how expanded private school choice might influence public school performance in california and elsewhere are discussed

assessing school efficiency in portugal using fdh and bootstrapping this study explores a new data set that contains information both on inputs and outputs for a sample of portuguese secondary schools an fdh reference technology is used to determine radial technical efficiency scores and slacks although it is known that there is no reason to assume convexity in the study of education efficiency frontiers this is the first study ever to use fdh at the school level effectively relaxing the convexity assumption a two stage approach is used whereby the significant environmental variables that explain fdh efficiency scores and slacks are identified for the purpose of statistical inference the first application of the bootstrapping algorithms suggested by simar and wilson 2003 is conducted the study concludes that the unemployment rate access to health care services adult education and living infrastructures are determinants of school efficiency the differences between the coast and the interior of portugal seem to be more relevant as far as school efficiency is

tradable quota taxation and market power abstract we investigate how corrective taxation can improve the efficiency properties of tradable quota systems affected by market power indeed we show that when there is a dominant firm in the tradable quota market the regulator can set an ad hoc taxation on firms traded quotas that restores cost effectiveness without driving the dominant firm s net demand to zero achieving cost effectiveness with market power and quota taxation implies some costs in terms of tax revenue that however can be justified by the corresponding reduction of compliance costs moreover we see that there may be cases where all firms result to be better off after the implementation of corrective taxation

human capital vs signalling explanations of wages increases wages by directly increasing the worker s productivity this learning explanation is usually associated with human capital theory however it seems unlikely that learning explains all the wage differences associated with schooling and work history better educated workers are not a random sample of workers they have lower propensities to quit or to be absent are less likely to smoke drink or use illicit drugs and are generally healthier it is unlikely that employers make full use of differences in propensities to quit or to be absent or sick when hiring workers these characteristics are often not directly observed and the americans with disabilities act precludes firms from using either poor health or the likelihood of future sickness as a hiring criterion unless it is directly related to job performance however if low levels of education are associated with these unfavorable employee characteristics and employers are allowed to take education into account when hiring workers we would expect employers to favor better educated workers as a means of reducing their costs of sickness and job turnover in turn students will take these hiring criteria into account when deciding how long to stay in school students will choose a length of schooling to signal their ability to employers and employers will demand a minimum level of schooling

institutional emergence in an era of globalization the rise of transnational private regulation of labor and environmental conditions1 why have systems of transnational private regulation recently emerged to certify corporate social and environmental performance different conceptions of institutional emergence underlie different answers to this question many scholars argue that firms create certification systems to solve problems in the market a view rooted in a conception of institutions as solutions to collective action problems the author develops a different account by viewing institutions as the outcome of political contestation and by analyzing conflict and institutional entrepreneurship among a wide array of actors using a comparative case study design the analysis shows how these arguments explain the formation of social and environmental certification associations both theoretical approaches are needed but strong versions of the market based approach overlook an important set of dynamics that the author calls the political construction of market institutions the analysis shows how both problem solving in markets and

the impact of educational standards on the level and distribution of earnings the goal of this paper is to present the following finding an egalitarian policy maker might prefer higher standards than would a policy maker whose goal was to maximize the sum of earnings the result is based on the observation that if workers are differentiated with respect to ability an increase in educational standards will increase the earnings of both the most able and the least able workers the only workers whose earnings fall are those workers who after the increase fail to continue meeting the standard

location and education in south african cities under and after apartheid we model a south african city during apartheid in which both schooling and mobility are restricted on the basis of race and after apartheid in which no restrictions are imposed we first show that the inequality between blacks and whites decreases when apartheid laws are removed indeed blacks are better off because of human capital externalities due to the possibility of mixing with white students whereas whites are worse off due to negative human capital externalities and intensified land market competition after apartheid we also show that reducing the commuting costs of black children always increases the utility of black families and may even increase that of whites

budget constrained frontier measures of fiscal equality and efficiency in schooling equality and efficiency are key issues in educational reform here the authors analyze the efficiency and equality consequences of various school finance reforms using a cost indirect output distance function this function readily models multiple output production under conditions of budgetary constraint and provides a natural measure of performance that is closely related to farrell type measures of efficiency the analysis suggests that despite school district inefficiency finance reforms can affect student achievement however any potential gains in output from redistribution are dwarfed by the potential gains from increased efficiency more strikingly the analysis demonstrates that budgetary reforms designed to equalize expenditures could actually increase the inequality of student achievement

stakeholder pressures as determinants of csr strategic choice why do firms choose symbolic versus substantive self regulatory codes of conduct to encourage corporations to contribute positively to the environment in which they operate voluntary self regulatory codes src have been enacted and refined over the past 15 years two of the most prominent are the united nations global compact and the global reporting initiative in this paper we explore the impact of different stakeholders pressures on the selection of strategic choices to join srcs our results show that corporations react differently to different sets of stakeholder pressures and that the src selection depends on the type and intensiveness of the stakeholder pressures as well as the resources at hand to respond to those pressures our contribution offers a more specific and finely variegated analysis of firm stakeholder interactions

