money anticipated changes and policy effectiveness the lucas sargent wallace l s w proposition states that expected policy changes have no influence on real economic variables even in the short run see robert lucas 1972 and thomas sargent and neil wallace 1975 one form of empirical test of the l s w proposition the neutrality proposition began with robert barro s 1977 1978 seminal articles supporting the neutrality proposition however more recent papers including those by david small 1979 john makin 1982 and frederic mishkin 1982a b have reexamined the relationships between anticipated and unanticipated money vs output unemployment and inflation and have found evidence suggesting that anticipated monetary changes do have real effects all of the above cited studies use expectations procedures which estimate for example a money growth equation over the entire period under consideration however this approach assumes that when expectations are being formed at the beginning of the period economic agents have the relevant information for the entire period in this note i reexamine the impact of expected vs unexpected monetary changes focusing on the informational restrictions actually faced by economic agents when formulating expectations the structure of the model used here is similiar to the models of barro and mishkin a measure of real output is assumed to be a function of a policy variable and a vector of predetermined variables the policy variable can be decomposed into anticipated and unanticipated components algebraically

an experimental examination of labor supply and work intensities estimated negative substitution effects on work hours question the empirical validity of the classical labor supply model estimates are reconciled by allowing a dual choice of hours and effort for piecerate workers in such a model these negative substitution effects result from substituting on and off the job leisure we test our model using controlled experimentation on human subjects these experiments while not naturally occurring environments represent real economic choices and can generate data unavailable elsewhere e g effort data the results support our model and they have implications both for labor management and for empirical research focusing only on the hours choice the classical static model of the labor leisure choice offers positive compensated wage effects on hours of work as its main testable implication previous attempts to test this hypothesis with field data have cast doubt on the empirical validity of the static labor supply model due to the frequency of negative estimated compensated wage elasticities a limitation of the model is that it views the choice of hours of work as the only

caught in the trap welfare s disincentive and the labor supply of single men abstract youth unemployment is particularly large in many industrialized countries and has dramatic consequences in both the short and long term while there is abundant evidence about the labor supply of married women and single mothers little is known about how young childless singles react to financial incentives the french minimum income revenu minimum d insertion rmi often accused of generating strong disincentives to work offers a natural setting to study this question since childless single individuals primarily males constitute the core group of recipients exploiting the fact that childless adults under age 25 are not eligible for this program we conduct a regression discontinuity analysis using french census data we find that the rmi reduces the participation of uneducated single men by 7 10 at age 25 we conduct an extensive robustness check and discuss the implications of our results for youth unemployment and current policy developments

deliberative monetary valuation in search of a democratic and value plural approach to environmental policy the use of deliberative methods to assess environmental values in monetary terms has been motivated by the potential for small group discussion to help with preference formation and the inclusion of non economic values in this review two broad approaches are identified preference economisation and preference moralisation the former is analytical concentrates upon issues of poor respondent cognition and produces a narrow conception of value linked to utilitarianism the latter emphasises political legitimacy appeals to community values and tends to privilege arguments made in the public interest both approaches are shown to embrace forms of value convergence which undermine the prospects for value pluralism as a result exclusion and predefinition of values dominates current practice in order to maintain democratic credentials the importance attributed to monetary value needs to be left as an open question to be addressed as part of a process determining an agreement to pay to this end we identify a discourse based approach as a third way consistent with the democratic and value plural potential of deliberative monetary valuation

deliberative monetary valuation dmv issues in combining economic and political processes to value environmental change abstract this paper explores and contrasts the different social processes of valuation now appearing as economic means of valuing the environment monetary valuation via stated preference approaches has been criticised for assuming well formed and informed preferences and excluding a range of sustainability concerns such as rights fairness and equity deliberative monetary valuation dmv in small groups is a novel hybrid of economic and political approaches which raises the prospect of a transformative and moralising experience critics of standard contingent valuation approaches have advocated this as offering a way forward however there has been a lack of clarity as to the means of obtaining values the expected outcomes and their role moving to group settings of deliberation raises concepts of social willingness to pay and accept which are distinct from an aggregate of individual value although this does not seem to have been widely recognised a new classification of values is presented appropriate to the literature trying to merge economic and political processes values associated with the individual may be exchange values charitable contributions or fair prices while social values can be speculative expressive or arbitrated the use of dmv is shown to result in different values due to variations in the institutional setting and process of valuation

