the importance of financial considerations in divorce decisions i introduction one of the most dramatic and commonly cited consequences of divorce is the fall in family money income especially for households headed by divorced women using the panel survey of income dynamics duncan and hoffman 1985 estimate that the family income of divorced and separated women fell by 19 percent during the year following divorce or separation a study by nestel et al 1983 using data from the mature women s cohort of the national longitudinal survey of labor market experience indicates that the poverty rate for households headed by women who were divorced during the survey and did not remarry rose from 10 percent just prior to divorce to 25 percent immediately after dovorce similar results are reported by mott and moore 1982 and espenshade 1979 these statistics however may overestimate the long term negative consequences of divorce because they ignore the possibility of an improvement in financial circumstances through remarriage 1 mott and moore 1982 find that even for women who do not remarry economic status improves over time due primarily to better employment prospects given the large financial costs of divorce especially in the short run it is reasonable to ask how important are financial considerations in divorce decisions this paper explores the linkages between the financial consequences of divorce and the decision to become divorced the paper extends previous work by measuring these consequences over a period of time rather than at one point in time in particular the paper addresses two issues 1 do the expected financial consequences of divorce affect the decision to become divorced and 2 what is the relative importance of short versus long run considerations a standard choice theoretic model predicts that the smaller are the financial costs of divorce the greater is the probability of divorce the financial opportunity cost of divorce is measured as the difference in the expected present values of the income streams within marriage and at divorce the expected income stream at divorce includes the financial value attached to a possible remarriage as well as income from employment welfare alimony and child support payments the empirical analysis utilizes data from the national longitudinal survey of work experience of young women nls a sample of those divorced between 1973 and 1978 is observed over time during marriage after divorce and for some during a remarriage thus the actual income changes resulting from divorce and remarriage are measured income changes for a sample of continuously married women are also measured over a comparable period the expected changes in income for each subsample are estimated as a function of socio economic variables and the values are imputed for the entire sample to explore the relationship between these expected income streams and decisions about divorce the result indicate that the expected short term financial consequences of divorce are a better predictor of subsequent divorce than are the longer term consequences this evidence implies that individuals behave as if they face high discount rates ii economic models of divorce one of the first economic models of divorce was developed and emphirically tested by becker landes and michael 1977 as in any choice theoretic model divorce occurs when the gains from that choice exceed the benefit from remaining married gains from marriage include both a pecuniary component such as pooled household income from the market work of the husband and wife and a non pecuniary component such as children love companionship and household goods from home production gains from divorce include own labor market income home production which may differ between the divorced and married states and the expected value of potential new relationship e g remarriage marriage specific capital such as children has a higher value within marriage and increases the opportunity cost of divorce

retail payments new contributions empirical results and unanswered questions abstract we offer a selected survey of retail payments and suggest areas where additional research would prove useful after summarizing eight papers presented at a recent norges bank central bank of norway payment conference and published in this volume we show how they and many of the other papers presented there have contributed to the payments literature we also illustrate how institutional and other differences across countries led to different payment arrangements historically which now due to technological innovation affecting bank costs have made payment arrangements across countries more homogeneous

mainstream economic analysis and the case for accommodation the federal reserve has a dual mandate to foster both full employment and price stability most often these two goals are in alignment so policies that support one objective generally support the other however at times the two aims can be at odds when that happens policies that target one goal may lead to misses on the other one this article argues that taking a balanced approach between competing choices provides a solution that is in agreement with mainstream monetary policy rules

mitigating the consequences of a health condition the role of intra and interhousehold assistance the behavior of noncoresident family members motivates much of the literature on consumption smoothing risk sharing and informal networks yet little is known empirically on the topic due to a lack of data simultaneously observing multiple households in an extended family this study utilizes genealogically linked longitudinal data to examine how extended family networks insure against financial risks from severely limiting health conditions we find that nonhealth consumption of unmarried households declines in response to worsening health whereas married households smooth expenditures in a way that is consistent with full insurance families mitigate losses by reallocating home production drawing down home equity holding formal health insurance collecting social security and receiving transfers from noncoresident relatives we illustrate that the costs of health shocks are transmitted throughout family networks and that noncoresident children draw down their assets and consumption when responding to a parent s health decline

in love with the debit card but still married to cash abstractusing shopping diary survey data we show that changing payment patterns is a challenging task even when consumers have fallen in love with a new payment instrument they find it hard to divorce from their old payment instrument we find a discrepancy between how consumers prefer to pay and how they actually pay half of the consumers who prefer the debit card to cash don t use the debit card to pay a majority of their point of sale transactions our regression results show that the habit of paying cash plays a significant role explaining the presence of a gap

a diamond is forever and other fairy tales the relationship between wedding expenses and marriage duration in this study we evaluate the association between wedding spending and marriage duration using data from a survey of more than 3 000 ever married persons in the united states controlling for a number of demographic and relationship characteristics we find evidence that marriage duration is inversely associated with spending on the engagement ring and wedding ceremony jel j12 z1 d1

drip pricing and its regulation experimental evidence abstract this article analyzes the effects of drip pricing the business practice of decomposing a price into multiple components that are presented sequentially to buyers we experimentally examine the effects of this practice on seller strategies and buyer behaviors and we assess the implications for regulation in our experiment sellers set two prices a base or headline price and a drip price at first buyers observe only the base prices and make a tentative purchase decision subsequently revealing the sellers drip prices however comes at a cost to buyers we find that sellers only compete on base prices and thus set the highest possible drip price this makes the base price a reliable indicator for the lowest total price moreover few consumers invest in drip price searches a comparison with bertrand competition reveals significant effects with drip pricing consumer surplus is lower and seller profits are higher when there is uncertainty over possible drip sizes sellers also compete over drips and consumers more frequently fail to identify the cheapest offer bertrand competition also leads to higher consumer surplus and lower firm profits in this case hence our results point to positive effects of drip price regulation

choosing how to pay the influence of foreign backgrounds abstract is having a foreign background a relevant factor in choosing between payment instruments in consumer point of sale transactions after migration we analyze this question using a unique diary survey in which both participants with a dutch and a foreign background documented their daily purchases we present several pieces of evidence suggesting that foreign backgrounds still influence the choice between payment instruments after migration to the netherlands for instance we find that first generation migrants from a number of countries that can be seen as cash oriented are more likely to use cash in the netherlands at the same time second generation migrants have similar payment habits as individuals with a dutch background this finding suggests that payment behavior is not passed on between generations but affected by host country payment habits finally we suggest that in this context special information campaigns to increase debit card usage will not have clear net social benefits

