the developmental effect of state alcohol prohibitions at the turn of the twentieth century john p lennon treasurer of the american federation of labor says that seventy percent of the drink bill of the united states is contributed by the american laboring man this means that liquor money is usually bread money meat money shoe money and money that ought to go for clothing american issue maryland edition june 12 1909 as cited in odegard 1928 i introduction work by economists provides considerable evidence consistent with the fetal origins hypothesis that various chronic health outcomes are prompted by an adverse in utero environment e g banerjee et al 2010 deschenes et al 2009 1 while the outcomes and conditions vary across studies the underlying findings emphasize the risks associated with negative exposures during this critical development period most studies in the fetal origins literature exploit the variation afforded by temporary adverse in utero shocks e g famines and focus on early life outcomes e g low birth weight however recent research in this area examines the effects in adulthood of positive in utero and childhood exposures for example hoynes schanzenbach and almond 2012 find that the beneficial effects of food stamp access in utero and during childhood persist into adulthood suggesting the potential for positive and sustained environmental changes during gestation and in early childhood to have long lasting impacts 2 results from bleakley 2007 suggest higher adult incomes among cohorts in the american south with more childhood exposure to hookworm eradication efforts 3 we contribute to this growing literature by exploiting the quasi randomization of alcohol consumption created by state level alcohol prohibition laws passed in the united states in the early part of the twentieth century we argue that such laws represented a positive shock to individuals who were in utero or who were young children around the times of the laws adoption using a large dataset of world war ii enlistees we examine the long term effects of these state prohibition laws on adult educational attainment obesity and height although we do not observe alcohol consumption and hence our results provide intent to treat estimates our design avoids the reporting problems associated with using more recent data on alcohol use we find small but statistically significant effects which do not appear to be the result of pre existing trends for two of the three outcome variables ii background reduced consumption of alcohol could lead to improved outcomes for those individuals in utero or in early childhood during this period through two channels first reduced alcohol consumption by the household members who likely consumed the most alcohol during this period namely men may have shifted resources to other members of the household namely women and children second reduced consumption by pregnant women themselves would reduce fetal exposure to alcohol we provide some historical evidence on the potential relevance of these mechanisms in the context of state level alcohol prohibitions a intrahousehold shift in resources to women and young children liquor traffic as the enemy of the home was a favorite theme of the anti saloon league and other temperance organizations of the time odegard 1928 42 4 the suggestive titles of pamphlets distributed by such organizations included better babies unborn children why babies die and boys worth more than taxes the obvious intention of such propaganda was to convey the message that the saloon culture and the alcohol consumption that came with it resulted in adverse outcomes for children and families that would be reversed under prohibition determining whether or not this reversal materialized is difficult given the lack of historical consumption data state level data on alcohol consumption are not available for this period however national data on consumption and other measures that are likely to be associated with consumption provide some evidence to suggest lower alcohol consumption in the period during which many states adopted alcohol prohibition laws

re examination of uniform commodity taxes under a non linear income tax system and its implication for production efficiency abstract this paper shows that the result of uniform commodity tax under nonlinear income taxation by atkinson and stiglitz 1976 no longer holds if the production side of an economy is taken into the consideration in particular imposing a non uniform commodity tax can pareto improve welfare even under nonlinear income taxation in addition the paper shows that if the government uses a nonlinear income tax system for income redistribution then the introduction of distortions in the public sector can pareto improve welfare contrary to the results in diamond and mirrlees 1971

a theory of socio economic disparities in health over the life cycle motivated by the observation that medical care explains only a relatively small part of the ses health gradient we present a life cycle model that incorporates several additional behaviours that potentially explain jointly a large part of observed disparities as a result the model provides not only a conceptual framework for the ses health gradient but more generally an improved framework for the production of health we derive novel predictions from the theory by performing comparative dynamic analyses more generally our comparative dynamic method can be applied to models of similar form e g human capital health deficits firm investment to name a few

life expectancy schooling and lifetime labor supply theory and evidence revisited this paper presents a theoretical and empirical analysis of the role of life expectancy for optimal schooling and lifetime labor supply the results of a simple prototype ben porath model with age specific survival rates show that an increase in lifetime labor supply is not a necessary or a sufficient condition for greater life expectancy to increase optimal schooling the observed increase in survival rates during working ages that follows from the rectangularization of the survival function is crucial for schooling and labor supply the empirical results suggest that the relative benefits of schooling have been increasing across cohorts of u s men born between 1840 and 1930 a simple quantitative analysis shows that a realistic shift in the survival function can lead to an increase in schooling and a reduction in lifetime labor hours publication abstract

the ramsey problem for congestible facilities abstract in recent years a new set of models drawing on vickrey 1969 has been developed to analyze the economics of congestible facilities these models are structural in that they derive the cost function from consumers time of use decisions and the congestion technology standard models in contrast simply assume the general form of the cost function we apply the new approach to analyze the ramsey problem for a congestible facility and show that the solution generally entails cost inefficiency standard models have failed to reveal this result because they treat the cost function as completely determined by technology

early life circumstance and adult mental health we show that psychological well being in adulthood varies with circumstance in early life combining a time series of real producer prices of cocoa with a nationally representative household survey

positive and normative judgments implicit in u s tax policy and the costs of unequal growth and recessions calculating the welfare implications of changes to economic policy or shocks requires economists to decide on a normative criterion one approach is to elicit the relevant moral criteria from real world policy choices converting a normative decision into a positive inference as in the recent surge of inverse optimum research we find that capitalizing on the potential of this approach is not as straightforward as we might hope we perform the inverse optimum inference on u s tax policy from 1979 through 2010 and argue that the results either undermine the normative relevance of the approach or challenge conventional assumptions upon which economists routinely rely when performing welfare evaluations