labour supply estimation and public policy abstract economists devote considerable energies towards refining their econometric techniques to overcome difficulties connected with conducting empirical research despite advances in technique it is not clear whether further refinement in this direction is worthwhile for policy purposes it may be that no further amount of statistical adjustment of inadequate data will increase understanding and that better data is simply necessary to add to our knowledge but rarely is sufficient credit paid to new forms of data in short econometric technique is emphasized to the neglect of data innovation as if new data were merely lying about waiting for an ingenious suggestion for use this paper surveys advances of the last twenty five years in estimating labour supply for policy purposes with a view towards appreciating the relative contribution of both improvements in econometric technique as well as developments of new data after briefly detailing the key parameters which economists have sought to estimate we describe the early first generation research circa 1970 which is plagued by problems of unobservable variables measurement errors truncation and selectivity bias and non linear budget constraints second generation research constitute attempts to resolve one or more of these difficulties and the respective contribution of econometric technique and new data is acknowledged and assessed including the contribution of data generated by large scale social experiments in which participants are randomly assigned to different guaranteed income plans and their labour supply behaviour measured

welfare transfers in two parent families labor supply and welfare participation under afdc up this paper examines the effect of cash transfers and food stamp benefits on family labor supply and welfare participation among two parent families the aid to families with dependent children unemployed parent program has provided cash benefits to two parent households since 1961 despite recent expansions little is known about the program s effect on labor supply and welfare participation i develop a model of family labor supply in which hours of work for the husband and wife are chosen to maximize family utility subject to a family budget constraint accounting for afdc up benefits and other tax and transfer programs the husband s and wife s labor supply decisions are restricted to no work part time work and full time work maximum likelihood techniques are used to estimate parameters of the underlying hours of work and welfare participation equations the estimates are used to determine the magnitude of the work disincentive effects of the afdc up program and to simulate the effects of changes in afdc up benefit and eligibility rules on family labor supply and welfare participation the results suggest that labor supply and welfare participation among two parent families are highly responsive to changes in the benefit structure under the afdc up program

incentive effects of the u s welfare system a review the author would like to acknowledge support for prior work on this topic from the u s department of health and human services and helpful comments from three anonymous referees rebecca blank howard chernick john fitzgerald irwin garfinkel peter gottschalk edward gramlich david greenberg judith gueron james heckman v joseph hotz robert hutchens michael keane frank levy larry mead michael murray robert plotnick anuradha rangarajan philip robins howard rolston jeffrey smith and daniel weinberg all opinions and errors are those of the author alone

evaluation of four tax reforms in the united states labor supply and welfare effects for single mothers an emerging consensus is that labor force participation is more responsive to taxes and transfers than hours worked to understand the implications of participation responses for the welfare analysis of tax reform this paper embeds this margin of labor supply in an explicit welfare theoretic framework we apply the framework to examine the welfare effects on single mothers in the united states following four tax acts passed in 1986 1990 1993 and 2001 we propose a simulation method combining features of fully structural microsimulation studies and simple deadweight loss calculations our approach accounts for the observed heterogeneity in the microdata but is simple to implement because we do not need to specify utility functions and estimate utility parameters we find that each of the four tax acts created substantial welfare gains and that the gains were concentrated almost exclusively on the participation margin our results imply that standard approaches not modeling the participation decision can make large errors

offshore commodity hedging under floating exchange rates exchange rate uncertainty can have significant effects on the optimal hedging behavior of offshore commodity traders in this paper the standard commodity hedging framework is extended first to incorporate exchange rate uncertainty and second to forward cover transactions in the foreign exchange market the implications of exchange rate movements and forward cover decisions for offshore commodity hedgers are illustrated using data relevant to hedging australian export wheat on the chicago board of trade