optimal card payment systems abstract this paper presents a model of a card payment system to address the pricing and rules that govern such systems it evaluates the social optimality of privately set interchange fees and the adoption of a rule by payment systems to prevent merchants surcharging for card transactions using two extremes of merchant pricing monopolistic pricing and perfect competition both types of merchant pricing constrain the ability of card schemes to use interchange fees and the no surcharge rule in anticompetitive ways although for quite different reasons the positive role of the no surcharge rule in preventing excessive merchant surcharging is also highlighted

the export diversifying impact of japanese and us foreign direct investments in the indian manufacturing sector the paper highlights the export diversifying impact of foreign direct investment fdi in a developing country fdi may lead to export diversification in the host country if it positively affects the export intensity of industries that have a low share in world exports indirectly fdi may encourage export diversification through spillover effects that is the presence of fdi in an industry may increase the export intensity of domestic firms the empirical results for the indian economy in the post liberalisation period show that fdi from the us has led to diversification of india s exports both directly and indirectly however japanese fdi has had no significant impact on india s exports

why do people use debit cards evidence from checking accounts i introduction debit card use has grown faster than any other payment instrument in the united states a minor segment of the market used debit cards in 1998 however figure 1 shows that because of rapid growth in their use more transactions are made with debit than with credit cards the puzzle of debit s popularity is that explicit costs appear to favor credit over debit with debit money immediately comes out of the bank account whereas with credit the household is billed for purchases at the end of the month and pays within a further grace period as long as no balance is carried on the credit card the consumer pays no interest this float may be minor if evaluated at a savings account interest rate however for liquidity constrained households the opportunity cost payday loans or bank bounce protection is quite high credit cards also offer the option to convert the balance into an uncollateralized loan with zero transaction cost most credit cards offer rewards cash back airline miles gift certificates warranty on purchase charitable donations etc or a below market interest rate only 5 7 of banks offer rewards on their signature debit cards moebs services inc 2006 and some financial institutions 15 charge a fee for pin debit purchases ranging from 10 cents to 2 dollars per transaction the goal of this paper is to investigate the factors that have caused a seemingly dominated product to become a market leader consumer debit card choice has implications for monetary policy as such choices affect money demand and money transmission mechanisms with 894 billion in credit card debt at the end of 2009 and 1 4 million personal bankruptcies in 2009 americans ability to effectively manage personal finances can have a strong effect on standard of living as payment card networks exhibit network externalities market concentration and its suppressive effects on competition is of concern to antitrust regulators the extent to which these network externalities exist is dependent on the degree of substitutability of competing payment media survey evidence such as found in the studies of zinman 2009 stavins 2001 borzekowski and kiser 2008 and borzekowski kiser and ahmed 2008 offers several motivations for choosing debit over credit cost convenience merchant acceptance time at checkout purchase tracking safety being credit constrained and spending restraint zinman notes that up to 31 of households could use debit for self restraint uniquely we use household transactions level data a course of action recommended by zinman the sufficiently rich data are consistent with spending control purchase tracking merchant acceptance and pecuniary motives paying interest when revolving a credit card balance as an explanation for some households debit use figure 1 omitted much of the growth in debit card use has come at the expense of checks or cash from 1995 to 2003 electronic payments grew from 23 to 55 of all payments borzekowski and kiser 2008 find that the closest substitutes for debit are cash checks and credit in that order however the debit versus credit comparison is quite clean debit and credit equate in many dimensions considered by klee 2006 and recently available data to track debit transactions as opposed to the anonymity of cash however with atm withdrawals observable we are able to compare debit and credit to cash to speculate whether debit card use might be correlated with spending control motives we look for evidence that debit card users are paying down a credit card balance the checking account data contains credit card payments but not credit card balances while the data do not contain full information about credit card balances they do contain payments to credit cards this is enough information to show that debit users are more likely to pay the same amount in multiple months a sign that they are paying a credit card balance

platform competition in two sided markets many if not most markets with network externalities are two sided to succeed platforms in industries such as software portals and media payment systems and the internet must get both sides of the market on board accordingly platforms devote much attention to their business model that is to how they court each side while making money overall this paper builds a model of platform competition with two sided markets it unveils the determinants of price allocation and end user surplus for different governance structures profit maximizing platforms and not for profit joint undertakings and compares the outcomes with those under an integrated monopolist and a ramsey planner jel l5 l82 l86 l96

are firm specific advantages location specific too much of the research on the role of firm specific advantages on firms subsidiary ownership preferences has been undertaken in the context of advanced country multinationals specifically u s mncs research has found that u s firms derive ownership advantages from their size experience and technological and marketing superiority perhaps having operated in the most developed and sophisticated home market many u s firms generate unique skills that give them absolute advantages over firms in almost all foreign host locations developing country mncs do not have absolute ownership advantages similar to those of the u s firms the relevance of a particular firm specific characteristic for a developing country mnc may be contingent not only upon the home country characteristics as in the case of u s mncs but also upon host country characteristics this study investigates the subsidiary ownership preferences among korean mncs and finds that the influence of three firm specific advantages technological intensity product differentiation and capital intensity on subsidiary ownership levels is contingent upon whether the subsidiary is located in a relatively less developed or a more developed country as compared to the home country although some authors have suggested that the influence of firm specific advantages may be contingent upon the characteristics of both home and host country locations empirical investigations to this effect have been nonexistent

health behavior health knowledge and schooling the positive correlation between schooling and good health is well documented one explanation is that schooling helps people choose healthier life styles by improving their knowledge of the relationship between health behaviors and health outcomes that is schooling improves the household s allocative efficiency in producing health this empirical study uses direct measures of health knowledge to test this explanation part of the relationship between schooling and the consumption of cigarettes alcohol and exercise is explained by differences in health knowledge however most of schooling s effects on health behavior remain after differences in knowledge are controlled for

the determinants of fdi location choice in china a discrete choice analysis this study addresses two questions what are the determinants of foreign direct investment fdi location choice in china what are the factors that determine investors choice between economic zo

