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

consumption and debt response to unanticipated income shocks evidence from a natural experiment in singapore abstract this paper uses a unique panel dataset of consumer financial transactions to study how consumers respond to an exogenous unanticipated income shock consumption rose significantly after th

a note on the inventory models for deteriorating items with ramp type demand rate abstract in this research we study the inventory models for deteriorating items with ramp type demand rate we first clearly point out some questionable results that appeared in mandal b pal a k 1998 order level inventory system with ramp type demand rate for deteriorating items journal of interdisciplinary mathematics 1 49 66 and wu k s ouyang l y 2000 a replenishment policy for deteriorating items with ramp type demand rate short communication proceedings of national science council roc a 24 279 286 and then resolve the similar problem by offering a rigorous and efficient method to derive the optimal solution in addition we also propose an extended inventory model with ramp type demand rate and its optimal feasible solution to amend the incompleteness in the previous work moreover we also proposed a very good inventory replenishment policy for this kind of inventory model we believe that our work will provide a solid foundation for the further study of this sort of important inventory models with ramp type demand rate

household risk management and optimal mortgage choice the portfolio of the typical american household is quite unlike the diversie ed portfolio of liquid assets discussed in e nance textbooks the major asset in the portfolio is a house a relatively illiquid asset with an uncertain capital value the value of the house generally exceeds the net worth of the household which e nances its homeownership through a mortgage contract to create a leveraged position in residential real estate other e nancial assets and liabilities are typically far less important than the house and its associated mortgage contract the importance of housing in household wealth is illustrated in figure i this e gure plots the fraction of household assets in housing and in equities against the wealth percentile of the household poor households appear at the left of the e gure and wealthy households at the right data come from the 1989 and 1998 survey of consumer finances the e gure shows that middle class american families from roughly the fortieth to the eightieth percentile of the wealth distribution have more than half their assets in the form of housing even after the expansion of equity ownership during the 1990s equities are of negligible importance for these households 1

household debt and monetary policy revealing the cash flow channel we study the effect of monetary policy on spending when households hold debt with variable interest rates when interest rates on outstanding loans vary with the short term market interest rate monetary policy has a direct and immediate effect on households expenses and disposable income if households are borrowing constrained they will respond to a shock to disposable income by adjusting their spending as a result a monetary policy induced interest rate change leads to a larger change in consumption than what is predicted by the elasticity of intertemporal substitution we examine this cash flow channel of monetary policy using administrative data on swedish households we estimate a strong and statistically significant response in spending to changes in interest expenses more specifically we estimate a marginal propensity to consume including durable consumption that is around unity or even higher in response to monetary policy induced changes in interest expenses for example highly indebted households with adjustable rate mortgages reduce consumption growth by several percentage points more in response to a one percentage point increase in the household interest rate than households with little debt or fixed rate mortgages our findings imply that monetary policy will have a stronger effect on real economic activity when households are highly indebted and have adjustable rate mortgages jel classification d14 e21 e52 g11

the great mortgaging housing finance crises and business cycles this paper unveils a new resource for macroeconomic research a long run dataset covering disaggregated bank credit for 17 advanced economies since 1870 the new data show that the share of mortgages on banks balance sheets doubled in the course of the twentieth century driven by a sharp rise of mortgage lending to households household debt to asset ratios have risen substantially in many countries financial stability risks have been increasingly linked to real estate lending booms which are typically followed by deeper recessions and slower recoveries housing finance has come to play a central role in the modern macroeconomy

child labor and globalization the article embeds child labor in a standard general equilibrium two sector model of a small open economy facing perfectly competitive markets efficiency wages and free trade the modern sector uses skilled adult labor and capital and the agrarian sector uses unskilled child and adult labor and skilled adult labor trade policies foreign direct investment or both that increase the modern sector output reduce the incidence of child labor emigration of skilled unskilled workers reduces increases the incidence of child labor child wage subsidies increase the incidence of child labor and a ban on child labor benefits unskilled adult workers but hurts skilled workers