the wisconsin child support assurance system estimated effects on poverty labor supply caseloads and costs the economic impact of a child support assurance system csas is simulated with microdata on custodial families in wisconsin the csas includes a uniform child support standard automatic wage withholding a minimum child support benefit and wage subsidy for eligible families the simulation incorporates a model of the labor supply decision representing the custodial parent s choice of whether to participate in csas or in the current afdc system the results suggest that csas can significantly reduce poverty as well as welfare caseloads if child support collections increase by one half of the difference between estimated ability to pay child support and current collections csas will be less costly than the current system

economic response to a guaranteed annual income experience from canada and the united states this article reviews research from the five income maintenance experiments in canada and the united states after sketching the historical and political context of the experiments we compare their designs and discuss some important analytic difficulties our primary focus is the work incentive issue both nonstructural estimates of the experimental effects and elasticity estimates of structural labor supply functions we provide initial estimates of nonstructural and structural models for the canadian experiment we discuss more briefly some non work response findings associated with a guaranteed annual income and offer some personal comments on social experimentation and the policy process

child support reform and the labor supply of lone mothers in the united kingdom the reform of child support arrangements including their treatment by the welfare system has been on the policy agenda in a number of countries in recent years this paper simulates the impact of a reform that recently has been implemented in the united kingdom the analysis is based on estimates of a model of discrete choice labor supply for a sample of u k lone mothers we suggest that reform will induce a major reduction in welfare expenditures on lone mothers and a significant rise in their labor force participation due to greater work incentives associated with the changes

discourse based valuation of ecosystem services establishing fair outcomes through group deliberation discourse based methods involving small groups of citizens have yet to be thoroughly engaged in the practice of ecosystem valuation this remains true despite the fact that many ecosystem goods and services such as clean air biodiversity and unpolluted lakes and rivers are considered to be public goods the conventional application of ecosystem valuation relies heavily on methodologies such as contingent valuation in which individuals are asked to express the value they attach to ecosystem goods and services in social isolation the difference between the public nature of ecosystem services and their valuation through individual expression has thus recently led to calls for more deliberative forms of environmental valuation because the allocation of ecosystem services directly affects many people and raises normative questions about social equity it is argued that carefully designed discursive methods will help ensure the achievement of social equity goals in this paper we examine the theoretical and normative assumptions that rest beneath the proposed turn towards discourse based methods and identify procedures for testing their application in the field 2002 elsevier science b v all rights reserved

monetary policy and inflation uncertainty in the united states and germany friedman s 16 proposition that increased inflation uncertainty may adversely affect real economic variables has received much attention over the last decade the theoretical arguments for such real effects are compelling however the empirical evidence on their presence and magnitude in different countries is mixed most results for the postwar u s economy strongly support the proposition 28 25 26 19 24 7 whereas it is generally rejected for the german economy 23 17 8 2 while a direct comparison of the u s and german results is difficult due to a lack of uniform sample periods data definitions estimation techniques and or measures of inflation uncertainty the evidence to date nevertheless suggests that the role of inflation uncertainty differs sharply between the two countries the question then arises what factor s can explain the difference one popular explanation is that the monetary authorities in the united states and germany respond quite differently to accelerating inflation 3 so that the behavior of uncertainty differs across countries 4 the u s federal reserve is often criticized for switching frequently between the primary policy goals of price stability and full employment possibly due to political pressures 21 30 since inflation is primarily a monetary phenomenon in the long run it is likely that such stop and go policies increase the uncertainty about future steady state inflation which in turn can adversely affect real output growth by reducing overall economic efficiency the german bundesbank on the other hand is reputed for its staunch and credible commitment to price stability which often takes precedence over other policy goals a more consistent and predictable

a comparison of the labor supply findings from the four negative income tax experiments between 1968 and 1982 the united states federal government sponsored four negative income tax experiments this paper provides a set of consensus estimates of the labor supply responses to these experiments it is found that despite the wide range of treatments and evaluation methodologies the results are remarkably consistent on average husbands reduced labor supply by about the equivalent of two weeks of full time employment wives and single female heads reduced labor supply by about the equivalent of three weeks of full time employment youth reduced labor supply by about the equivalent of four weeks of full time employment estimated income and substitution effects are quite similar to those obtained from nonexperimental studies