schools and housing markets an examination of school segregation and performance in connecticut this paper estimates a dynamic model of price level school performance and school racial and ethnic composition in the state of connecticut the paper finds that increasing minority representation in a labor market area reinforces the existing pattern of school segregation changes in segregation appear to be influenced by demographic trends in urban areas and by the labour market factors that determine those trends there is no evidence however to suggest that this process affects housing prices rather the housing market appears to adjust relatively quickly

the religious factor in private education abstract we quantify the religious factor in private education in the united states by calibrating a political economy model of school choice among public private nonsectarian and subsidized religious schools in which parents differ in their incomes and in their preferences for religious education this shows strong latent demand for religious schooling conditioned on current subsidized tuition levels in parochial schools which is suppressed by the need to pay twice for private education applying the results of the calibration to gauge the effect of means tested school voucher programs on religious and nonsectarian private enrollment we find that when the amount of the voucher is relatively small including subsidized religious schools in such programs is necessary for providing low income families effective access to private education

teacher training teacher quality and student achievement abstract we study the effects of various types of education and training on the productivity of teachers in promoting student achievement previous studies on the subject have been hampered by inadequate measures of teacher training and difficulties in addressing the non random selection of teachers to students and of teachers to training we address these issues by estimating models that include detailed measures of pre service and in service training a rich set of time varying covariates and student teacher and school fixed effects we find that elementary and middle school teacher productivity increases with experience informal on the job training the largest gains from experience occur in the first few years but we find continuing gains beyond the first five years of a teacher s career in contrast we do not find a consistent relationship between formal professional development training and teacher productivity however this may be partly driven by estimation issues as we find more significant positive effects of formal training in the subject grade combination where estimates should be most precise middle school math there is no evidence that teachers pre service undergraduate training or college entrance exam scores are related to productivity

public schooling college subsidies and growth abstract how does the mix of public education expenditures across primary and secondary k 12 education and post secondary college education influence economic growth to address this i build an overlapping generations endogenous growth model human capital is accumulated through compulsory k 12 education and through optional college education government uses tax revenue to provide quality in k 12 schooling and to subsidize college tuition when total expenditures are small all funds should provide k 12 quality when expenditures are above a critical value a positive share should subsidize tuition the share should increase with total expenditures and with the degree of complementarity of human capital accumulated through the two types of education also increased education spending is more likely to increase growth when a larger share subsidizes tuition

understanding the twentieth century growth in u s school spending persistent increases in spending on elementary and secondary schools have gone virtually undocumented real expenditure per student increased 3 percent per year over the period 1890 1990 decomposition of the spending growth shows that it resulted from a combination of falling pupil staff ratios increasing real wages to teachers and rising expenditure outside of the classroom although the expansion of education for the handicapped has had a disproportionate effect on spending most of the growth in expenditure during the 1980s came from other sources significant teacher salary increases particularly for females have failed to keep up with wages in other occupations

where has all the education gone cross national data show no association between increases in human capital attributable to the rising educational attainment of the labor force and the rate of growth of output per worker this implies that the association of educational capital growth with conventional measures of total factor production is large strongly statistically significant and negative these are on average results derived from imposing a constant coefficient however the development impact of education varied widely across countries and has fallen short of expectations for three possible reasons first the institutional governance environment could have been sufficiently perverse that the accumulation of educational capital lowered economic growth second marginal returns to education could have fallen rapidly as the supply of educated labor expanded while demand remained stagnant third educational quality could have been so low that years of schooling created no human capital the extent and mix of these three phenomena vary from country to country in explaining the actual economic impact of education or the lack thereof

analysis of trends in technical and allocative efficiency an application to texas public school districts abstract we present a new dea based method to analyze efficiency trends over time and differences across subgroups in a panel data setting we employ a result that the aggregate technical and allocative inefficiency score equals the technical inefficiency when input quantities are aggregated into a single total input cost variable and develop test procedures to evaluate the presence of allocative inefficiency we apply these methods to test for the presence of allocative inefficiency in texas school districts over 1993 99 and analyze shifts and trends in both technical and allocative inefficiencies over time for different regions our empirical results indicate the existence of statistically significant allocative inefficiencies while technical inefficiency increased over the six year sample period allocative inefficiency remained relatively stable during this period these results for the full sample obtain also when we repeat the analysis for different regions