second best taxation of emissions and polluting goods abstract this paper studies the problem of the design of an integrated system of second best emission and output taxes in a model where production costs are negatively correlated with their emissions it shows that i the first best pigouvian rule of equating the marginal private benefit of emissions in production to the marginal social damage of emissions must be modified in the second best ii implementation of the modified pigouvian rule requires all firms to face the same marginal emission tax equal to the marginal social damage of emissions plus an adjustment term reflecting optimal tax objectives iii it may not be necessary to directly tax the polluting goods the latter taxes can be subsumed in the emission tax function iv output taxes must be set solely on the basis of optimal tax objectives no pigouvian adjustment is required v if emission taxes are restricted to be proportional and commodity taxes are constrained the modified pigouvian rule will no longer be optimal vi if preferences are weakly separable in emissions and other goods the pigouvian rule remains valid the marginal emission tax is pigouvian and emission and commodity tax instruments can be set separately to address different objectives a proportional emission tax corrects for externalities while commodity taxes are determined solely on the basis of optimal tax considerations

oiling the palms restructuring of settlement schemes in malaysia and the new international trade regulations abstract the felda resettlement program in malaysia is internationally recognized as a success story in terms of cultivated area number of settlers and scope of vertical integration in the malaysian palm oil industry since the mid 1980s however a series of reorganizations of work and property rights in the settlement schemes have taken place it is argued here that the recent adjustments of felda are in accordance with the new rules for international regulation of agricultural production and trade in the wto international trade regulations increasingly influence the direction of socioeconomic and institutional struggles over rural reform programs in developing countries

income maintenance and labor force participation the paper studies the optimal tax subsidy schedules in an economy where the only decision of the agents is to work or not with an application to the case of france given an income guarantee provided by the welfare state the tax schedule that maximizes government revenue provides a benchmark the laffer bound above which it is inefficient to tax in fact under mild conditions a feasible allocation is second best optimal if and only if the associated taxes are lower than the laffer bound the only restriction that efficiency puts on the shape of the tax scheme is this upper laffer bound the laffer tax scheme itself can be computed from the joint distribution of the agents productivities and work opportunity costs depending on the economy it can take widely different forms and exhibit for instance negative marginal tax rates after estimating the joint distribution of productivities and work opportunity costs on french data i compute the laffer bound for two subpopulations single women and married women with two children or more quite surprisingly the actual incentives to work appear to be very close to the bound

health and agricultural productivity evidence from zambia we evaluate the productivity effects of investment in preventive health technology through a randomized controlled trial in rural zambia in the experiment access to subsidized bed nets was randomly assigned at the community level 516 farmers were followed over a one year farming period we find large positive effects of preventative health investment on productivity among farmers provided with access to free nets harvest value increased by us 76 corresponding to about 14 7 of the average output value while only limited information was collected on farming inputs shifts in the extensive and the intensive margins of labor supply appear to be the most likely mechanism underlying the productivity improvements observed

a review of angus deaton s the great escape health wealth and the origins of inequality this book explores the relationship between the material standard of living and health both across countries and over time above all deaton is interested in the question of whether income growth contributes significantly to better health his answer is no saving lives in poor countries is not expensive and there are many episodes of massive health improvements in the absence of income growth as an alternative he argues that the cross sectional correlation between health and income is induced by variation in institutional quality while over time parallel improvements in income and health have been a result of advancing knowledge

life expectancy and human capital investments evidence from maternal mortality declines longer life expectancy should encourage human capital accumulation since a longer time horizon increases the value of investments that pay out over time previous work has been unable to determine the empirical importance of this life expectancy effect due to the difficulty of isolating it from other effects of health on education we examine a sudden drop in maternal mortality risk in sri lanka between 1946 and 1953 which creates a sharp increase in life expectancy for school age girls without contemporaneous effects on health and which also allows for the use of boys as a control group using additional geographic variation we find that the 70 reduction in maternal mortality risk over the sample period increased female life expectancy at age 15 by 4 1 female literacy by 2 5 and female years of education by 4 0 authors

the lazarus drug the impact of antiretroviral therapy on economic growth abstract does better population health lead to growth in per capita income theory is ambiguous and empirical evidence is very limited in 2001 a steep fall in antiretroviral arv drug prices triggered rapid and massive expansion of arv therapy coverage in lower income countries exploiting the sharp resultant changes in population health i show that arv therapy coverage expansion led to growth in gdp per capita the positive effects on growth most likely persist for around four years arv therapy coverage expansion could explain around a third of the sub saharan african growth miracle

pareto efficient income taxation with stochastic abilities abstract this paper studies pareto efficient income taxation in an economy with finitely lived individuals whose income generating abilities evolve according to a two state markov process the study yields three main results first when individuals are risk neutral in any period the only individuals whose earnings are distorted are those who currently are and have always been low ability in addition the degree to which these perpetual low ability types have their earnings distorted decreases over time converging to zero if the time horizon is long enough second the earnings distortions are continuous with respect to the degree of risk aversion at the risk neutral solution third pareto efficient income tax systems can be time consistent even when the degree of correlation in ability types is large the condition for time consistency suggests a novel theoretical reason why the classic equity efficiency trade off may be steeper in a dynamic environment than previously thought