threats and opportunities faced by private businesses in china abstract this article presents a comprehensive analysis of the environment experienced by private businesses in china through examining their relationships with the major stakeholders namely government supplier employee customer and competitor since the announcement of the economic reform in 1978 substantial political and economic power has been delegated from the central government to the regions endowed with this power local governments have crucial influence on the size of the private sector within their jurisdiction being outside the state allocation plan private firms have less access to raw materials and credit in the volatile political climate of china they are vulnerable to attack during political campaigns maintaining a cordial relationship with local cadres through paying bribes and various charges is thus a prerequisite for survival having solicited political backing a private entrepreneur can not only run his business more smoothly but also may be more tolerated in his illegal activities such as tax evasion profiteering and selling banned products in short the whole situation can be described as a collusion of local governments and private businesses at the expense of the central government s interest under the economic reform the distribution system has become less rigid than before it is easier for private firms to secure supplies whether raw materials or manufactured goods labor input is also not a problem for most private firms which are small in size and employ mainly unskilled workers however large private enterprises have to compete with state collective and foreign enterprises for managerial staff who are in short supply there have been marked changes in the consumption pattern since the early 1980s people spend less on staple foods and more on non staple foods consumer goods and services moreover china is experiencing a consumption boom altogether this offers great opportunities to the private sector which has been expanding its share of industrial output and retail sales very fast on the other hand competition is becoming much keener state enterprises are improving their efficiency and giant multinational corporations are rushing in as there are few entry barriers private entrepreneurs are also competing fiercely among themselves the ideological contradiction of having labor exploitation by private entrepreneurs in a socialist country has prevented the chinese government from actively encouraging private business the private sector has been assigned a supplementary role in the dominant public economy this status has led to discrimination against private firms in obtaining factor inputs accounting partly for their vulnerability to bureaucratic harassment by local cadres this will continue to hamper private business development it is concluded that ideological and political reforms in addition to the economic reform are required for providing a more conducive environment for private businesses the chinese experience of liberalizing the private sector offers useful insights to governments of other developing countries

the effect of job displacement on couples fertility decisions this paper analyzes the effects of job displacement on fertility using finnish longitudinal register data we focus on couples where one spouse has lost a job due to a plant closure and follow them for several years before and following the job loss the results show that female job loss decreases fertility for every 100 displaced females there are three fewer children born male job loss has no impact on fertility despite resulting in a stronger decrease in family income than female job loss this indicates that the income effect is not the mechanism through which job displacement influences fertility

when it rains it pours under what circumstances does job loss lead to divorce much of the previous research that has examined the effect of job loss on the probability of divorce either rely on data from the 1970s 80s data from european countries or focus on aggregate divorce rates this study uses u s micro data from 2000 to 2012 thus including effects of the great recession to examine how displacement i e exogenous job loss affects the probability of divorce the author finds displacement significantly increases the probability of divorce but only if the husband is the spouse that is displaced and his earnings represented approximately half or less of the household s earnings prior to displacement similarly results show that the probability of divorce increases if the wife is employed and as her earnings increase while the mechanism behind these asymmetric results remains unclear these results are consistent with recent research that finds a destabilizing effect on marriages when a wife earns more than her husband

consumers use of debit cards patterns preferences and price response debit card use at the point of sale has grown dramatically in recent years in the united states and now exceeds the number of credit card transactions however many questions remain regarding patterns of debit card use consumer preferences when using debit and how consumers might respond to explicit pricing of card transactions using a new nationally representative consumer survey this paper describes the current use of debit cards by u s consumers including how demographics affect use in addition consumers stated reasons for using debit cards are used to analyze how consumers substitute between debit and other payment instruments we also examine the relationship between household financial conditions and payment choice finally we use a key variable on bank imposed transaction fees to analyze price sensitivity of card use and find a 12 decline in overall use in reaction to a mean 1 8 fee charged on certain debit card transactions we believe this represents the first microeconomic evidence in the united states on price sensitivity for a card payment at the point of sale

house prices and marital stability we investigate the effect of house price changes on divorce using data for 1991 2010 from the current population survey and the federal housing finance agency our findings suggest that changing house prices significantly affect the share of a cohort that is divorced and that these effects are asymmetric with respect to housing gains versus losses in addition we find differential effects for groups that are more likely to be homeowners versus renters some of this evidence is consistent with homeowners being locked into their homes and hence marriages by increased transactions costs in down markets

the decline in male labor force participation comment in an article in thisjournal parsons 1980a analyzes the doubling in the rate of nonparticipation in the labor force of older men since 1946 using cross sectional data from the national longitudinal survey parnes et al 1970 in an index function model of the labor force participation decision he tests the assertion that the withdrawal of older males is attributable to the rapid expansion of alternatives to work provided by the social security disability insurance ssdi program he reports an elasticity of nonparticipation with respect to the replacement rate of ssdi benefits of 631 and concludes that the recent decline in labor force participation can be largely explained by the increased generosity of social welfare transfers particularly social security disability payments p 130 the magnitude of parsons s estimate and its impact on the public debate over disability transfer policy require careful scrutiny of its basis in section i we describe parsons s econometric model and construction of variables in section ii we provide a critique in section iii we test the robustness of parsons s elasticity estimate by presenting alternative estimates based on corrections and extensions of his basic model section iv concludes

choosing a control group for displaced workers the vast majority of studies on the earnings of displaced workers use a control group of continuously employed workers to examine the effects of initial displacements this approach implies long lived earnings reductions following displacement even if these effects are not persistent overstating the losses relative to the true average treatment effect this paper s approach isolates the impact of an average displacement without imposing continuous employment on the control group in a comparison of the standard and alternative approaches using psid data the estimated long run earnings losses fall dramatically from 25 percent to 5 percent model simulations reinforce these empirical findings

country of origin effects of foreign investments in the people s republic of china this paper investigates the existence of country of origin effects occurring in foreign investments in the people s republic of china the eclectic theory of international production posits that the pattern of foreign investments should vary by country of origin this aspect of the eclectic theory is difficult to test directly especially in developing countries because of the relatively small numbers of foreign investment projects in a single country the data used in this research cover 1 665 sino foreign joint ventures jvs from 1979 to 1985 allowing a more reliable test of this aspect of the theory statistical evidence suggests that country of origin effects are indeed present in foreign investment activities in china