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

an inventory model with generalized type demand deterioration and backorder rates abstract this study is motivated by the paper of skouri et al skouri konstantaras papachristos ganas european journal of operational research 192 1 2009 79 92 we extend their inventory model from ramp type demand rate and weibull deterioration rate to arbitrary demand rate and arbitrary deterioration rate in the consideration of partial backorder we demonstrate that the optimal solution is actually independent of demand that is for a finite time horizon any attempt at tackling targeted inventory models under ramp type or any other types of the demand becomes redundant our analytical approach dramatically simplifies the solution procedure

malnutrition and child labor in pre industrial and developing economies it is common to find i entire families including children working together in family farms or urban factories and ii a positive link between a person s consumption and her productivity this paper argues that there is a natural reason for the concurrence of i and ii as a rule households are characterized by intra household altruism an increase in the income of an individual increases the consumption of all household members hence when an employer pays an adult worker a high wage to enhance her productivity part of it ends up augmenting her children s consumption and productivity one way for the employer to prevent this leakage and internalize the externality is to employ the children as well this explains the higher incidence of family labor in poor societies where ii is more likely to be true

household expenditure and the income tax rebates of 2001 using questions expressly added to the consumer expenditure survey we estimate the change in consumption expenditures caused by the 2001 federal income tax rebates and test the permanent income hypothesis we exploit the unique randomized timing of rebate receipt across households households spent 20 to 40 percent of their rebates on nondurable goods during the three month period in which their rebates arrived and roughly two thirds of their rebates cumulatively during this period and the subsequent three month period the implied effects on aggregate consumption demand are substantial consistent with liquidity constraints responses are larger for households with low liquid wealth or low income

interest rate changes mortgages and consumption evidence from italy summaryusing the italian survey of household income and wealth we study whether the drop in interest rates following the great recession was associated with an increase in consumption for households with adjustable rate mortgages arm relative to those with fixed rate mortgages frm after the reduction in mortgage payments consumption of arm holders increases relative to frm but the implied marginal propensity to consume is not statistically different from zero we suggest three explanations for the weak consumption response to the income shock first cash on hand and debt heterogeneity may attenuate the consumption response second borrowers believe that the income shock was short lasting and that interest rates would likely increase in the future implying a small effect on consumption third the shock is offset partly by a reduction in income from financial assets owned by mortgagors the findings have implications for the conduct of monetary policy interventions and the credibility of the future path of interest rates pass through of monetary policy and design of the mortgage market

parental altruism and self interest child labor among late nineteenth century american families intergenerational relationships within late nineteenth century industrial families are analyzed using several large scale contemporary household surveys nonaltruistic behavior by parents was pervasive even among families with positive assets child labor was common in certain industrial settings suggesting that child labor or nonschooling did not simply reflect parental borrowing constraints neither did physical asset transfers offset human capital losses among working youth a quantitative estimate of parental nonaltruism is derived from an equilibrium labor market model approximately 90 percent of all child earnings was implicitly competed away through lower adult wages as families migrated to areas with abundant child labor opportunities

inventory models with ramp type demand rate partial backlogging and weibull deterioration rate in this paper an inventory model with general ramp type demand rate time dependent weibull deterioration rate and partial backlogging of unsatisfied demand is considered the model is studied under the following different replenishment policies a starting with no shortages and b starting with shortages the model is fairly general as the demand rate up to the time point of its stabilization is a general function of time the backlogging rate is any non increasing function of the waiting time up to the next replenishment the optimal replenishment policy for the model is derived for both the above mentioned policies

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

effort wages and the international division of labor this paper embeds variable effort into a traditional two sector heckscher ohlin model of international competition effort enters a production function as total factor productivity and on the assumption that effort does not affect capital depreciation the capital cost savings from high effort operations are passed on to workers the labor market thus offers a set of contracts with higher wages compensating for higher effort this has implications for growth openness minimum wages collective bargaining public support of education efficiency of state enterprises the distribution of wealth childbearing and much more

review of inventory systems with deterioration since 2001 abstract this paper presents an up to date review of the advances made in the field of inventory control of perishable items deteriorating inventory the last extensive review on this topic dates back to 2001 goyal s k and giri b c recent trends in modeling of deteriorating inventory european journal of operational research 134 1 16 since then over two hundred articles on this subject have been published in the major journals on inventory control indicating the need for a new review we use the classification of goyal and giri based on shelf life characteristics and demand characteristics contributions are highlighted by discussing main system characteristics including price discounts backordering or lost sales single or multiple items one or two warehouses single or multi echelon average cost or discounted cash flow and payment delay