public goods self selection and optimal income taxation using the self selection approach to tax analysis this paper derives a modified samuelson rule for the provision of public goods when the government deploys an optimal nonlinear income tax this approach gives a straightforward interpretation of the central result in this area generalises it and provides a simple characterisation of optimal policy in a wide range of circumstances the analysis also emphasises and clarifies the significance of the choice of numeraire for the optimality of decentralising public spending decisions it is well known that the famous samuelson rule for the provision of public goods may not be applicable when the tax revenues used to finance the public goods come from distorting taxes the principle was recognized as long ago as pigou 1947 long before the samuelson rule was devised pigou saw that in addition to the resource cost involved in transferring funds from the private to the public sector there was a deadweight loss involved from this insight he suggested that the criterion for providing public goods should be more stringent than the samuelson rule would later suggest in particular one might expect that the inclusion of the deadweight loss of taxes as part of the cost of providing a public good would lead to a reduction in its optimal provision relative to a situation in which lump sum taxes were available the problem was investigated more systematically by atkinson and stern 1974 who considered the case in which a public good is financed by a set of optimal commodity taxes all individuals were assumed to be identical so efficiency alone dictated the objective they found that no prima facie case could be made for the pigou position that the use of distortionary taxes called for a reduction in the supply of the public good their analysis clearly showed that there were two influences at work when the financing of a public good was by distorting taxes on the one hand

chronic disease burden and the interaction of education fertility and growth abstract this study considers the eradication of hookworm disease from the american south circa 1910 as a test of the quantity quality q q framework of fertility eradication was principally a shock to the price of quality because of three factors hookworm i depresses the return to human capital investment ii had a very low case fatality rate and iii had negligible prevalence among adults consistent with the q q model we find a significant decline in fertility associated with eradication

education policies and taxation without commitment we study the implications of limited commitment on education and tax policies set by benevolent governments consistent with real world practices a government can decide to subsidize different levels of education at different rates a lack of commitment however affects the optimal structure of education subsidies the direction of the effect depends on how labor taxes are designed with linear labor tax rates and a transfer for redistribution subsidies become more progressive by contrast if the government is only constrained by informational asymmetries when designing taxes subsidies become more regressive

malaria suitability urbanization and persistence evidence from china over more than 2000 years abstract we show that the climatic potential for plasmodium falciparum malaria transmission constituted a locational fundamental that influenced the spatial distribution of urbanization since the early start of the southward expansion of the han chinese around 200 bce this effect is still detectable in today s distribution of urbanization and economic activity even though the risk of malaria falciparum has been successfully eliminated we do not find any indication of convergence between high and low malaria potential regions after eradication our identification strategy relies on a climate based measure of plasmodium falciparum malaria transmission intensity which is fitted to experimental data on mosquito and parasite development from laboratory studies this measure is exogenous with respect to human population densities

sixty years after the magic carpet ride the long run effect of the early childhood environment on social and economic outcomes this paper estimates the effect of the early childhood environment on a large array of social and economic outcomes lasting almost 60 years to do this we exploit variation in the living conditions experienced by yemenite children after being airlifted to israel in 1949 we find that children who were placed in a more modern environment i e with better sanitary and infrastructure conditions were more likely to obtain higher education marry at an older age have fewer children and work at age 55 they were also more likely to be assimilated into israeli society to be less religious and have more worldly tastes in music and food however these effects are found mainly for women and not for men we also find an effect on the next generation children who lived in a better environment grew up to have children with more education

technical change wage inequality and taxes this paper considers the normative implications of technical change for tax policy design a task to talent assignment model of the labor market is embedded into an optimal tax problem technical change modifies equilibrium wage growth across talents and the substitutability of talents across tasks the overall optimal policy response is to reduce marginal income taxes on low to middle incomes while raising those on middle to high incomes the reform favors those in the middle of the income distribution reducing their average taxes while lowering transfers to those at the bottom jel d31 h21 h23 h24 j31 o33

a nation of gamblers real estate speculation and american history the great housing convulsion that buffeted america between 2000 and 2010 has historical precedents from the frontier land boom of the 1790s to the skyscraper craze of the 1920s but this time was different there was far less far less real uncertainty about fundamental economic and geographic trends making the convulsion even more puzzling during historic and recent booms sensible models could justify high prices on the basis of seemingly reasonable projections about stable or growing prices the recurring error appears to be a failure to anticipate the impact that elastic supply will eventually have on prices whether for cotton in alabama in 1820 or land in las vegas in 2006 buyers don t appear to be irrational but rather cognitively limited investors who work with simple heuristic models instead of a comprehensive general equilibrium framework low interest rates rarely seem to drive price growth under priced default options are a more common contributor to high prices the primary cost of booms has not typically been overbuilding but rather the financial chaos that accompanies housing downturns

the contribution of female health to economic development we analyze the economic consequences for less developed countries of investing in female health we do this through developing and calibrating a novel micro founded dynamic general equilibrium model in which parents trade off the number of children against investments in their education and in which we allow for health related gender differences in productivity we show that better female health speeds up the demographic transition and thereby the take off toward sustained economic growth by contrast male health improvements delay the transition and take off because ceteris paribus they raise fertility investing in female health is therefore a potent lever for promoting development

keeping the doctor away experimental evidence on investment in preventative health products household investment in preventative health products in developing countries is typically low even though the returns to such products are high in this paper we experimentally estimate demand curves for health products and test whether 1 information about health risk 2 cash liquidity 3 peer effects and 4 intra household differences in preferences affect demand in our main experiment in kenya involving children s shoes critical for preventing hookworm infection price is by far the most important predictor of purchase providing liquidity and targeting women also increased demand information had no effect even though we find that genuine learning occurred we find no peer effects even though people discussed the product purchase decision extensively we find similar results for price and information in three smaller studies in guatemala india and uganda in experiments involving soap and multivitamins

disease and development the effect of life expectancy on economic growth we exploit the major international health improvements from the 1940s to estimate the effect of life expectancy on economic performance we construct predicted mortality using preintervention mortality rates from various diseases and dates of global interventions predicted mortality has a large impact on changes in life expectancy starting in 1940 but no effect before 1940 using predicted mortality as an instrument we find that a 1 percent increase in life expectancy leads to a 1 7 2 percent increase in population life expectancy has a much smaller effect on total gdp however consequently there is no evidence that the large increase in life expectancy raised income per capita