payments data do consumers want banks to keep them in a safe or turn them into gold abstractfor policymakers seeking to protect financial stability and financial institutions it is key to know consumers attitudes towards payments data usage this article provides detailed insigh

inflation and other aggregate determinants of the trend in us divorce rates since the 1960s this article extends empirical research on the determinants of divorce in two ways first i examine the effect of inflation on divorce second the use of a structural time series modelling approach attributes unobservables and omitted variables to an unobserved component which allows for the model s parameters to be estimated consistently inflation is statistically significant positive and persistent i show that the effects of inflation are robust to the inclusion of additional explanatory variables and various trend specifications the long run implications of inflation are also substantial i conclude that price stability has the potential to reduce divorce rates

does unemployment insurance crowd out spousal labor supply previous research on unemployment insurance ui has emphasized the program s effect on individual search behavior this state contingent income may also reduce the labor supply of family members during the unemployment spell we investigate this question within the context of wives labor supply responses to their husbands unemployment spells we find strong crowdout of this form of family self insurance our estimates imply that for each dollar of ui receipt wives earn up to 73 cents less the reduction in spousal hours of work is over 40 as large as previous estimates of the effect of ui on search time of husbands

the eclectic paradigm of international production a restatement and some possible extensions this article reviews some of the criticisms directed towards the eclectic paradigm of international production over the past decade and restates its main tenets the second part of the article considers a number of possible extensions of the paradigm and concludes by asserting that it remains a robust general framework for explaining and analysing not only the economic rationale of economic production but many organisational and impact issues in relation to mne activity as well

impacts of disability on poverty quasi experimental evidence from landmine amputees in cambodia abstract this paper examines the impacts of disability on poverty in rural cambodia i combine a natural experiment and spatial blocking first i focus on amputation among adults due to landmines which is free from measurement errors and the onset of which is an exogenous shock second i conduct an original survey stratified by disability status within villages where people have shared the same local vulnerability to landmine accidents this research design enables matching analysis within small geographic areas treating demographic factors such as household formation and fertility as endogenous this quasi experimental study finds that amputation greatly reduces consumption and income but not subjective well being i e adaptation increasing poverty and augmenting its magnitude disability triggers a vicious circle of reduced work low earnings and limited accumulation of productive assets and social capital this work cum asset channel leads to adverse intergenerational effects on child schooling and child labor

match quality new information and marital dissolution this article investigates the role of surprises in marital dissolution surprises consists of changes in the predicted earning capacity of either spouse data from the national longitudinal study of the high school class of 1972 is used we find that an unexpected increase in the husband s earning capacity reduces the divorce hazard while an unexpected increase in the wife s earning capacity raises the divorce hazard couples sort into marriage according to characteristics that are likely to enhance the stability of the marriage the divorce hazard is initially increasing with the duration of marriage and the presence of children and high levels of property stabilizes the marriage

the impact of child care costs on the labour supply of married mothers evidence from canada this paper provides estimates for canada of the impact of childcare costs on the labor supply of married mothers this is done by linking two microdata sources the 1988 canadian national child care survey and the 1988 labour market activity survey the key results show that the market wage and childcare costs have respectively a significant positive and negative impact on both hours of work and the labor force participation decision by married mothers the childcare cost elasticities for labor force participation and hours of work are reported to be 0 38 and 0 32 respectively

why do shoppers use cash evidence from shopping diary data des etudes recentes montrent que l argent comptant demeure un mode de paiement privilegie pour les transactions de faible montant malgre la prevalence d autres moyens de paiement comme les cartes de debit et de credit pour les decideurs publics il importe de savoir si les consommateurs preferent vraiment regler en especes ou plutot si les commercants restreignent l usage de ces cartes

how people pay evidence from grocery store data abstract empirical evidence based on grocery store transaction data shows that consumer payment behavior at the point of sale is important for understanding models of money demand there are statistically significant effects of transaction costs opportunity costs and product characteristics on the choice of payment instrument which then in turn affect money demand these results emphasize the overlap between the work of empirical researchers in payment choice and theoretical modelers of monetary economics and should inform both literatures

prices for cash and cash for prices theory and evidence on convenient pricing a transaction between a seller and a buyer incurs a payment cost the payment cost is borne by the seller depending on the payment instrument the buyer chooses cash or card card payment is more costly than cash payment so the seller prefers that the buyer pays cash in this article we study the strategy of the seller setting a convenient price which simplifies transactions and pushes the buyer to pay cash the theoretical analysis which models both the seller and the buyer in a game setting derives two propositions 1 the seller is more likely to set a more convenient price and 2 the buyer is more likely to pay cash a more convenient price the empirical analysis supports both propositions thus sellers adopt a convenience pricing strategy prices for cash and this strategy pushes buyers to pay cash cash for prices

lucky in life unlucky in love the effect of random income shocks on marriage and divorce abstract economists have long been interested in the extent to which economic resources affect decisions to marry and divorce however this issue has been difficult to address empirically due to a lack of exogenous income shocks we overcome this problem by exploiting the randomness of the florida lottery and comparing recipients of large prizes to those of small prizes results indicate that while positive income shocks of 25 000 to 50 000 do not cause statistically significant or economically meaningful changes in divorce rates single women are less likely to marry as a result of the additional income

household finances income shocks and family separation in britain we examine the effect of household financial indebtedness on the incidence of partnership dissolution using a large survey of families with children in britain we use detailed data on household finances to provide a robust statistical analysis of the relationship between indebtedness and partnership dissolution and to avoid the potential simultaneity of financial and psychological health responses that arise when using self reported data on the extent of household financial problems we examine whether the data provides any support for the economic models of divorce and separation developed by gary becker and his colleagues

heavily skewed pricing in two sided markets a common feature in two sided markets is the prevalence of heavily skewed pricing strategies in which price markups are much higher on one side of the market than the other we show that maximal skewed pricing is profit maximizing under constant elasticity of demand the most elastic side of the market is used to generate maximum demand by providing it with platform services at the lowest possible price full participation of the high elasticity low price side of the market attracts the other side as this side is less price elastic the platform is able to extract high prices

