the assessment education research on the economics of education increasingly influences the design of education policy the framework for the analysis is provided by human capital theory in which education is interpreted as an investment raising the future productivity of the individual and bringing other private and social benefits estimates of the private and social returns to education and of the effectiveness of schools and teachers can be used to guide the allocation of resources within the public sector in addition policy reforms in the uk have attempted to make public providers of education more responsive to the preferences of parents and students there is evidence that pupil attainment has risen in recent years but that the education system fails to provide equality of access or opportunity and may reinforce social and economic inequality copyright 2004 oxford university press

state characteristics and the location of foreign direct investment within the united states a conditional logit model of the location decision of foreign firms investing in manufacturing facilities in the united states is developed and estimated the authors results for 1981 83 indicate that states with higher per capita incomes and higher densities of manufacturing activity attracted relatively more foreign direct investment in addition higher wages deterred foreign direct investment while higher unemployment rates attracted it surprisingly higher unionization rates were associated with increased foreign direct investment overall higher taxes deterred foreign direct investment however more extensive transportation infrastructures and larger promotional expenditures were associated with increased foreign direct investment copyright 1991 by mit press

fdi and taxation a meta study despite the continuing political interest in the usefulness of tax competition and tax coordination as well as the wealth of theoretical analyses it still remains open whether or when tax competition is harmful moreover the influence of tax differentials on multinationals decisions is still insufficiently analyzed thus economists have increasingly resorted to empirical analysis in order to gain insights on the elasticity of fdi with respect to company taxation as a result the empirical literature on taxation and international capital flows has grown to a similar abundance during the last 25 years as the respective theoretical literature its heterogeneity leads to a rising need for concise reviews on the existing empirical evidence in this paper we extend former meta analyses on fdi and taxation in three ways first we add the most recent publications unconsidered in meta analyses up to date second we apply a different methodology by using a broad set of meta regression estimators and explicitly discuss which one is most suitable for application to our meta data third we address some important issues in research on fdi and taxation to the clarification of which meta analysis can make valuable contributions these issues are mainly the influence of variables which might moderate effects of tax differentials e g public spending the implications of using aggregate fdi data as opposed to firm level information on measured tax effects the implications of bilateral effective tax rates and the possible presence of publication bias in primary research

tax motivated transfer pricing and us intrafirm trade prices abstract this paper analyzes monthly data on us international trade prices between 1997 and 1999 in order to investigate the impact of tax influences on intrafirm trade prices results indicate that there is substantial evidence of tax motivated transfer pricing in us intrafirm trade prices there is a strong and statistically significant relationship between countries tax rates and the prices of intrafirm transactions controlling for other variables that affect trade prices as country tax rates are lower us intrafirm export prices are lower and us intrafirm import prices are higher this finding is consistent with theoretical predictions regarding tax motivated income shifting behavior

staying on in full time education the educational participation rate of 16 year olds this paper presents a time series analysis of the socioeconomic factors influencing the propensity of sixteen year olds to stay on in full time education in england and wales the econometric methodology employed relies on cointegration and general to specific techniques the results suggest that the main factors influencing staying on are the rate of return to education changing social class structure unemployment rates and the introduction of special employment and training measures such as the youth training scheme copyright 1991 by the london school of economics and political science

using maimonides rule to estimate the effect of class size on scholastic achievement the twelfth century rabbinic scholar maimonides proposed a maximum class size of 40 this same maximum induces a nonlinear and nonmonotonic relationship between grade enrollment and class size in israeli public schools today maimonides rule of 40 is used here to construct instrumental variables estimates of effects of class size on test scores the resulting identiecation strategy can be viewed as an application of donald campbell s regression discontinuity design to the class size question the estimates show that reducing class size induces a signiecant and substantial increase in test scores for fourth and efth graders although not for third graders when asked about their views on class size in surveys parents and teachers generally report that they prefer smaller classes this may be because those involved with teaching believe that smaller classes promote student learning or simply because smaller classes offer a more pleasant environment for the pupils and teachers who are in them mueller chase and walden 1988 social scientists and school administrators also have a longstanding interest in the class size question class size is often thought to be easier to manipulate than other school inputs and it is a variable at the heart of policy debates on school quality and the allocation of school resources in many countries see e g robinson 1990 for the united states ofsted 1995 for the united kingdom and moshel ravid 1995 for israel this broad interest in the consequences of changing class size