the determinants of mortality mortality rates have fallen dramatically over time starting in a few countries in the 18th century and continuing to fall today in just the past century life expectancy has increased by over 30 years at the same time mortality rates remain much higher in poor countries with a difference in life expectancy between rich and poor countries of also about 30 years this difference persists despite the remarkable progress in health improvement in the last half century at least until the hiv aids pandemic in both the time series and the cross section data there is a strong correlation between income per capita and mortality rates a correlation that also exists within countries where richer better educated people live longer we review the determinants of these patterns over history over countries and across groups within countries while there is no consensus about the causal mechanisms we tentatively identify the application of scientific advance and technical progress some of which is induced by income and facilitated by education as the ultimate determinant of health such an explanation allows a consistent interpretation of the historical cross country and within country evidence we downplay direct causal mechanisms running from income to health

disease and development evidence from hookworm eradication in the american south this study evaluates the economic consequences of the successful eradication of hookworm disease from the american south the hookworm eradication campaign c 1910 began soon after i the discovery that a variety of health problems among southerners could be attributed to the disease and ii the donation by john d rockefeller of a substantial sum to the effort the rockefeller sanitary commission rsc surveyed infection rates in the affected areas eleven southern states and found that an average of forty percent of school aged children were infected with hookworm the rsc then sponsored treatment and education campaigns across the region follow up studies indicate that this campaign substantially reduced hookworm disease almost immediately the sudden introduction of this treatment combines with the cross area differences in pre treatment infection rates to form the basis of the identification strategy areas with higher levels of hookworm infection prior to the rsc experienced greater increases in school enrollment attendance and literacy after the intervention this result is robust to controlling for a variety of alternative factors including differential trends across areas changing crop prices shifts in certain educational and health policies and the effect of malaria eradication no significant contemporaneous results are found for adults who should have benefited less from the intervention owing to their substantially lower prior infection rates a long term follow up of affected cohorts indicates a substantial gain in income that coincided with exposure to hookworm eradication i also find evidence that eradication increased the return to schooling

mortality risk and human capital investment the impact of hiv aids in sub saharan africa abstract over the past several decades the hiv aids epidemic has dramatically altered patterns of morbidity and mortality in sub saharan africa with potential consequences for human capital investment and economic growth using data from demographic and health surveys for fifteen countries in sub saharan africa i estimate the relationship between regional hiv prevalence and the change in individual human capital investment over time consistent with a simple model of human capital investment incorporating mortality risk i find that areas with higher levels of hiv experienced relatively larger declines in schooling

optimal linear income taxation with general equilibrium effects on wages abstract the paper argues that the endogeneity of wages may make a considerable difference to optimal linear tax rates in this case there is not only the usual direct redistribution via the fiscal system but also the general equilibrium redistribution due to the change in wages depending on the elasticity of substitution of the production function and the labour supply elasticities these may be reinforcing or opposing it is shown that the general equilibrium effect may plausibly outweigh the direct effect so that net redistribution to the lower paid involves a wage subsidy financed by a lump sum tax

the credibility revolution in empirical economics how better research design is taking the con out of econometrics since edward leamer s memorable 1983 paper let s take the con out of econometrics empirical microeconomics has experienced a credibility revolution while leamer s suggested remedy sensitivity analysis has played a role in this we argue that the primary engine driving improvement has been a focus on the quality of empirical research designs the advantages of a good research design are perhaps most easily apparent in research using random assignment we begin with an overview of leamer s 1983 critique and his proposed remedies we then turn to the key factors we see contributing to improved empirical work including the availability of more and better data along with advances in theoretical econometric understanding but especially the fact that research design has moved front and center in much of empirical micro we offer a brief digression into macroeconomics and industrial organization where progress by our lights is less dramatic although there is work in both fields that we find encouraging finally we discuss the view that the design pendulum has swung too far critics of design driven studies argue that in pursuit of clean and credible research designs researchers seek good answers instead of good questions we briefly respond to this concern which worries us little

early life health interventions and academic achievement this paper studies the effect of improved early life health care on mortality and long run academic achievement in school we use the idea that medical treatments often follow rules of thumb for assigning care to patients such as the classification of very low birth weight vlbw which assigns infants special care at a specific birth weight cutoff using detailed administrative data on schooling and birth records from chile and norway we establish that children who receive extra medical care at birth have lower mortality rates and higher test scores and grades in school these gains are in the order of 0 15 0 22 standard deviations

can the west save africa in the new millennium the western aid effort toward africa has surged due to writ ings by well known economists a celebrity mass advocacy campaign and decisions by western leaders to make africa a major foreign policy priority this survey contrasts the predominant transformational approach west comprehensively saves africa to occasional swings to a marginal approach west takes one small step at a time to help individual africans evaluation of one step at a time initiatives is generally easier than that of transformational ones either through controlled experiments although these have been oversold or simple case studies where it is easier to attribute outcomes to actions we see two themes emerge from the literature survey 1 escalation as each successive western transformational effort has yielded disappointing results as judged at least by stylized facts since again the econometrics are shaky the response has been to try an even more ambitious effort and 2 the cycle of ideas rather than a progressive testing and discarding of failed ideas we see a cycle in aid ideas in many areas in africa with ideas going out of fashion only to come back again later after some lapse long enough to forget the previous disappointing experience both escalation and cyclicality of ideas are symptomatic of the lack of learning that seems to be characteristic of the transfor mational approach in contrast the marginal approach has had some successes in improving the well being of individual africans such as the dramatic fall in mortality