real interest rates anticipated inflation and unanticipated money a multi country study a bstractin this paper we examine real interest rate behavior in canada west germany the united states and the united kingdom using a model that yields a semi reduced form equation linking the real interest rate to monetary growth shocks anticipated inflation and expected inflation variance the estimator used in our analysis accommodates regressors from other regressions ensuring that accurate inferences are obtained in all countries we find that increases in anticipated inflation initially dampen real interest rates in addition a significant and negative relationship between unanticipated money shocks and real interest across all countries is discovered inflation variance typically exhibits little explanatory power

the non equivalence of labour market taxes a real effort experiment under full rationality a labour market tax levied on employers and a corresponding income tax levied on employees are equivalent with boundedly rational agents this equivalence is no longer obvious in a real effort experiment we study the effects of these taxes on preferences concerning the size of the public sector subjective well being labour supply and on the job performance our findings suggest that employer side taxes induce preferences for a larger public sector subjective well being is higher under employer side taxes while labour supply is lower at least at the extensive margin we discuss three mechanisms that may underlie these results

an economic model of welfare stigma perhaps the most basic assumption of the economic theory of consumer demand is that more is better than less virtually all of the major propositions of consumer theory can in a certain sense be derived from the assumption that goods are good interestingly however this tenet seems to be violated by the behavior of many individuals in the low income population for many turn out to be eligible for a positive welfare benefit but do not in fact join the welfare rolls for example it has been estimated that in 1970 only about 69 percent of the families eligible for afdc aid to families with dependent children participated in the program see richard michel 1980 the corresponding percentage for afdc u the program for which families with an unemployed male are eligible was only 43 percent and the participation rate in the food stamp program was only 38 percent see maurice mcdonald 1977 this phenomenon has puzzled many investigators because such individuals do not locate on the boundaries of their budget sets consequently most investigators ignore the problem when studying the effects of welfare programs on behavior in this paper this seemingly irrational rejection of an increase in income is modeled as resulting from welfare stigma that is from disutility arising from participation in a welfare program per se 1 the existence of stigma has been amply documented in the sociological literature patrick horan and patricia austin 1974 lee rainwater 1979 where interviews of recipients have often uncovered feelings of lack of self respect and negative self characterizations from participation in welfare nevertheless this phenomenon has not been modeled and many questions consequently remain when is the disutility of participation strong enough to prevent participation shouldn t we expect individuals to weigh the disutility of participation against the potential benefit in their decisions what is the elasticity of participation with respect to the potential benefit also in a slightly different vein how are the work disincentives of welfare affected by stigma these questions have been given scant attention by economists yet they are crucial for our ability to predict the impact of various welfare programs on the lowincome population here these questions are addressed by modeling nonparticipation as a utility maximizing decision the model is developed and estimated for the afdc program 2 the model posits an individual utility function containing not just disposable income but

child support and partnership dissolution this article studies the determinants of partnership dissolution and focuses on the role of child support we exploit the variation in child support liabilities and entitlements driven in part by the introduction of a new set of complex rules that determined child support liability in the uk and by their interaction with welfare rules our panel has the virtue that the post 1993 variation in child support liability for all couples in partnerships formed prior to 1993 is unanticipated we find strong evidence that the resulting large child support liabilities significantly reduced dissolution risks

the effects of housing assistance on labor supply evidence from a voucher lottery this study estimates the effects of means tested housing programs on labor supply using data from a randomized housing voucher wait list lottery in chicago economic theory is ambiguous about the expected sign of any labor supply response we find that among working age able bodied adults housing voucher use reduces labor force participation by around 4 percentage points 6 percent and quarterly earnings by 329 10 percent and increases temporary assistance for needy families program participation by around 2 percentage points 15 percent we find no evidence that the housing specific mechanisms hypothesized to promote work such as neighborhood quality or residential stability are important empirically jel i38 j22 r23 r38