poverty and public policy the problem of poverty is particularly acute in india with 14 of the world s population we have the misfortune of having almost twice as large a share of the world s poor indeed as i shall presently underline the question of poverty and its amelioration has been at the center of our concerns from the beginning of our planning efforts almost four decades ago little therefore can be said on it that some distinguished indian economist has not already said in some ways therefore to talk on the design of public policy for poverty to an indian audience is to carry coal to newcastle or as the old saying goes to teach your grandmother how to suck eggs nonetheless i hope to provide a fresh perspective by putting the problem into an explicit analytical framework that permits alternative policy designs to be sharply defined and contrasted i also intend to draw on international experience to put our efforts and problems into both historical and comparative perspectives

a comparison of determinants of urban rural and farm poverty in costa rica abstract the lack of progress on reducing poverty in third world countries and its growth during the 1980s show that one of the fundamental goals of development has not been met addressing the renewed concern with poverty requires knowledge about the factors affecting poverty this paper uses logistic regression analysis to estimate the effects of variables on urban rural farm and nonfarm poverty among households in costa rica results show the complexity of the issue and imply policies to expand education through the secondary level to create more opportunities for rural off farm employ

agglomeration adjustment and state policies in the location of foreign direct investment in the united states abstract using u s state level data we show that agglomeration externalities influence the level of foreign invested capital in a location our empirical model allows the separation of agglomeration effects from the rate of capital stock adjustment two forces that previous research has conflated we estimate an agglomeration elasticity of investment of 0 11 to 0 15 with respect to same source country investment lower than previous estimates we also investigate the influence of state policies and find that although general investment incentives do not affect the location of fdi targeted policies such as unitary taxation and state foreign offices influence investment

the locational determinants of direct investments among industrialized countries abstract market size and growth rate as well as tariff barriers have already been shown to influence u s direct investments in the eec the present paper enlarges the field of observation to all bilateral flows of direct investments among six industrialized countries the united states germany france the united kingdom the netherlands and belgium over the years 1969 1982 it also tests the impact of two other would be locational determinants of foreign direct investments namely unit labour costs and export flows moreover a new and alternative specification is put forward and tested which assumes that in the investment decision process foreign locations are in competition not only with each other but also with the home country of the investor

the family and the state the immaturity of children sometimes precludes efficient arrangements between children and parents or others responsible for child care the difficulty in establishing efficient relations within families provides the point of departure for our interpretation of the heavy state involvement in the family the authors believe that a surprising number of state interventions mimic the agreements that would occur if children were capable of arranging for their care many regulations of the family improve the efficiency of family activities these interventions include subsidies to education and training social security and other old age support subsidies to births laws that limit access to divorce and the sale of children and laws that require parents permission for early marriage and other choices of children families that leave bequests can force children to repay parents for investments in human capital by reducing bequests therefore these families do not underinvest in childrens human capital by contrast families that do not leave bequests often poorer families do underinvest in children the state may subsidize schools and other training facilities to raise investments in children by poorer families to efficient levels authors modified

differences in income and poverty within brazil regional disparities in living standards within brazil have received increasing attention in recent years this paper indicates that although costs of living adjustments narrow spatial differences large regional disparities remain particularly upon comparing the northeast and the southeast the application of price indices reduces urban rural variations more than regional differences drastically narrowing the urban rural gap in food consumption poverty is nevertheless much more concentrated in the rural areas than in the urban areas although regional differences in its incidence are more striking than the urban rural divergencies this paper has not primarily concerned the policy implications of these income differentials but tries to highlight the importance of measuring cost of living differences and thus obtaining more accurate measures of income and poverty levels

distributional implications of macroeconomic policy theory and applications to el salvador abstract this article offers a theoretical framework for designing macroeconomic strategy for el salvador that will both respect stabilization and structural adjustment needs and enhance social equity after outlining the largely negative distributional implications of the orthodox policies followed by el salvador in recent years we argue that stabilization and efficiency could actually be improved by increased equity and sketch out the elements of an alternative approach that would be distributionally sensitive and thereby help consolidate the peace

social security and extreme poverty in latin america abstract this article argues that although social security has had a significant impact in preventing a considerable number of people from falling below the extreme poverty level in latin america it has not played an important role in reducing current extreme poverty in the region the analysis is done focusing on three social security objectives protection of the needy affected by social risks progressive income redistribution and promotion of savings investment to reduce inflation and enhance development the author discusses a series of recommendations for achievement of the three cited objectives in order to diminish critical poverty in the future