compulsory education and the benefits of schooling causal estimates of the benefits of increased schooling using u s state schooling laws as instruments typically rely on specifications which assume common trends across states in the factors affecting different birth cohorts differential changes across states during this period such as relative school quality improvements suggest that this assumption may fail to hold across a number of outcomes including wages unemployment and divorce we find that statistically significant causal estimates become insignificant and in many instances wrong signed when allowing year of birth effects to vary across regions

limited life expectancy human capital and health investments human capital theory predicts that life expectancy will impact human capital attainment we estimate this relationship using variation in life expectancy driven by huntington disease an inherited neurological disorder we compare investments for individuals who have ex ante identical risks of hd but differ in disease realization individuals with the hd mutation complete less education and job training the elasticity of demand for college attendance with respect to life expectancy is around 1 0 we relate this to cross country and over time differences in education we use smoking and cancer screening data to test the corollary that health capital responds to life expectancy

privatization and the distribution of income in the commons abstract the explicit treatment of heterogeneity among the users of the commons leads to results that differ from those that are now generally accepted in the literature the owner of the fixed factor is not able to expropriate the rents of privatization rather the resulting distribution of income to the free factor after privatization depends on the technology and the institutional arrangements this result extends to more than two goods if the decline in the price of the good produced in the commons is sufficient to offset the decline in the marginal product of labor in the rest of the economy

life expectancy and human capital evidence from the international epidemiological transition exploiting preintervention variation in mortality from various infectious diseases together with the time variation arising from medical breakthroughs in the late 1940s and the 1950s this study examines how a large positive shock to life expectancy influenced the formation of human capital within countries during the second half of the 20th century the results establish that the rise in life expectancy was behind a significant part of the increase in human capital over this period according to the baseline estimate for one additional year of life expectancy years of schooling increase by 0 17 year moreover the evidence suggests that declines in pneumonia mortality are the underlying cause of this finding indicating that improved childhood health increases human capital investments

infant health during the 1980s peruvian crisis and long term economic outcomes summary in 1988 peru entered a severe economic crisis as a corollary of unfavorable external economic conditions high levels of debt and heterodox policies the so called debt crisis of 1980s this paper investigates the short term health shock experienced by infants during the crisis and its long term impact on human capital accumulation because no longitudinal data are available the estimation of causal effects is performed using multiple cross section surveys that are representative of the same population over time the short term and the long term effects are estimated exploiting the heterogeneous impact of the crisis across and within birth cohorts results indicate that the peruvian crisis significantly affected the health of infants particularly that of children born to low educated mothers from 1988 to 1990 vaccination declined 12 percentage points and infant mortality increased 2 3 percentage points among children born to low educated mothers in the long run the children who suffered the most severe health shocks during the economic downturn of the 1980s performed worse in school they had 0 12 fewer years of formal education and their probability of completing primary education by age 15 was three percentage points lower in relation to similar children born after the crisis the results have strong policy implications children in developing countries should be safeguarded against health shocks during economic crises to avoid a decline in the accumulation of human capital in the long run

infant health and longevity evidence from a historical intervention in sweden this paper investigates the potential of an infant intervention to improve life expectancy contributing to emerging interest in the early life origins of chronic disease we track individuals from birth to death and are able to identify age and cause of death the intervention was pioneered in sweden in 1931 1933 and appears to have been pivotal in the emergence of universal infant care programmes in the scandinavian countries during the creation of the welfare state it provided information and support to mothers with an emphasis on nutrition and sanitation while monitoring infant care through home visits and clinics we estimate that the average duration of programme exposure in infancy led to a 1 56 point decline in the risk of infant death 24 of baseline risk and a 2 56 point decline in the risk of dying by age 75 7 0 of baseline risk and these impacts are much larger for children born out of wedlock intervention led declines in the risk of dying after the age of 50 are dominated by reductions in cancer and cardiovascular mortality we find no evidence of selective utilisation and the estimates are similar when we exploit within mother variation in outcomes less

a reduced form optimal nonlinear income tax problem abstract for a finite population with quasilinear preferences it is shown how mirrlees optimal nonlinear income tax problem can be simplified to a reduced form problem involving only the allocation of the consumption good this result is a finite version of a proposition established in the continuum by s lollivier and j c rochet

climate and the emergence of global income differences the latitude gradient in comparative development is a striking fact as one moves away from the equator economic activity rises while this regularity is well known it is not well understood in the present paper we take a step towards unpacking this gradient perhaps the strongest correlate with absolute latitude is the intensity of ultraviolet radiation uv r which epidemiological research has shown to be a cause of a wide range of diseases we establish that uv r is strongly and negatively correlated with economic activity both across and within countries we propose and test a mechanism that links uv r to current income differences via the impact of disease ecology on the timing of the take off to sustained growth

public health investments and the infant mortality gap evidence from federal sanitation interventions on u s indian reservations abstract to what extent do differential levels of investment in public health inputs explain observed differences in health outcomes across socioeconomic and racial groups this study investigates the impact of 3700 projects that were part of a widespread federal initiative to improve sanitation infrastructure on u s indian reservations starting in 1960 sanitation investment substantially reduced the cost of clean water for households leading to sharp reductions in both waterborne gastrointestinal disease and infectious respiratory disease among native american infants the sanitation program was quite cost effective in part because improvements in the overall disease environment also reduced infectious respiratory disease among nearby white infants despite the health externalities federal sanitation interventions explain almost forty percent of the convergence in native american and white infant mortality rates in reservation counties since 1970