bringing stakeholder values into environmental policy choices a community based estuary case study this paper discusses a methodology for joining deliberation and analysis using the case study example of a national estuary program planning effort in tillamook bay or usa we describe the development of a community based evaluation tool that links actions proposed by technical experts e g biologists ecologists engineers to restore functioning of the tillamook bay estuary with the values and concerns expressed by community residents this task required the explicit consideration of trade offs across multiple benefits costs and risks we describe the design and results of an evaluation workbook developed with input from both the epa staff and community residents that provided insight to decision makers by presenting participants with explicit choices across the key dimensions and consequences of proposed actions the final section of the paper discusses the successes and limitations of the project in relation to evaluation needs associated with other environmental policy initiatives 2001 elsevier science b v all rights reserved

when financial work incentives pay for themselves evidence from a randomized social experiment for welfare recipients abstract this paper summarizes early findings from a social experiment that provided financial incentives for new welfare recipients to leave welfare and work full time the financial incentive was essentially a negative income tax with a requirement that people work at least 30 h week early results show that the financial incentive increased full time employment earnings and income and reduced poverty furthermore at the end of the period discussed in this paper the program was paying for itself through increased tax revenues

the econometrics of piecewise linear budget constraints a survey and exposition of the maximum likelihood method in this article maximum likelihood techniques for estimating consumer demand functions when budget constraints are piecewise linear are exposited and surveyed consumer demand functions are formally derived under such constraints and it is shown that the functions are themselves nonlinear as a result the econometric problems in estimating such functions are exposited and the importance of the stochastic specification is stressed in particular the specification of both unobserved heterogeneity of preferences and measurement error econometric issues in estimation and testing are discussed and the results of the studies that have been conducted to date are surveyed

eliciting public values for complex policy decisions several approaches exist to illuminate and clarify public values relevant for making public policy decisions these include surveys indirect and direct value elicitation focus groups and public involvement this paper describes a new approach called the public value forum which combines elements of focus groups and direct multiattribute value elicitation techniques two public value forums were conducted with selected members of the west german public to elicit values relevant for setting long term energy policies the purposes of conducting the value forums were to examine the feasibility of eliciting values from laypeople and combining them with factual assessments of experts to determine the extent to which values elicited formally conflict with values elicited informally and to assess the advantages and disadvantages of the public value forum the results indicate that the public value forum is feasible that the participants felt comfortable with the procedure and that they were eager to resolve inconsistencies between their intuitive judgments and the multiattribute models there was substantial conflict between the formally and informally elicited values however the participants were able to resolve those conflicts in the course of the value forum tending towards more moderate alternatives in the process the public value forum provided useful information for the policy process and education for the participants however because it is expensive and time consuming its main application may involve small samples of opinion leaders and stakeholder representatives rather than large representative samples of the general public

child support enforcement and welfare caseloads although there is a large body of research devoted to the issue of the determinants of welfare caseloads none of these studies has incorporated the effects of child support enforcement cse we employ annual state panel data from 1980 to 1999 and find that states with more effective cse have significantly lower welfare caseloads the improvement in cse over this period reduces welfare caseloads by about 9 percent in 1999 we also discover that individual child support variables may not be good indicators of state cse vigor and that a cse index that includes multiple dimensions of cse is more likely to capture the multiplicative functions of cse

welfare reform in european countries a microsimulation analysis this article compares the effects of increasing traditional welfare to introducing in work benefits in the 15 pre enlargement countries of the european union we use a labour supply model encompassing responses to taxes and transfers along both the intensive and extensive margins and the euromod microsimulation model to estimate current marginal and participation tax rates we quantify the equity efficiency trade off for a range of elasticity parameters in most countries because of large existing welfare programmes with high phase out rates increasing traditional welfare is undesirable unless the redistributive tastes of the government are extreme in contrast the in work benefit reform is desirable in a very wide set of cases

welfare benefits and lone parents employment in great britain the analysis pools ten years of general household surveys to identify the effects of britain s welfare benefit system on a lone mother s probability of employment it confirms the prediction that because of the implicit 100 percent tax rate in the system higher nonlabor income other than welfare benefits increases the probability while a higher benefit guarantee reduces it the analysis also confirms that among women who could never be eligible for benefits higher nonlabor income reduces the probability of employment and the guarantee has no effect