is product boycott a good idea for controlling child labor a theoretical investigation abstract a popular form of action to curb child labor and uphold international labor standards in general is a product boycott by consumers there are labeling agencies that inform us if for instance a carpet or a hand stitched soccer ball is free of child labor the presence of a consumer boycott will typically mean that products tainted by child labor will command a lower price on the market than ones certified to be untainted it is popularly presumed that such consumer activism is desirable the paper formally investigates this presumption and shows that consumer product boycotts can in a wide class of situations have an adverse reaction that causes child labor to rise rather than fall this happens under weak and plausible assumptions hence there has to be much greater caution in the use of consumer activism and one has to have much more detailed information about the context where child labor occurs before using a boycott

consumption dynamics during recessions when will durable expenditures respond strongly to economic stimulus we build from micro evidence and show that in a heterogeneous agent business cycle model with xed costs of durable adjustment responsiveness is substantially dampened during recessions our model estimates imply that during the great recession durable expenditures were half as responsive to additional stimulus as during the boom in the 1990s this procyclical responsiveness is driven by changes in the distribution of households desired durable holdings over the cycle we directly test our model by estimating this distribution empirically using psid micro data and nd that the distribution in the data moves cyclically as predicted in addition to this micro evidence we also provide support for our model s procyclical responsiveness using aggregate time series data and we show this time series evidence is inconsistent with simpler models featuring smooth adjustment costs

what calls to arms international evidence on interest rates and the choice of adjustable rate mortgages the form of the interest rate on newly issued mortgages namely whether they are adjustable rate mortgages arms or fixed rate mortgages frms varies considerably both across countries and over time we attempt to uncover the sources of this variation in the arm share of arms issued relative to total mortgage issuance our emphasis is on drawing inferences about how household mortgage choice is affected by households reactions to movements in interest rates we complement newly assembled panel data from nine countries on the arm share and mortgage interest rates with a panel instrumental variables approach in which we test exclusion restrictions that are implied by alternative explanations for variation in the arm share we uncover strong evidence in favour of current cost minimization as the proximate driver of household mortgage choice

inequality as a determinant of malnutrition and unemployment policy this paper explores the policy implications that are obtained once it is recognized that at low nutrition intakes a person s productivity is an increasing function of intake in the context of a fully general equilibrium model it is shown that if aggregate assets in an economy are neither large nor small certain patterns of lorenz improving asset redistributions or nutrition transfers increase aggregate output and reduce the volume of involuntary unemployment and the incidence of undernourishment copyright 1987 by royal economic society

a theory of dual labor markets with application to industrial policy discrimination and keynesian unemployment this paper develops a model of dual labor markets based on employers need to motivate workers in order to elicit effort from their workers employers may find it optimal to pay more than the going wage this changes fundamentally the character of labor markets the model is applied to a wide range of labor market phenomena it provides a coherent framework for understanding the claims of industrial policy advocates it also can provide the basis for a theory of occupational segregation and discrimination that will not be eroded by market forces finally the model provides the basis for a theory of involuntary unemployment

the macroeconomics of child labor regulation we develop a positive theory of the adoption of child labor laws workers who compete with children in the labor market support a child labor ban unless their own working children provide a large fraction of family income fertility decisions lock agents into specific political preferences and multiple steady states can arise the introduction of child labor laws can be triggered by skill biased technological change which induces parents to choose smaller families the theory can account for the observation that in britain regulations were first introduced after a period of rising wage inequality and coincided with rapid fertility decline

the broth and the cooks a theory of surplus labor abstract it had been suggested by sen 1966 that surplus labor may exist if a decline in labor force size results in an increase in the number of hours of work per remaining laborer the present paper explores a new avenue where the decline in the labor force raises wages and thereby raises each worker s productivity it is argued that the large literature on efficiency wages while very successful in explaining open unemployment fails to explain surplus labor in this literature the assumption that wages can raise productivity is invariably made in conjunction with the assumption that this is true not only at the aggregate level but at the level of each employer once these two assumptions are separated out a rigorous explanation of surplus labor becomes possible under conditions which are in some ways more general than sen s model this argument is demonstrated and then some policy issues are addressed in this paper in particular the consequences of food rationing and wage subsides are examined

international migration and child labour in developing countries this paper investigates the labor market effect of international migration on child work in countries of origin we use an original cross country survey dataset which combines information on international migration with detailed individual level data on child labour at age 5 14 in a wide range of developing countries by exploiting both within and cross country variation and controlling for country fixed effects we find strong and robust evidence on the role of international mobility of workers in reducing child labour in disadvantaged households through changes in the local labour market