cause of death and development in the us abstract exploiting cross state variation in infectious causes of death along with time variation arising from medical innovations toward the middle of the twentieth century this study examines the consequences of a positive health shock in the us it establishes that states with higher levels of mortality from infectious causes prior to the onset of the era of big medicine experienced greater increases in life expectancy population and total gdp after its onset whereas per capita gdp remained largely unchanged together the evidence suggests that the rise in life expectancy had no significant effect on living standards in the us during the time period 1940 1980 these results are robust to controlling for initial health and initial economic conditions

economic booms and risky sexual behavior evidence from zambian copper mining cities existing studies suggest that individual and household level economic shocks affect the demand for and supply of risky sex however little evidence exists on the effects of an aggregate shock on equilibrium risky sexual behavior this paper examines the effects of the early twenty first century copper boom on risky sexual behavior in zambian copper mining cities the results suggest that the copper boom substantially reduced rates of transactional sex and multiple partnerships in copper mining cities these effects were partly concentrated among young adults and copper boom induced in migration to mining cities appears to have contributed to these reductions

drought of opportunities contemporaneous and long term impacts of rainfall shocks on human capital higher wages are generally thought to increase human capital production particularly in the developing world we introduce a simple model of human capital production in which investments and time allocation differ by age using data on test scores and schooling from rural india we show that higher wages increase human capital investment in early life in utero to age 2 but decrease human capital from age 5 to 16 children switch out of school into productive work when rainfall is higher the opportunity cost of schooling even for fairly young children is an important factor in determining overall human capital investment

mortality versus morbidity in the demographic transition abstract the link between the mortality and epidemiological transitions is used to identify the effect of the former on the fertility transition a mortality transition that is not accompanied by improving morbidity causes slower demographic and economic change in a model where children may die from infectious disease childhood health affects human capital and noninfectious disease related adult mortality when child mortality falls from lower prevalence as it did in western europe labor productivity improves fertility falls and the economy prospers when it falls mainly from better cures as it has in sub saharan africa survivors are less healthy and there is little economic growth the model can quantitatively explain sub saharan africa s experience more generally it shows that the commonly used indicator life expectancy at birth is a poor predictor of population health and economic growth unless morbidity falls with mortality

women s liberation what s in it for men the nineteenth century witnessed dramatic improvements in the legal rights of married women given that these changes took place long before women gained the right to vote they amounted to a voluntary renouncement of power by men in this paper we investigate men s incentives for sharing power with women in our model women s legal rights set the marital bargaining power of husbands and wives we show that men face a tradeoff between the rights they want for their own wives namely none and the rights of other women in the economy men prefer other men s wives to have rights because men care about their own daughters and because an expansion of women s rights increases educational investments in children we show that men may agree to relinquish some of their power once technological change increases the importance of human capital we corroborate our argument with historical evidence on the expansion of women s rights in england and the united states

coal smoke and mortality in an early industrial economy air pollution was severe in the 19th century yet its health consequences are often overlooked due to a lack of pollution data we offer a new approach for inferring local coal use levels based on local industrial structure and industry specific coal use intensity this allows us to provide the first estimates of the mortality effects of british industrial coal use in 1851 1860 exploiting wind patterns for identification we find that a one standard deviation increase in coal use raised infant mortality by 6 8 and that industrial coal use explains roughly one third of the urban mortality penalty observed during this period this article is protected by copyright all rights reserved

early life health and cognitive function in old age child health in the united states improved dramatically over the twentieth century data from the national center for health statistics indicate the infant mortality rate was 23 times greater in 1900 than in 2004 the mortality rate of one to four year old children although lower in absolute terms had a larger proportionate decline the value in 1900 was 66 times that in 2004 the proximate cause of the mortality decline was a reduction in infectious disease between 1900 and 1998 the percentage of deaths of children age 1 to 19 due to infectious disease is estimated to have declined from 61 6 percent to 2 percent bernard guyer et al 2000 major causes of child death included diarrhea pneumonia and other respiratory infections diphtheria typhoid measles scarlet fever whooping cough and tuberculosis guyer et al 2000 the mortality decline was accompanied by reductions in morbidity among surviving children there were also declines in the prevalence of a host of illnesses such as hookworm and trachoma which were not deadly but which impaired children s quality of life c hoyt bleakley 2007 shannen k allen and richard d semba 2002 early life exposures to infectious disease may also have adverse effects on health and well being into old age if true then the benefits of the twentieth century decline in infectious disease in the united states are still being realized we examine whether the disease environments experienced by american children in the first half of the twentieth century are associated with their cognitive abilities at older ages we match region level historical data on mortality from a variety of infectious diseases as well as total infant mortality with information on the cognitive function of older americans followed by the health and retirement study hrs we find evidence that the burden of disease in early life measured using either mortality rates by cause or the overall infant mortality rate is significantly associated with performance on cognitive tests in old age

causal effects of health shocks on consumption and debt quasi experimental evidence from bus accident injuries abstract endogeneity between health and wealth presents a challenge for estimating causal effects of health shocks using a quasi experimental design comprising exogenous shocks sustained as bus accident injuries in india with controls drawn from travelers on the same bus routes one year later i present new evidence of causal effects on consumption and debt using primary household survey data i find that households faced with shock related expenditures are able to smooth consumption on food housing and festivals with small reductions in educational spending debt was the principal mitigating mechanism households used leading to significantly larger levels of indebtedness

theory general equilibrium and political economy in development economics i discuss the role of economic theory in empirical work in development economics with special emphasis on general equilibrium and political economy considerations i argue that economic theory plays should play a central role in formulating models estimates of which can be used for counterfactual and policy analysis i discuss why counterfactual analysis based on microdata that ignores general equilibrium and political economy issues may lead to misleading conclusions i illustrate the main arguments using examples from recent work in development economics and political economy