measuring the effect of disability on labor force participation this paper estimates the effect of disability on labor force participation by using symptoms or diseases as instruments in a simultaneous equations model of endogenous reported disability and labor force participation the results show that each measure of disability explains a significant amount of variation in labor force participation though the two are not perfect substitutes there is only weak evidence of endogeneity of the disability variables for cases where there is evidence of endogeneity the bias it causes has the opposite effect of that hypothesized in the literatute i e stress causes health to deteriorate with labor force participation furthermore it has only insignificant effects on the coefficients for other variables

marriage and divorce changes and their driving forces the family is not a static institution in recent decades marriage rates have fallen divorce rates have risen and the defining characteristics of marriage have changed the economic approach to the family seeks to explain these trends by reference to models that can also explain how and why families form gary becker s 1981 treatise on the family proposed a theory based on production complementarities in which husband and wife specialize in the market and domestic spheres respectively production complementarities also arise in the production and rearing of one s own children however production complementarities at least as initially described are decreasingly central to modern family life increased longevity and declining fertility mean that most of one s adult life is spent without one s own children in the household also the rise in marital formation at older ages including remarriage means that many families form with no intention of producing children moreover increases in female labor force participation suggest that household specialization has either declined or at least taken on a different meaning these changes have come about as what is produced in the home has been dramatically altered both by the emergence of labor saving technology in the home and by the development of service industries that allow much of what was once provided by specialized homemakers to be purchased in the market the availabil

the health and earnings of rejected disability insurance applicants applicants for social security disability benefits who fail to pass the medical screening form a natural control group for beneficiaries data drawn from the 1972 and 1978 surveys of the disabled done for the social security administration show that fewer than 50 percent of rejected male applicants work typical earnings of those that do are less than 59 percent of median earnings for other men their age these data cast doubt on recent econometric work that suggests that the disincentive effects of the social security disability program have been substantial copyright 1989 by american economic association

disability earnings income and consumption using longitudinal data for the period 1968 2005 for a sample of male household heads we determine the prevalence of disability during the working years and examine how the extent of disability affects a range of outcomes including earnings income and consumption we have seven main findings first disability rates are high we divide the disabled along two dimensions based on the persistence and severity of their work limiting condition we estimate that a person reaching age 56 has a 53 percent chance of having been disabled at least once during his working years and a 19 percent chance that he has begun a chronic and severe disability second the economic consequences of disability are frequently profound ten years after disability onset a person with a chronic and severe disability on average experiences a 68 percent decline in earnings a 32 percent decline in after tax income a 22 percent decline in food and housing consumption and a 21 percent decline in food consumption third the various economic consequences differ sharply across disability groups the outcome declines for those with a chronic and severe disability are often more than twice as large as those for the average disabled fourth our findings show the partial and incomplete roles that individual savings family support and social insurance play in reducing the consumption drop that follows disability only about half of this most disabled group reports receiving social security disability insurance or supplemental security income fifth we find a noticeable fall in earnings and income prior to the onset of a reported disability consumption also falls somewhat suggesting that future disability is partially but incompletely predictable in the short run sixth time use and detailed consumption data further indicate that disability is associated with a decline in well being seventh the quantities we have estimated combined with elasticities from the literature allow us to examine the optimality of current compensation for the disabled we find that the current compensation for our most disabled group appears to be lower than is optimal

do the sick retire early chronic illness asset accumulation and early retirement our objective is to determine how chronic illness affects asset accumulation and retirement previous studies have found that poor health leads to early retirement but those studies failed to look at the indirect impact of chronic illness on retirement using data from the health and retirement study we define an illness as chronic if the individual reports having asthma cancer heart disease stroke or diabetes for four or more years we first estimate how a chronic illness influences asset accumulation we then estimate how asset accumulation and current poor health influence retirement we observe that the vast majority of the chronically ill population do not report their general health to be poor nor do they report functional limitations in activities of daily living nevertheless our results indicate that chronic illness leads these people to accumulate fewer assets during their working years and consequently retire later neither researchers nor policy makers discussing the many critical issues

labour force participation by disabled males in canada the disabled are not necessarily unemployed although about a quarter of them report they are completely prevented from working a disabled person s decision to work or not depends on a variety of psychological social and economic as well as health factors this paper asks if canadian disability related insurance schemes discourage work it models and measures the impact of disability benefits on the work choice of disabled prime age males it finds that they amount to a significant work disincentive but better yet they likely save many disabled persons from unsuitable and or undesirable jobs

labor market discrimination against men with disabilities in the year of the ada the americans with disabilities act ada provides civil rights protections to persons with disabilities but the debate that preceded passage of the act was not based on empirical estimates that could be used to measure its performance this article estimates the extent of wage discrimination against men with disabilities in 1990 providing a reference that can be used to evaluate the impact of the ada the results show large productivity standardized wage differentials between disabled and nondisabled men that are weakly correlated with the strength of prejudice against different impairments physical limitations explain part but not all of the wage differentials the results also show that low employment rates are a more serious problem than wage discrimination for workers with disabilities provide civil rights protections to persons with disabilities the act s supporters promised that it would increase the employment and wages of persons with disabilities and reduce their dependency on public programs the promises were not based on empirical estimates of discrimination and there is no empirical base against which to compare the promises to the performance of the ada this article estimates the extent of wage discrimination against men with disabilities in 1990 providing a reference that can be used to evaluate the impact of the act the ada does not grant a right to employment to all persons with disabilities it requires that persons with disabilities be able to perform the jobs they seek subject to reasonable accommodations by employers this article therefore considers men who are able to work even though their health limits the amount or kind of work they can perform the ada s provisions assume that low wages and low employment rates for persons with disabilities are the result of discrimination caused by prejudice prejudice against persons with disabilities is well documented but so are the limiting effects of physical impairments on workplace productivity hahn 1987 margolis and shapiro 1987 clogston 1990 the core of the debate concerning the value of the ada is whether the poor labor market outcomes of persons with disabilities are the result of discrimination or the limiting effects of health con

size matters economies of scale in european payments processing abstract this paper investigates the existence and extent of economies of scale in the european payment processing industry it is expected that the creation of a single european payments area sepa will spur consolidations and mergers among european payment processors to more fully realize payment economies of scale we find evidence for the existence of significant economies of scale using data of eight european payment processors during the years 1990 2005 the analysis also reveals that ownership structure is an important factor to explain cost differences across european processing centers