health nutrition and economic development the relationship between health and economic development is explored focusing on nutrition based health indicators the spotlight is placed on the inter related feedbacks between the influence of health on productivity on one hand and the influence of income on health status on the other disentangling causality in these relationships has preoccupied much of the literature we evaluate different empirical strategies that have been adopted and assess the results there is now a body of evidence based on careful empirical studies that demonstrates a causal relationship between health and labor productivity there is also evidence that at least among the very poor additional income is spent on improved nutrition there are two issues that have received little attention although we argue they are likely to be very important first measurement of health is discussed in detail evidence is presented on how taking into account differences in the extent of measurement error is critical for interpreting the impact of health on wages the same theme emerges in studies of the effect of income on health specifically calorie intake the key role of non linearities in these relationships is highlighted and we demonstrate that a good deal of the variation in estimates of income elasticities of demand for calories can be ascribed to the role of measurement and functional form authors

financial market imperfections and home ownership a comparative study abstract we explore the determinants of the distribution of owner occupancy rates across age groups using a collection of microeconomic data on 14 oecd countries in most the survey is repeated over time this allows us to construct an international dataset merging data on 39 national household surveys with aggregate data on down payment ratios we find strong evidence that the availability of mortgage finance as measured by down payment ratios affects the distribution of owner occupancy rates across age groups especially at the young end the results are consistent with previous theoretical models and have important implications for the debate on the relation between saving and growth

monetary policy when households have debt new evidence on the transmission mechanism in response to an unanticipated change in interest rates households with mortgage debt adjust their expenditure signicantly especially on durable goods renters react to a lesser extent and outright home owners do not react at all all housing tenure groups experience a signicant change in disposable income over and above the direct impact on mortgage repayments the response of house prices is sizable driving a signicant adjustment in loanto income ratios but little change in loan to value ratios a simple collateral constraint model augmented with durable goods and a renting decision generates predictions consistent with these novel empirical ndings and suggests that heterogeneity in housing debt positions plays an important role in the transmission of monetary policy

the consumption and wealth effects of an unanticipated change in lifetime resources in 2000 italy replaced its traditional system of severance pay for public employees with a new system under the old regime severance pay was proportional to the final salary before retirement under the new regime it is proportional to lifetime earnings this reform entails substantial losses for future generations of public employees in the range of 20 000 30 000 depending on seniority using a difference in difference framework we estimate the impact of this unanticipated change in lifetime resources on the current consumption and wealth accumulation of employees affected by the reform in line with theoretical simulations we find that each euro reduction in severance pay reduces the average propensity to consume by 3 cents and increases the wealth income ratio by 0 32 the response is stronger for younger workers and for households where both spouses are public sector employees this paper was accepted by amit seru finance

international trade policy in a model of unemployment and wage differentials the author examines the effects of import tariffs and export subsidies in a two sector model with sector specific wage differentials and an equilibrium level of unemployment in general such policies change both the composition and level of employment policies designed to attract workers to the high wage sector could also result in reduced employment and lower social welfare this could happen if the low wage sector is also the relatively labor intensive sector in such situations the optimal policy might entail protecting the low wage labor intensive sector i examine the effects of import tariffs and export subsidies in a two sector model with sector specific wage differentials and an equilibrium level of unemployment in general such policies change both the composition and level of employment policies designed to attract workers to the high wage sector could also result in reduced employment and lower social welfare this could happen if the low wage sector is also the relatively labour intensive sector in such situations the optimal policy might entail protecting the low wage labour intensive sector

optimal mortgage refinancing a closed form solution we derive the first closed form optimal refinancing rule refinance when the current mortgage interest rate falls below the original rate by at least in this formula w is the principal branch of the lambert w function where is the real discount rate is the expected real rate of exogenous mortgage repayment is the standard deviation of the mortgage rate is the ratio of the tax adjusted refinancing cost and the remaining mortgage value and is the marginal tax rate this expression is derived by solving a tractable class of refinancing problems our quantitative results closely match those reported by researchers using numerical methods

efficiency wages in a ricardian model of international trade abstract this paper examines the implications of efficiency wages for international trade in a simple extension of the ricardian model in which labour performs two different tasks in production and where workers are imperfectly monitored in the performance of one of the tasks as a result of the factor market distortion the one factor economy may behave like a heckscher ohlin model an important result is that transfers of income have efficiency reducing effects and hence the standard aggregate analysis of trade policy may be inappropriate