home field advantage location decisions of portuguese entrepreneurs an investor s home bias in industrial location decisions may stem from personal factors social capital other non transferable assets and imperfect information about the urban and regional environment this paper explores the distinction between home base and non home location decisions in portugal we reach two important conclusions first the introduction of a variable accounting for prior base of economic activity significantly improves the statistical results second we find that the weighting of distinct location attributes differs between home and non home locations notably non home location choices are strongly governed by agglomeration economies and proximity to major urban centers possibly replicating prior location decisions to economize on search costs the results also enable us to quantify the investor s willingness to opt for a possible home field advantage for example entrepreneurs accept over three times higher labor costs to compete in their resident area of business 2002 elsevier science usa all rights reserved

economic crisis adjustment and living standards in mexico 1982 85 abstract this paper presents an estimate of the impact of economic crisis and adjustment on the living standards of the mexican population between 1982 and 1985 the analysis is based on information on wage and nonwage incomes unemployment functional income distribution changes in public expenditures and social indicators the specific questions addressed are what happened to agricultural and nonagricultural wage and nonwage incomes how did unemployment and the composition of employment change what was the impact of fiscal cuts on social expenditures and food subsidies were social services affected by declining resources did social indicators worsen in addition households strategies in response to declining incomes are briefly discussed finally conjectures are made regarding which population groups were hurt most by the crisis the results indicate that the crisis and adjustment process left mexico with a relatively impoverished middle class and with rising poverty

estimating earnings poverty in 1939 a comparison of orshansky method and price indexed definitions of poverty official poverty lines do not exist for the united states for years prior to 1959 in this paper a poverty line comparable to the seminal line is constructed for 1939 using the orshansky method poverty rates are then calculated using the earnings data of the 1940 public use microdata sample of the u s census a comparison with similar work by ross et al 1987 demonstrates the degree to which continual price indexing of the poverty line results in inappropriate estimates a trend of increasing incidence of poverty among female headed households prior to 1960 is also revealed

the impact of u s tax reform on foreign direct investment in the united states abstract this study empirically examines how taxes shape foreign direct investment and finds that increased taxes spur inward foreign investment this finding conforms with theories that recognize that foreign investor response is critically shaped by the tax provisions faced by the foreign investor in his home country and by the effects of tax reform on pre tax asset returns we demonstrate that average tax rates may better proxy tax effects than do effective tax rates our findings are more robust than previous results since we utilize the entire 1980s tax history consider a fuller set of industry distinctions and estimate the tax responsiveness in the context of exchange rate fluctuations

poverty income distribution and child welfare in latin america a comparison of pre and post recession data abstract the traditional and external dependency of most latin american economies and their recent pattern of growth has made them particularly vulnerable to the unexpected and severe changes of the world economy that began in 1979 1980 even those countries with less open economies have been forced to seek adjustments to the new world situation that are both in nature and consequences essentially different from those of the interdependent industrial economies this paper attempts to evaluate the impact of these recent economic changes on the living conditions of the populations of chile colombia costa rica panama and venezuela it is based on household data and is limited to those aspects of household living conditions that can be observed through the variables included in labour surveys it analyses changes in overall income distribution the movement of different socio economic groups within the income pyramid and changes in these groups livelihood strategies

below the line poverty in latin america abstract despite gains in basic welfare indicators poverty remains prevalent in latin america this paper surveys existing data on poverty in the region and discusses the relationship between growth inequality and poverty given the inequality of income distribution in latin america and the slow growth of output policies to overcome poverty must involve more efficient allocation of government resources redistribution and foreign aid

agglomeration and land rents evidence from the prefectures abstract we use japanese prefectural wage and land rent data to estimate the magnitude of agglomeration effects in manufacturing and financial services we also examine the geographical range of agglomeration effects by estimating the extent to which they diminish with distance using a specification that encompasses the polar cases of purely local agglomeration economies on the one hand and national increasing returns on the other we find that the extent of agglomeration economies in both industries is significant but that their effect decays much faster with distance in financial services than in manufacturing that is the geographical reach of spillovers in financial services appears to be much lower than in manufacturing

troubled banks impaired foreign direct investment the role of relative access to credit during the 1980 s theories were developed to explain the striking correlation between real exchange rates and foreign direct investment fdi however this relationship broke down for japanese fdi in the 1990 s as the real exchange rate appreciated while fdi plummeted we propose the relative access to credit hypothesis and show that unequal access to credit by japanese firms contributes to the explanation of declining japanese fdi using bank level and firm level data sets we find that financial difficulties at banks were economically and statistically important in reducing the number of fdi projects by japanese firms into the united states jel g21 f36