the long run impact of cash transfers to poor families lleras muney we estimate the long run impact of cash transfers to poor families on children s longevity educational attainment nutritional status and income in adulthood to do so we collected individual level administrative records of applicants to the mothers pension program the first government sponsored welfare program in the united states 1911 1935 and matched them to census wwii and death records male children of accepted applicants lived one year longer than those of rejected mothers they also obtained onethird more years of schooling were less likely to be underweight and had higher income in adulthood than children of rejected mothers jel i12 i14 i18 i32 i38 j16 n32

child schooling and child work in the presence of a partial education subsidy could a partial subsidy for child education increase children s participation in paid work in contrast to much of the theoretical and empirical child labor literature this paper shows that child work and school participation can be complements under certain conditions using data from the randomized evaluation of a conditional cash transfer program in the philippines the analysis finds that some children who were in neither school nor work before the program increased participation in school and work for pay after the program earlier cash transfer programs notably those in mexico brazil and ecuador increased school attendance while reducing child labor those programs fully offset schooling costs while the transfers under the philippine transfers fall short of the full costs of schooling for a typical child as a result some beneficiary children from poor philippine households increased work to support their schooling the additional earnings from this work represent a substantive share of the shortfall in the schooling costs net of transfer the paper rules out several potential alternative explanations for the increase in child labor including changes in household productive activities adult labor supply and household expenditure patterns that in principle can arise after a cash transfer and may also affect the supply of or demand for child labor

long run impacts of childhood access to the safety net a growing economics literature establishes a causal link between in utero shocks and health and human capital in adulthood most studies rely on extreme negative shocks such as famine and pandemics we are the first to examine the impact of a positive and policy driven change in economic resources available in utero and during childhood in particular we focus on the introduction of a key element of the u s safety net the food stamp program which was rolled out across counties in the u s between 1961 and 1975 we use the panel study of income dynamics to assemble unique data linking family background and county of residence in early childhood to adult health and economic outcomes the identification comes from variation across counties and over birth cohorts in availability of the food stamp program our findings indicate that the food stamp program has effects decades after initial exposure specifically access to food stamps in childhood leads to a significant reduction in the incidence of metabolic syndrome obesity high blood pressure and diabetes and for women an increase in economic self sufficiency overall our results suggest substantial internal and external benefits of the safety net that have not previously been quantified

worms at work long run impacts of a child health investment this study estimates long run impacts of a child health investment exploiting community wide experimental variation in school based deworming the program increased labor supply among men and education among women with accompanying shifts in labor market specialization ten years after deworming treatment men who were eligible as boys stay enrolled for more years of primary school work 17 more hours each week spend more time in nonagricultural self employment are more likely to hold manufacturing jobs and miss one fewer meal per week women who were in treatment schools as girls are approximately one quarter more likely to have attended secondary school halving the gender gap they reallocate time from traditional agriculture into cash crops and nonagricultural self employment we estimate a conservative annualized financial internal rate of return to deworming of 32 and show that mass deworming may generate more in future government revenue than it costs in subsidies

the effect of ambient temperature shocks during conception and early pregnancy on later life outcomes abstract a large body of research has recently shown that early life or in utero shocks especially climatic shocks may affect long run human capital outcomes most of these effects are assumed to be biological including poor nutrition during critical windows of fetal development or through increased maternal stress however in addition to these biological effects climatic conditions at the time of conception may also cause changes in parental behavior not only affecting the mix of parents who conceive but also the characteristics of the children once born this paper explores whether increases in ambient temperature at the time of conception while in utero or after birth affect educational and health outcomes as adults using census and demographic and health survey data from sub saharan africa we show that individuals conceived during high temperatures have higher educational attainment and literacy in addition we find evidence of temperature effects at other times in utero especially during the first trimester we then explore the biological and behavioral mechanisms through which this effect may occur including heat induced changes in sexual behavior differences in parental characteristics and intensified fetal selection we conclude that fetal selection is the most likely mechanism driving our result

barriers to prosperity parasitic and infectious diseases iq and economic development iq scores differ substantially across nations this study argues that cross country variations in iq scores to a large extent reflect the burden of parasitic and infectious diseases pids and iron and iodine deficiency iid in infancy and in utero furthermore it is shown that the prevalence of health insults through the channel of cognitive ability is influential for the level as well as the growth in productivity across the world using data for 181 countries and an instrumental variable approach regressions reveal that the prevalence of pid iids is influential for growth and income inequalities globally

climate and the slave trade african societies exported more slaves in colder years lower temperatures reduced mortality and raised agricultural yields lowering slave supply costs our results help explain african participation in the slave trade which predicts adverse outcomes today we use an annual panel of african temperatures and port level slave exports to show that exports declined when local temperatures were warmer than normal this result is strongest where african ecosystems are least resilient to climate change cold weather shocks at the peak of the slave trade predict lower economic activity today we support our interpretation using the histories of whydah benguela and mozambique

health and hunger disease energy needs and the indian calorie consumption puzzle india s experience presents a puzzle at odds with a basic fact of household economics amidst unprecedented economic growth average per capita daily calorie consumption has declined in recent decades does an improving disease environment explain the calorie decline a diminished burden of infectious disease could lower energy needs by increasing absorption and effective use of calories we document a robust effect of disease exposure measured as infant mortality and as poor sanitation on calorie consumption similar effects are found using multiple datasets and empirical strategies disease can account for an important fraction one fifth or more of india s calorie decline

disease control and inequality reduction evidence from a tuberculosis testing and vaccination campaign this article examines the economic impact of a tuberculosis control program launched in norway in 1948 in the 1940s norway had one of the highest tuberculosis infection rates in europe affecting about 85 of the inhabitants to lower the disease burden the norwegian government launched a large scale tuberculosis testing and vaccination campaign that substantially reduced tuberculosis infection rates among children we find that cohorts in school during and after the campaign in municipalities with high tuberculosis prevalence gained more in terms of education earnings longevity and height following this public health intervention furthermore the gains from the disease control program are not limited to the initially treated cohorts but also affect their children the results also suggest that individuals from a low socioeconomic background benefited more from the intervention and we present new evidence that a narrowing of the gap in childhood health can lead to a reduction in socioeconomic inequalities in adulthood