parental job loss and children s school performance using norwegian register data we estimate how children s school performance is affected by their parents exposure to plant closure our estimates suggest that paternal job loss has a negative effect on children s school performance in contrast maternal job loss is associated with a non significant increase in school performance importantly the negative effect of paternal job loss appears largely unrelated to its effect on father s income father s employment status a shift in maternal time towards employment marital dissolution and residential relocation a disparate effect of job loss across fathers and mothers is however consistent with recent empirical studies documenting that the mental distress experienced by displaced workers is generally more severe for men than women

cooperation among competitors some economics of payment card associations we analyze platforms in two sided markets with network externalities using the specific context of a payment card association we study the cooperative determination of the interchange fee by member banks the interchange fee is the access charge paid by the merchants banks the acquirers to cardholders banks the issuers we develop a framework in which banks and merchants may have market power and consumers and merchants decide rationally on whether to buy or accept a payment card after drawing the welfare implications of a cooperative determination of the interchange fee we describe in detail the factors affecting merchant resistance compare cooperative and for profit business models and make a first cut in the analysis of system competition

health and wage a simultaneous equation model with multiple discrete indicators in this article we propose all econometric approach for estimating the simultaneouls effects of health and wages in a structural equations framework in the theoretical works of grossmana 1972a 1972b health is viewed as anl elldogen1oulsly determined capital stock the demand for health should rise with the wage rate as the rate of return to health investment increases with wage onl the other hand better health should raise market productivity and hence wages since health capital is an abstract theoretical concept it can hardly be measured quantitatively however most population surveys include various health indicators these indicators are usually discrete variables in the empirical work of grossman and benham 1974 these qualitative indicators are treated as continuous variables and two stage least squares estimation techniques are used this specification raises various econometric problems see e g goldberger 1964 pp 248 255 domencich and mcfadden 1975 and nerlove and press 1973 a satisfactory specification should take into account the discrete nature of the indicators our specification generalizes the dummy variables simultaneous equations system of heckman 1978 the measurement models of joreskog and goldberger 1975 and is closely related to the models of muthe n 1976 1979 muthen studies full information maximum likelihood procedures for estimation except for very simple cases this does not generally yield feasible or tractable procedures in this article we introduce a tractable procedure for statistical estimation and testing this specification and the estimation procedure is then applied to study the joint dependence of health and wages another departure of our approach from others is that we will test and correct the possible incompatibility of the various health capital indicators in the population surveys one may have subjective health indicators such as self evaluation of health which may reflect different populations perception of health we propose a statistical procedure for testing measurement compatibility and if required for correcting this problem this article is divided into two parts initially we describe the model specification estimation and statistical tests in a general simultaneous equation model with multiple discrete indicators in the second part of the paper we consider specification of a simultaneous equation model for health and wages the model

male wage inequality and marital dissolution is there a link after almost a century long pattern of rising marital instability divorce rates leveled off in 1980 and have been declining ever since the timing of deceleration and decline in the rates of marital disruption interestingly coincides with a period of substantial growth in wage inequality this paper establishes a connection between the two phenomena and explores potential explanations for the underlying link using individual data on female marital histories in a duration analysis framework combined with regional and temporal variation in the pattern of male wage dispersion i show that inequality has a significant stabilizing effect on the marital relationship quantitatively increases in male wage dispersion can roughly explain up to 30 of the fall in the mean separation probability between 1979 and 1990 several plausible explanations for this relationship are assessed changes in spousal labor supplies female wage inequality income uncertainty social capital as well as a hypothesis of on the marriage search the results are most supportive of the search interpretation no strong quantitative support was found for the remaining mechanisms

missed sales and the pricing of ancillary goods firms often sell a basic good as well as ancillary ones hold up concerns have led to ancillary good regulations such as transparency and price caps the hold up narrative however runs counter to evidence in many retail settings where ancillary good prices are set below cost e g free shipping or limited card surcharging in countries where the no surcharge rule was lifted we argue that the key to unifying these conflicting narratives is that the seller may absorb partly or fully the ancillary good s cost so as not to miss sales on the basic good a supplier with market power on the ancillary good market then takes advantage of cost absorption and jacks up its wholesale price hold ups occur only when consumers are initially uninformed or naive about the drip price and shopping costs are high the price of the basic good then acts as a signal of the drip price since a high markup on the basic good makes the firm more wary of missed sales regardless of whether consumers are informed uninformed but rational or naive mandating price transparency and banning loss making on the ancillary good leads to i an efficient consumption of the ancillary good and ii a reduction of its wholesale price generating strict welfare gains

explaining adoption and use of payment instruments by u s consumers this paper develops and estimates a structural model of adoption and usage of payment instruments by u s consumers we utilize a cross section from the survey of consumer payment choice a new survey of consumer behavior our empirical model combines the elements of a discrete continuous model where rst a consumer picks a product and then chooses how much to use it with a bundled choice model in which consumers can choose multiple products that may aect the utility derived from each other we consider how changes in the costs of adoption and usage may dierentially aect substitution patterns these results are particularly relevant for bank pricing of debit card services in response to the regulation of interchange fees on debit cards enacted by the durbin amendment to the dodd frank act which became eective on

an experiment on retail payments systems we study the behavioral underpinnings of adopting cash versus electronic payments in retail transactions a novel theoretical and experimental framework is developed to primarily assess the impact of sellers service fees and buyers rewards from using electronic payments buyers and sellers face a coordination problem independently choosing a payment method before trading in the experiment sellers readily adopt electronic payments but buyers do not eliminating service fees or introducing rewards significantly boosts the adoption of electronic payments hence buyers incentives play a pivotal role in the diffusion of electronic payments but monetary incentives cannot fully explain their adoption choices findings from this experiment complement empirical findings based on surveys and field data

worker displacement and the added worker effect this article examines the added worker effect which is the labor supply response of wives to their husbands job losses unlike past studies which focused on the husbands current unemployment status this article analyzes wives responses before and after job losses to examine the life cycle labor supply adjustments using panel study of income dynamics data reveals small predisplacement effects and large persistent postdisplacement effects the timing of the responses differs with type of displacement possibly because of differences in the information acquired before job loss long run labor supply increases compensate for over 25 of the husbands lost income