size location and agglomeration of inward foreign direct investment fdi in the united states halvorsen t size location and agglomeration of inward foreign direct investment fdi in the united states regional studies since the late 1970s a range of economic development policies to attract foreign direct investments fdis have been tried out despite a policy reorientation from a large size bias to policies also favouring smaller investments little empirical work has been performed on the determinants of investment size this paper presents empirical evidence on how the size of fdis is determined by agglomeration and other state level factors the results indicate that fdi agglomeration and urbanization affect investment size and that taxes markets labour land and the concentration of scientific knowledge are important determinants in the size composition of fdi halvorsen t le montant la localisation et l agglomeration de l investissement direct etranger ide aux etats unis regional studies depuis la fin des annees 1970 on met en vigueur toute une serie de politiques de developpeme

the effects of imf programs in the third world debate and evidence from latin america abstract this article reviews the debate about the effects of imf sponsored stabilization programs in the third world after examining recent studies by fund economists results of a new study on a latin american country set are presented in this research imf programs are associated with insignificant changes in the current account significant improvements in the overall balance of payments increases in inflation mixed effects on growth and a strong and consistent pattern of reduction in labor share of income the latter result is incorporated into a distribution oriented critique of fund policy

experimental estimates of education production functions this paper analyzes data on 11 600 students and their teachers who were randomly assigned to different size classes from kindergarten through third grade statistical methods are used to adjust for nonrandom attrition and transitions between classes the main conclusions are 1 on average performance on standardized tests increases by four percentile points the first year students attend small classes 2 the test score advantage of students in small classes expands by about one percentile point per year in subsequent years 3 teacher aides and measured teacher characteristics have little effect 4 class size has a larger effect for minority students and those on free lunch 5 hawthorne effects were unlikely

who cares about corporate taxation asymmetric tax effects on outbound fdi this paper investigates whether different types of fdi are asymmetrically affected by corporate taxation we classify investment projects according to several characteristics such as the general motivation for fdi the type of business activity or the degree of internationalisation of the multinational firm subsequently we analyse how local taxes influence the number of german outbound investments in european countries the analysis reveals significant asymmetries with regard to tax effects vertically integrated investments are more sensitive to host country taxation than horizontal fdi larger tax rate elasticities are estimated if business activities are considered highly mobile and in accordance with profit shifting considerations subsidiaries of more internationalised companies are less tax responsive to host country taxation

mode size and location of foreign direct investments and industry markups abstract several studies find that inward foreign direct investment fdi raises host industries competition and productivity using aggregate fdi measures the monetary flows or the change in the industries foreign production share yet fdi flows are composed of many individual heterogeneous investments reflecting this heterogeneity i ask how the average traits of the individual investments that constitute the fdi flow further affect the host while the results show that inward fdi does heighten competition for us manufacturing industries in 1987 1991 price cost markups fall even more when foreign investments locate further away from incumbent industry which is consistent with endogenous location choice

the dynamic effects of tax law asymmetries under the laws of most countries a distinction is made between gains and losses by businesses losses that must be carried forward are subjept to two penalties a loss of interest and expiration previous examinations have focused on the higher expected tax payments such a tax system without full loss offset imposes on risky projects this paper presents a dynamic analysis of the impact of taxation on investment when gains and losses are treated asymmetrically the results demonstrate how firm characteristics and the timing of taxes can influence behaviour under current u s tax law a distinction is made between gains and losses by businesses for corporations gains are taxed at what is essentially a flat rate of 46 while losses do not necessarily qualify for a refund at the same rate to obtain an immediate refund the taxpayer must have had taxable income during the three previous years in excess of the current loss any losses that cannot be carried back in this fashion must be carried forward subject to two implicit penalties such loss carryforwards earn no interest and they expire after fifteen years similar provisions apply in other countries hence businesses investing in risky projects for which the probability of having to carry losses forward is positive can expect to pay higher taxes than they would under a system with full loss offset i e the immediate refund of taxes for losses incurred many corporations

knowledge seeking and location choice of foreign direct investment in the united states to what extent do firms go abroad to access technology available in other locations this paper examines whether and when state technical capabilities attract foreign investment in manufacturing from 1987 1993 we find that on average state r d intensity does not attract foreign direct investment most investing firms are in lower tech industries and locate in low r d intensity states suggesting little interest in state technical capabilities in contrast we find that firms in research intensive industries are more likely to locate in states with high r d intensity foreign firms in the pharmaceutical industry value state r d intensity the most at a level twice that of firms in the semiconductor industry and four times that of electronics firms interestingly not only firms from technically lagging nations but also some firms from technically leading nations are attracted to r d intensive states this suggests that beyond catching up firms use knowledge seeking investments also to source technical diversity