the rise in life expectancy and economic growth in the 20th century this research exploits conditional exogenous variation in mortality from the diffusion of modern medicine to study the effect of growth in life expectancy on the growth in gdp per capita the empirical analysis establishes that countries that obtained higher growth rates of life expectancy due to this shock to mortality in the mid twentieth century experienced lower growth rates of gdp per capita in the second half of the twentieth century in addition a negative relationship between initial level of life expectancy and the subsequent growth rate of gdp per capita is found

economic effects of childhood exposure to tropical disease to what extent do tropical diseases contribute to the poverty characteristic of tropical countries estimates of the impact of health on income are difficult to obtain because health is a normal good countries with higher income will buy more of it and third factors such as remoteness and bad government might impede both productivity and public health in the abuja declaration of 2005 african heads of states claim that malaria has depressed income growth in subsaharan africa since the 1960s so much so that gdp in the region today is 40 lower because of malaria estimates of this magnitude have been mocked at cocktail parties and clambakes but how ridiculous is this number

accounting for the effect of health on economic growth i use microeconomic estimates of the effect of health on individual outcomes to construct macroeconomic estimates of the proximate effect of health on gdp per capita i employ a variety of methods to construct estimates of the return to health which i combine with cross country and historical data on height adult survival rates and age at menarche using my preferred estimate eliminating health differences among countries would reduce the variance of log gdp per worker by 9 9 percent and reduce the ratio of gdp per worker at the 90th percentile to gdp per worker at the loth percentile from 20 5 to 17 9 while this effect is economically significant it is also substantially smaller than estimates of the effect of health on economic growth that are derived from cross country regressions

decentralized fiscal federalism revisited optimal income taxation and public goods under horizontal leadership this paper concerns optimal taxation and public goods in an economic federation with decentralized leadership where one lower level government is the first mover also in the horizontal dimension under plausible assumptions horizontal leadership reinforces the incentives created by decentralized leadership

political competition and mirrleesian income taxation a first pass we study downsian competition in a mirrleesian model of income taxation the competing politicians may dier in competence if politicians engage in vote share maximization the less competent politician s policy proposals are attractive to the minority of rich agents whereas those of the competent politician are attractive to the majority of poor agents the less competent politician wins with positive probability which gives rise to a political failure in the sense of besley and coate 1998 political failures are avoided if politicians maximize winning probabilities nevertheless the two equilibria cannot be pareto ranked the minority may be better o under vote share maximization

work incentives and the food stamp program abstract labor supply theory makes strong predictions about how the introduction or expansion of a social welfare program impacts work effort although there is a large literature on the work incentive effects of afdc and the eitc relatively little is known about the work incentive effects of the food stamp program and none of the existing literature is based on quasi experimental methods we use the cross county introduction of the program in the 1960s and 1970s to estimate the impact of the program on the extensive and intensive margins of labor supply earnings and family cash income consistent with theory we find reductions in employment and hours worked when food stamps are introduced the reductions are concentrated among families headed by single woman

ironing out deficiencies evidence from the united states on the economic effects of iron deficiency iron deficiency reduces productive capacity in adults and impairs cognitive development in children in 1943 the united states government required the fortification of bread with iron to reduce iron deficiency in the working age population during world war ii this nationwide fortification of grain products increased per capita consumption of iron by 16 percent i find that areas with lower levels of iron consumption prior to the mandate experienced greater increases in income and school enrollment in the 1940s a long term followup suggests that adults in 1970 with more exposure to fortification during childhood earned higher wages

optimum taxation with errors in administration abstract the paper compares the welfare levels which can be achieved by two distinct tax regimes lump sum taxation where one attempts to identify individuals and allocate transfers or subsidies on the basis of characteristics and income taxation where characteristics are not observed but personal incomes are measured and taxed where there are no errors in classifying individuals lump sum taxation is superior but where mistakes are made in the allocation of lump sum grants or subsidies income taxation may be more attractive the level of errors where the regimes are equally desirable in terms of social welfare is computed in simple models following that of feldstein 1973 where there is strong aversion to inequality then income taxation becomes preferable at quite small errors in analysing income taxation it is shown that in the feldstein model with endogenous wages the marginal tax rate in optimum income taxation on the more skilled is negative and that on the less skilled is positive in contrast to the standard results see seade 1977 with exogenous wages

self selection and pareto efficient taxation abstract this paper analyses the set of pareto efficient tax structures the formulation of the problem as one of self selection not only shows more clearly the similarity between this problem and a number of other problems such as the optimal pricing of a monopolist which have recently been the subject of extensive research but also allows the derivation of a number of new results we establish i under fairly weak conditions randomization of tax structures is desirable ii if different individuals are not perfect substitutes for one another in production then the general equilibrium effects until now largely ignored in the literature of changes in the tax structure may be dominant in determining the optimal tax structure in particular if the relative wage of high ability and low ability individuals depends on the relative supplies of labor the optimal tax structure entails a negative marginal tax rate on the high ability individuals and a positive marginal tax rate on the low ability individuals the marnitude of which depends on the elasticity of substitution iii if individuals differ in their preferences pareto efficient taxation may entail negative marginal tax rates for high incomes while iv if wage income is stochastic the marginal tax rate at the upper end may be 100 our analysis thus makes clear that the main qualitative properties of the optimal tax structure to which earlier studies called attention are not robust to these attempts to make the theory more realistic