the economics of the cdm levy revenue potential tax incidence and distortionary effects a levy on the clean development mechanism and other carbon trading schemes is a potential source of finance for climate change adaptation an adaptation levy of 2 is currently imposed on all cdm transactions which could raise around 500 million between now and 2012 this paper analyses the scope for raising further adaptation finance from the cdm the economic costs deadweight loss of such a measure and the incidence of the levy that is the economic burden the levy would impose on the buyers and sellers of credits we find that a levy of 2 could raise up to 2 billion a year in 2020 if there are no restrictions on demand this could rise to 10 billion for a 10 tax restrictions on credit demand called supplementarity limits the requirement that most emission abatement should happen domestically curtail trade volumes and consequently tax revenues they also alter the economic impact of the cdm levy without supplementarity restrictions sellers developing countries bear two thirds of the cost of the tax if there are supplementarity limits they can pass on the tax burden to buyers developed countries more or less in full without supplementarity restrictions the distortionary effect of the levy its deadweight loss rises sharply with the tax rate with them the deadweight loss is close to zero

assessing alternative solutions to carbon leakage abstract a modified version of the computable general equilibrium gtap e model is developed in order to assess the economic and carbon emission effects of alternative trade policy measures aimed at reducing carbon leakage we compare several unilateral policy measures implemented by countries subject to an emissions level cap results provide evidence of the scarce effectiveness of these policies in reducing the carbon leakage rate and conversely some of the trade measures that are discussed seem to be more consistent with the goal of protecting market shares of national firms in the domestic markets of abating countries assessing environmental and competitiveness outcomes jointly confirms that a global cooperative solution would be the most effective as well as an efficient policy option for reducing carbon leakage

demand elasticities in international trade are they really low the authors analyze the u s demand for bangladeshi imports for products restricted under the multifiber arrangement because bangladesh is only a small supplier of these products and latin american and asian countries can supply close substitutes the authors expected a high elasticity of demand for bangladeshi imports and they found consistently high estimates based on statistically significant coefficients their finding accords with trade theorists prejudice that small countries can essentially behave as price takers but conflicts with the empirical literature view that demand elasticities are low rarely exceeding 3 and generally between 1 and 2 the authors analysis differs from the existing literature in three ways they derive a set of estimation equations from an explicit utility maximization model and use the estimated parameters of the utility function to obtain the marshallian own price and cross price elasticities as well as the income elasticity of demand they take explicit account of u s imports from competitors of bangladesh relying directly on competitors prices and they use highly disaggregated data that make the unit value of exports a better proxy for price than using aggregated export data commonly used in this literature the authors outline their theoretical model for deriving their estimated equations in section 1 preliminarily determine who bangladesh s competitors are in section 2 and estimate the demand equation derived in section 1 and derive the price and income elasticities facing bangladesh in section 3

the effect of competition on the efficiency of secondary schools in england abstract in this paper we calculate the technical efficiencies based upon multiple outputs school exam performance and attendance rates of all secondary schools in england over the period 1993 1998 we then estimate models to examine the determinants of efficiency in a particular year and the determinants of the change in efficiency over the period our results suggest that the greater the degree of competition between schools the more efficient they are the strength of this effect has also increased over time which is consistent with the evolution of the quasi market in secondary education competition is also found to be an important determinant of the change in efficiency over time there is however some evidence of conditional convergence between schools

the determinants of donative revenue flows from alumni of higher education an empirical inquiry institutions of higher education are increasingly relying upon alumni giving and endowment earnings as sources of funding this paper utilizes a new database on average alumni donations at the institutional level and institutional characteristics to explore the role that lagged institutional characteristics and policy have on subsequent donations to the institution our results confirm the noncontemporaneous effects of variations in the average scholastic achievement of matriculated students a proxy for both student quality and student socioeconomic status on subsequent donative revenue flows and indirectly address some of the open questions left by previous theoretical inquiries

quality adjusted measures of services in public schools abstract this study considers specification and estimation of cost functions in public schools a number of production characteristics are included in the specification to control for observable differences between municipalities in the provision of their school services both parametric and non parametric approaches are used to take into account the quality differences in school services these approaches are then compared to the alternative output measure without any adjustment for quality differences the sensitivity of different elasticities and returns to scale rts measures with respect to alternative model specifications and quality adjustments are also analyzed in the empirical section we examine performances of 286 swedish municipalities in the production of primary and secondary school education during the 1992 3 1994 5 school years

taxing international emissions trading we investigate the efficiency and effectiveness consequences of emissions trading taxation a theoretical partial equilibrium model is developed showing that permits taxation distorts the equilibrium price and abatement efforts potentially counterintuitive conclusions concerning the tax revenue are also derived a cge model complements theoretical results suggesting that the change in the equilibrium permits price brought about by taxation can be significant finally we conclude that policy design based on cost effectiveness might lead to wrong conclusions the socially desirable design of emissions trading taxation requires homogenous tax rates applied to net sellers and no rebate rates allowed for net buyers