optimal income transfer programs intensive versus extensive labor supply responses this paper analyzes optimal income transfers for low incomes labor supply responses are modeled along the intensive margin intensity of work on the job and along the extensive margin participation into the labor force when behavioral responses are concentrated along the intensive margin the optimal transfer program is a classical negative income tax program with a substantial guaranteed income support and a large phasing out tax rate however when behavioral responses are concentrated along the extensive margin the optimal transfer program is similar to the earned income tax credit with negative marginal tax rates at low income levels and a small guaranteed income carefully calibrated numerical simulations are provided

dynamic hours of work functions for husbands wives and single females hours of work equations are derived from the constrained maximization of a utility function that is not separable over time and that varies with a household s demographic structure these equations are fitted to observations on wage rates nonlabor income and other variables for husbands wives and unmarried women the dependence of each household s current work and consumption behavior upon its work and consumption behavior in the past is examined closely and different interpretations of the relationship are confronted with the data

a comparison of the effect of welfare programme features on welfare participation one and two parent families the effect of welfare programme characteristics on the decision to enter the welfare system is modelled as a binary discrete choice latent variable model dependent upon an underlying index function the two chief classes of welfare beneficiaries in the us welfare system are analysed two parent families and single female headed families the data set is a large recent non experimental multiyear cross sectional pooled data set derived from the us census bureaus current population survey behavioural impacts from a range of economic variables are consistent in sign with predictions made by economic theory newly estimated comprehensive descriptive statistics of the entire welfare system for both single female household heads and married couples with children are employed to characterize the welfare system statistically significant estimates of substantial magnitude are obtained for the impacts on welfare participation for the welfare guarantee level the effective tax rate on earned income and the effec

estimates of effective guarantees and tax rates in the afdc program for the post obra period we employ the model used by fraker moffitt and wolf 1985 to estimate effective tax rates and guarantees in the aid to families with dependent children afdc program for the years 1967 82 to produce comparable estimates for 1983 91 we compare this method of benefit prediction with other methods in the literature and clarify the interpretation of estimates generated using the fraker moffitt and wolf model we use our estimates for the period from 1983 to 1991 to examine how effective afdc tax rates and guarantee levels have changed over time and relative to nominal or official program parameters

child support welfare dependency and women s labor supply this study evaluates the potential effectiveness of alternative child support policies in reducing welfare program participation employing longitudinal data from the panel study of income dynamics the analysis addresses the simultaneity of women s decisions regarding welfare participation labor force participation and annual hours of work following marital breakup the estimation framework accounts for the endogeneity of child support payments with female labor supply and for the selection bias due to differential rates of remarriage among divorced separated women results show that higher child support payments would i decrease welfare participation and ii increase average hours of work the empirical estimates are used to assess the potential effects of adopting alternative child support policies such as the wisconsin child support assurance system these results suggest that large potential welfare cost savings are attainable but significant reductions in welfare participation rates would only be achieved through substantial improvements in child support enforcement or through government assured child support payments

a theoretical approach to deliberative valuation aggregation by mutual consent in deliberative valuation a small group of selected persons explores the values that should guide collective decisions through a process of reasoned discourse proponents argue that deliberative techniques enhance the effectiveness and perceived legitimacy of policy making by facilitating public participation this paper outlines an approach to deliberative valuation that is grounded in democratic theory social psychology and cooperative game theory emphasizing applications to the monetary valuation of environmental services the analysis suggests that deliberative groups that employ consent based choice rules may aggregate individual values in a manner that systematically departs from the additive aggregation procedures of standard cost benefit analysis

a stackelberg model of child support and welfare this article models the child support and welfare decisions of never married parents on welfare as a stackelberg game the mother chooses whether to exit welfare report paternity and to obtain a formal child support order if a child support order is obtained the father chooses whether to comply with the order simulation results from the structural parameters indicate that increasing the child support disregard increases paternal compliance slightly and affects maternal paternity reporting more significantly effects are limited however by low paternal incomes results also indicate that high award amounts can decrease expected child support payments to women on welfare