work limiting health earnings and employment an analysis with sipp data abstractthis study examines the role of work limiting health conditions on employed people s earnings employment status and working hours and distinguishes between the different degree and sever

business cycles and divorce evidence from microdata we use individual level data to show that divorce is pro cyclical on average a finding robust to the inclusion of a wide range of controls pro cyclical divorce is concentrated among women who married young and or do not have a college degree

are children really inferior goods evidence from displacement driven income shocks abstract this paper explores the causal link between income and fertility by analyzing women s fertility response to the large and permanent income shock generated by a husband s job displacement i find that the shock reduces total fertility suggesting that the causal effect of income on fertility is positive a model that incorporates the time cost of children and assortative matching of spouses can simultaneously explain this result and the negative cross sectional relationship i also find that a husband s displacement accelerates childbearing which is consistent with lifecycle models of fertility in which the incentive to delay is driven by expected earnings growth

two sided markets a progress report the paper provides a road map to the burgeoning literature on two sided markets and presents new results it identifies two sided markets with markets in which the structure and not only the level of prices charged by platforms matters the failure of the coase theorem is necessary but not sufficient for two sidedness the paper builds a model integrating usage and membership externalities that unifies two hitherto disparate strands of the literature emphasizing either form of externality and obtains new results on the mix of membership and usage charges when price setting or bargaining determine payments between end users

engineering growth business group structure and firm performance in china s transition economy business groups have received increasing attention from academics interested in interorganizational relations and their impact on firms as part of industrial reform the chinese government began in the mid 1980s to encourage firms to form business groups with structural characteristics that promised to enhance financial performance and productivity using 1988 90 panel data on china s 40 largest business groups and their 535 member firms the study finds that the presence and predominance of interlocking directorates and finance companies in business groups improved the financial performance and productivity of the groups member firms in addition firms in groups with nonhierarchical organizational structures performed better than firms in hierarchical groups suggesting that complete integration into a hierarchical organization is not an optimal strategy

developed country mnes investing in developing economies progress and prospect this study reviews research from 1970 through 2016 on developed country multinational enterprises dmnes entering and competing in developing economies to identify the current state of knowledge of this research and push it further we review the literature using bibliometric and qualitative content analyses covering leading journals and books we articulate frontier issues that are understudied yet critical to both theorization and practice of dmnes in developing economies we discuss the findings and conclusions from prior research along five key areas 1 entering developing economies 2 organizing local activities 3 managing alliances and joint ventures 4 competing in dynamic environments and 5 dealing with institutions governments and society we offer prospective insights into future agenda that have important implications for mne strategies and decisions and propose frontier directions that encompass strategic localization reverse transfer and adaptation co evolution with local business ecosystems reorganizing and restructuring and strategic responses to institutional and market complexity

interchange fees in payment card systems a survey of the literature abstract this paper surveys the recent literature about interchange fees in payment card systems interchange fees are used by payment platforms to allocate the total cost of a payment card transaction between the cardholder s bank the issuer and the merchant s bank the acquirer each time a consumer pays by card its bank receives an interchange fee from the merchants bank banks argue that interchange fees are needed to encourage the use of electronic payment instruments whereas merchants claim that they artificially inflate the cost of accepting cards this paper sheds light on the ongoing debate that opposes banks to the regulatory institutions or the competition authorities in various countries by reviewing the theoretical results of the literature and highlighting some unanswered issues

job displacement disability and divorce earnings shocks should affect divorce probability by changing a couple s expected gains from marriage we find that the divorce hazard rises after a spouse s job displacement but does not change after a spousal disability this difference casts doubt on a purely pecuniary motivation for divorce following earnings shocks since both types of shocks exhibit similar long run economic consequences furthermore the increase in divorce is found only for layoffs and not for plant closings suggesting that information conveyed about a partner s noneconomic suitability as a mate due to a job loss may be more important than financial losses in precipitating divorce

caution men not at work gender specific labor market conditions and child maltreatment abstract this paper examines the effect of labor market conditions measured through unemployment mass layoffs and predicted employment on child maltreatment using county level data from california using these indicators we separately estimate the effects of overall and gender specific economic shocks we find only modest evidence of a link between overall economic conditions and child maltreatment however analysis by gender reveals robust evidence that maltreatment decreases with indicators for male employment and increases with indicators for female employment these opposite signed effects are consistent with a theoretical framework that builds on household time use models and is supported by an analysis of time use data though we discuss other mechanisms that may also play important roles

the early retirement decision new empirical evidence on the influence of health many studies have examined the influence of health on retirement but there may be problems with the various health measures used a major criticism of the most frequently used variables is that they may reflect ex post rationalizations of retirement in this paper i examine a variety of health variables focusing directly on the health measurement issue as it relates to retirement research new measures of health are developed with individual self evaluations of health status unlike most previous findings the empirical results suggest that economic variables play a more important role than health in retirement decisions

the intergenerational effects of worker displacement this article uses variation induced by firm closures to explore the intergenerational effects of worker displacement using a canadian panel of administrative data that follows more than 39 000 father son pairs from 1978 to 1999 we find that children whose fathers were displaced have annual earnings about 9 lower than similar children whose fathers did not experience an employment shock they are also more likely to receive unemployment insurance and social assistance the estimates are driven by the experiences of children whose family income was at the bottom of the income distribution

the long run consumption effects of earnings shocks although prior studies of job displacement and disability have measured the impact of these shocks in terms of lost earnings no previous research has linked these permanent earnings shocks to the

spatial linkages and export processing location in china this paper provides empirical evidence that spatial linkages matter for the localisation of global value chain activities relying on processing trade data for chinese provinces during the period 1997 2008 we investigate whether a chinese province s proximity to international suppliers and international buyers within an industry chain affects its attractiveness as an export processing location we find that the upstream and downstream spatial linkages both have a strong and independent explanatory power we also explore what factors explain the influence of these spatial linkages

labor supply and marital separation panel data are used to estimate the effect of marital separation on labor supply female labor supply increases substantially and male labor supply declines marginally lending support to the theory of specialization within the household the most interesting finding is that women began to increase their labor supply well before the actualsplit occurs suggesting either that shocks to labor supply change divorce probabilities or that women with a higher likelihood of divorcework more this argument is pursued by constructing and estimating a simultaneous model of labor supply and divorce risk copyright 1986 by american economic association