corporate tax rates and foreign direct investment in the united states a significant research effort has been directed at establishing the determinants of foreign direct investment fdi with taxation policy identified as an important factor however the empirical literature has been limited in several respects with most work focused exclusively on host country tax regimes this paper seeks to extend the boundaries of fdi empirical inquiry by using a panel of nine investing tax exemption and tax credit countries over the period 1982 2000 constituting more than 85 of total us fdi inflows and incorporating home country tax rates to analyse two as yet unanswered questions first are corporate income tax rates an important determinant of fdi in the us secondly do investors from tax credit countries differ significantly in their tax response relative to those from tax exemption countries

altered states taxes and the location of foreign direct investment in america this paper compares the distribution between u s states of investment from countries that grant foreign tax credits with investment from all other countries the ability to apply foreign tax credits against home country tax liabilities reduces an investor s incentive to avoid high tax foreign locations state corporate tax rate differences of 1 percent are associated with differences of 9 11 percent between the investment shares of foreign tax credit investors and the investment shares of all others suggesting that state taxes significantly influence the pattern of foreign direct investment in the united states copyright 1996 by american economic association

the aggregate and distributional effects of the tax reform act of 1986 on firm valuation the authors examine the aggregate and distributional effects of the tax reform act of 1986 on equity values of publicly traded corporations the results show that the effect of the act on the aggregate equity value of corporations was consistent with the present value of the projected added tax collection from the corporate sector the cross sectional variation in the magnitude and direction of the stock price response to the tax reform act of 1986 was a function of both the direct and indirect consequences of the act on the firms future cash flows copyright 1991 by university of chicago press

employment and economic growth in costa rica abstract costa rica s economic growth in the last 25 years has had favorable labor market and income distribution consequences overall employment growth kept pace with labor force growth the mix of jobs improved real wages rose and relative inequality and absolute poverty fell but during the economic crisis of 1980 1982 when real per capita income plummeted labor market conditions deteriorated markedly unemployment doubled employment composition worsened and real wages fell by 40 growth labor market conditions and income distribution

perspectives on poverty and income inequality in brazil abstract exploratory analysis of the advance tabulations of the 1980 brazilian demographic census suggests the proportion of the population in poverty fell during the decade 1970 1980 the degree of inequality of the distribution of the income of individuals apparently remained about the same from 1970 to 1980 after rising in the 1960s this near constancy of the overall inequality of income distribution resulted from two offsetting changes a narrowing of the gap between rural and urban incomes and greater inequality within the rural sector

fdi in space spatial autoregressive relationships in foreign direct investment abstract there are a number of theoretical reasons why foreign direct investment fdi into a host country may depend on the fdi in proximate countries such spatial interdependence has been largely ignored by the empirical fdi literature with only a couple recent papers accounting for such issues in their estimation this paper conducts a general examination of spatial interactions in empirical fdi models using data on us outbound fdi activity we find that estimated relationships of traditional determinants of fdi are surprisingly robust to inclusion of terms to capture spatial interdependence even though such interdependence is estimated to be significant however we find that both the traditional determinants of fdi and the estimated spatial interdependence are quite sensitive to the sample of countries one examines

repatriation taxes and outbound m as repatriation taxes reduce the competitiveness of multinational firms from tax credit countries when bidding for targets in low tax countries this comparative disadvantage with respect to bidders from exemption countries violates ownership neutrality which results in production inefficiencies due to second best ownership structures this paper empirically estimates the magnitude of these effects the abolishment of repatriation taxes in japan and in the u k in 2009 has increased the number of acquisitions abroad by japanese and british firms by 16 1 and 1 6 respectively a similar policy switch in the u s is simulated to increase the number of u s cross border acquisition by 11 0 the yearly gain in efficiency is estimated to be 108 9 million dollar due to the japanese reform and 3 9 million dollar due to the u k reform simulating such a reform for the u s results in a yearly efficiency gain of 537 0 million dollar

location and the multinational enterprise in the early development of the international business field the focus of attention moved from the country level to the firm level and interest in location issues declined more recently firm based research has itself become increasingly concerned with the study of firm location interactions when examining two way knowledge flows or spillovers between multinational enterprises mnes and other actors in specific locations the diversity or heterogeneity of firms matters as does the diversity of locational environments the localization of knowledge sources depends on mne group level strategies for growth and organizational decentralization on subsidiary level evolution towards local competence creating efforts and on the development of suitable business networks within locations mnes now have a greater potential to benefit from a synergistic locational portfolio of complementary sources of knowledge the locational composition of the international network for knowledge sourcing of a given mne depends upon the extent of institutional compatibility between the locations in which the mne is active this compatibility between locations in turn affects the capacity of the mne to become an insider in local business systems and to influence the local institutional environment