effective tax rates and guarantees in the afdc program 1967 1982 estimates of effective tax rates on earned and unearned income and estimates of effective guarantees in the afdc program by state are provided for the period 1967 1982 the results indicate that effective real guarantees fell every year from 1967 to 1981 but stabilized in 1982 effective tax rates on unearned income rose steadily from 1967 to 1981 and took a particularly large additional jump in 1982 effective tax rates on earned income fell after 1967 but then gradually rose throughout the 1970s until 1982 when they took a much larger jump thus guarantees fell and tax rates rose over the 1970s as tight budgets forced states to restrict benefits and in the early 1980s tax rates were pushed even higher by federal legislation

labour supply impacts of effective welfare programme parameters a reanalysis we quantify the impact of effective welfare programme parameters on the labour supply of single female household heads the primary group of welfare recipients in the usa our panel of data is derived from the us census bureau s current population survey for the years 1979 to 1990 inclusive behavioural impacts from a range of economic variables are consistent in sign with predictions made by economic theory we find that effective welfare gurantee levels and the effective tax rate on earned income both significantly decrease labour supply the marginal effects of these welfare programme parameters are economically small a us 1000 increase in the expected welfare guarantee level reduces annual labour supply by about 36 hours a 10 percentage point increase in the effective tax rate on earned income reduces annual labour supply by about 7 5 hours

child support welfare dependency and poverty female headed families have among the highest poverty rates of any major demographic group in the united states the purpose of this paperis to investigate empirically the effectiveness of current child support enforcement policies and to determine their role in reducing poverty and welfare dependency a special supplement to the april 1982 current population survey provides the data for the analysis the results indicate that child support enforce ment may represent an effective means for re ducing welfare program costs but isunlikely to have a dramatic effect on either welfare de pendency or poverty copyright 1986 by american economic association

deliberative monetary valuation and the evidence for a new value theory economists concerned with validity are combining stated preference methods with participatory deliberation to address on going criticism deliberative monetary valuation dmv uses formal methods of deliberation to express values for environmental change in monetary terms however the results have begun to define different realms of value reflecting pluralism in public concern over environmental change reviewing empirical dmv studies evidences a range of issues regarded as external to economics and the validity of its methods issues which are typically kept at arms length by most environmental economists namely multiple values incommensurability and lexicographic preferences social justice fairness and non human values

democratic valuation dv using majority voting principles to value public services the now dominant survey approaches to value public services remain contentious a common explanation is that stated preferences are generally difficult to measure i argue that the key problems of the dominant survey approaches can be explained more specifically by their ambition to measure individuals maximum willingness to pay wtp to estimate wtp researchers need to ask questions involving counterfactual prices to specify doubtful implementation rules and to aggregate preferences in a way that is inconsistent with political rights the procedures engender problems with scenario credibility incentive compatibility adequate information provision and democratic legitimacy as an alternative to the standard stated preference paradigm i propose a democratic valuation approach dv dv measures the exchange value of public services in the political domain in terms of the aggregate valuation implied by the median preferred expenditure level for public services the blueprint for survey design is the public finance referendum with multiple proposals i suggest that empirically straightforward and democratically legitimate exchange values may be a more powerful input to public policy decisions than theoretically correct but empirically problematic estimates of mean willingness to pay

valuing environmental policy options a case study comparison of multiattribute and contingent valuation survey methods this paper describes a promising new evaluation approach called a value integration survey that uses the objectives and tradeoffs expressed by participants to value environmental policy options this constructive technique which builds on the interactive elicitation process of decision analysts assists stakeholders in clarifying their values and in agreeing on a policy alternative the paper compares this multi attribute valuation method to contingent valuation surveys describes the sequence of respondents tasks and presents results from a case study comparison of contingent valuation and value integration survey methods in the context of valuing options for fire control in oregon s oldgrowth forests