the way we pay with money we assess the sample distribution of payments in the netherlands using survey data for 1984 1986 the payment pattern fits a lognormal distribution with peaks caused by the price tags of the purchased items the results are used to simulate the use of coins and notes which indicates a rather efficient denominational mix but a high degree of hoarding for the large bank notes

insuring consumption against illness one of the most sizable and least predictable shocks to economic opportunities in developing countries is major illness we investigate the extent to which families are able to insure consumption against major illness using a unique panel data set from indonesia that combines excellent measures of health status with consumption information we find that there are significant economic costs associated with major illness and that there is very imperfect insurance of consumption over illness episodes these estimates suggest that public disability insurance or subsidies for medical care may improve welfare by providing consumption insurance

incentives at the counter an empirical analysis of surcharging card payments and payment behaviour in the netherlands in card payment systems no surcharge rules prohibit merchants from charging consumers extra for card payments however such rules are prohibited in the netherlands dutch retailers are allowed to surcharge consumers for debit card use this setting permits an empirical analysis of the impact of surcharging card payments on merchant acceptance and consumer payment choice based on consumer and retailer survey data our analysis shows that surcharging steers consumers away from using debit cards towards cash half of the observed difference in debit card payment shares across retailers can be explained by this surcharge effect removing debit card surcharges may induce cost savings of more than eur 50 million in the long run

differences in the returns to education for males by disability status and age of disability onset author affiliation kevin hollenbeck w e upjohn institute 300 south westnedge avenue kalamazoo mi 49007 usa e mail hollenbeck upjohninstitute org jean kimmel department of economics western michigan university kalamazoo mi 49008 4023 usa e mail jean kimmel wmich edu corresponding author acknowledgment this paper is a substantially revised version of a paper that was first presented at the january 2001 assa meetings held in new orleans louisiana and then circulated as upjohn institute working paper no 01 72 the authors thank our discussant robert haveman for his excellent suggestions andrew houtenville for generous assistance with the disability literature doug kruse for input and data assistance above and beyond the call of duty and noyna debburman jason preuss and yuanlei zhu for their skillful research assistance additionally we are very appreciative to claire black and sue berkebile for their superb assistance in preparation of the manuscript finally we thank our journal editor plus two anonymous journal referees 1 introductionin 1990 the u s congress passed the americans with disabilities act ada legislation perceived as a hallmark in the quest by individuals with disabilities for equal access to labor market opportunities numerous studies have been published in recent years assessing the outcomes to date of this legislation and much debate continues regarding its success or failure in improving labor market outcomes however the ada is only one means of addressing labor market difficulties faced by individuals with disabilities because its primary intent is to expand the number of employment opportunities via employer accommodation the ada may be characterized as a demand side intervention 1 numerous education training and rehabilitation programs operate on the supply side of the labor market one example of increased attention on supply side programs may be seen in the workforce investment act of 1998 this sort of disability management model program has the goal of enhancing the skills and knowledge of workers with disabilities to increase their productivity and employability 2 the returns to education for the population with disabilities is indicative of the potential efficacy of such supply side interventions if the rates of return to formal education are large then it might be argued that there is an underinvestment in such interventions if the rates are low then expanding this human capital intervention as a way to improve employment or earnings may not be indicated formal educational attainment and its differential effects by disability status and age of onset are the focus of this paper for an individual with a work limiting condition the age of onset of this condition plays a role in education choices and employment a priori one might expect that among the population with disabilities those with early onset of the disability are the most able to adjust human capital investments and obtain job matches that minimize the potentially negative labor market impacts of the disabling condition see loprest and maag 2003 however the early onset of the disability might hinder human capital investment or affect its quality many studies and data sets have been used to document the disparities in employment related outcomes between people with and without disabilities and many nice summaries exist in the literature 3 depending on the data used and the definition of disability 4 approximately 8 15 of individuals of working age have disabilities in general individuals with a disability report lower employment rates lower levels of educational attainment and lower wages additionally many researchers have reported a post ada decline in employment rates although the cause of this trend is not clear and might be related to a worsening in recent years of disability severity amongst the population reporting disabilities or the trend might be confounded by changes in the labor force participation rates among the disabled

an exogeneity test for a simultaneous equation tobit model with an application to labor supply a test of weak exogeneity in the simultaneous equation tobit model is proposed and illustrated using a female labour supply model estimated using cross section data the test statistic can be simply output from any standard tobit maximum likelihood package and is asymptotically efficient the procedure provides consistent estimators for the simultaneous tobit model whose asymptotic covariance matrix is a simple extension of the usual tobit formula we also provide the lagrange multiplier test of weak exogeneity this abstract was borrowed from another version of this item

income after job loss the role of the family and the welfare state that displaced workers suffer long lasting earnings losses is a stylized fact raising the question whether these losses are replaced by other means for married men increased labour supply by the wife may be one way another possibility is that the public welfare system offsets the same losses i used a swedish longitudinal data set containing married couples where the husband was either employed or made redundant in 1987 by an establishment closure there was no evidence that husbands job loss positively affected wives annual earnings although husbands utilization of unemployment insurance increased significantly government transfers including also sickness insurance disability insurance and means tested social benefits did not fully replace husbands long run earnings losses hence displaced workers seem to suffer also from long lasting losses in family income which in many respects is a better measure of economic welfare than individual earnings or wages

chronic diseases and labour force participation in australia we examine the impact of several chronic diseases on the probability of labour force participation using data from the australian national health surveys an endogenous multivariate probit model is used to account for the potential endogeneity of the incidence of chronic conditions such as diabetes cardiovascular diseases and mental illnesses the cross equation correlations are significant rejecting the exogeneity of the chronic illnesses marginal effects of exogenous socio demographic and lifestyle variables are estimated through their direct effects on labour market participation and indirect effects via the chronic diseases the treatment effects of chronic diseases on labour force participation are estimated via conditional probabilities using five dimensional normal distributions the estimated effects differ by gender and age groups although computationally more demanding these treatment effects are compared with results from a univariate model treating the chronic conditions exogenous and the structural effects from the multivariate probit model both significantly overestimate the effects