economic valuation by the method of paired comparison with emphasis on evaluation of the transitivity axiom the paired comparison pc method is used to investigate reliability transitiv ity and decision time for binary choices among goods and sums of money the pc method reveals inconsistent choices and yields individual prefer ence order over the set of items being compared the data reported support the transitivity as sumption and demonstrate high reliability for individual preference order the paper also discusses using the pc method to obtain conser vative median and mean estimates of willingness to accept compensation for public and private goods the pc method may prove useful for valu ing public goods and warrants further study jel 426

a structural model of labor supply and child care demand this paper specifies and estimates a structural model in which the decision to purchase market child care and the quality purchased is made simultaneously with the employment decision of the mother separate analyses are performed for married mothers and single mothers the structural estimates are used to simulate the effects and costs of changes in the federal child care tax credit the simulations indicate that a refundable child care tax credit would distribute child care benefits more equally across the population by increasing the shares of subsidies received by low income families and would induce a considerable increase in expenditures on market child care labor supply also increases but by considerably less than child care expenditures a surprising result is that despite large increases in child care

unanticipated money growth and unemployment post sample forecasts in the late 1970s robert j barro published what has since become a popular model of business fluctuations barro s 3 findings provide evidence advocating the short run neutrality of money under rational expectations forging an important empirical link to the theoretical studies of lucas 19 20 and sargent and wallace 33 the original barro unemployment model has received additional support from further statistical testing 5 6 15 despite criticisms and modifications some of which are considered in barro s 6 updated model these equations have inspired numerous empirical studies analyzing unanticipated effects of macroeconomic variables this paper examines post sample forecasts of barro s original 3 and revised 6 unemployment equations for the 1974 84 period mayer 23 24 harvey 13 179 80 and lovell 18 among many contend that the ability to successfully forecast outside of the sample period is an important criterion for evaluating model robustness this view is also reflected in a substantial body of studies including 10 25 26 29 39 which investigate the post sample predictive performance of macroeconomic models one year ahead forecasts indicate that the barro 3 6 equations accurately predict unemployment for the 1974 79 period during 1980 84 however the predictive performance of both models sharply deteriorates augmenting the barro models with interest rate volatility in accordance with the findings of evans 11 and tatom 38 considerably improves the overall forecasting ability this modification also rectifies the 1980s structural instability of the barro unemployment equations furthermore the basic conclusions of the seminal barro work are retained with this augmented model the results reveal that increases in interest rate volatility exert significantly adverse effects upon unemployment corroborating with the findings of evans 11 and tatom 38 still interest rate volatility could be overlooked in previous estimations of the barro or other models of business fluctuations due to the variable s relative constancy prior to 1979

anticipated money inflation uncertainity and real economic activity this paper critically examines a number of maintained hypotheses that are necessarily being tested along with the basic notion derived from the rational expectations re formulation of lucas 1972 19 73 that only unanticipated money matters the trend stationary representation of secular real output of lucas and others is replaced by a difference stationary representation found by nelson and plosser 1980 to be consistent with u s historical data the impact of inflation uncertainty on real activity is considered attention is paid to possible mis measurement of agents ex ante anticipated money growth it is found that three alternative measures of anticipated money growth produce a stable impact on growth of output and employment contemporaneous and lagged values of unanticipated money growth have no significant additional explanatory power in the presence of any one of the three measures of anticipated money growth beyond this it is impossible to reject the hypothesis that the initial positive real impact of anticipated money is not temporary inflation uncertainty is found to act as a significant depressant of real economic activity in the presence of all tested combinations of anticipated and unanticipated money growth this abstract was borrowed from another version of this item

inflation uncertainty and real economic activity an alternative approach a bstracct increased uncertainty about inflation is shown to encourage inflation hedging which in turn reduces the macroeconomic costs of that uncertainty portfolio theory and empirical evidence support the contention that only the portion of inflation volatility that cannot be hedged has real economic effects additional empinrcal results suggest that i increased inflation volatility in the early seventies was eventually followed by portfolio reallocations that allowed for greatly improved inflation hedging and ii the deletenrous effect of inflation uncertainty on real economic activity shown in previouis studies is significantly smaller after 1975