credit natural disasters coffee and educational attainment in rural honduras summary this paper exploits a two stage estimation approach to examine the impact on secondary school attainment in rural honduras of four key variables affecting household choices wealth credit access crop choice and shocks the first stage estimates the probability that a household is credit constrained while the second estimates secondary school educational attainment of appropriately aged children the second stage includes variables for crop selection and household wealth shocks from hurricane mitch in addition to other characteristics of the child household and community that can influence educational attainment credit constrained households have lower educational attainment and are more likely to be adversely affected by negative shocks

representative democracy and capital taxation abstract in this paper we study a political model of capital taxation voters who differ in their relative shares of capital and labor income choose tax policy under majority rule we compare two political regimes direct democracy where the voters vote directly on the policy and representative democracy where they elect a representative who then chooses policy in both regimes some form of commitment by the voters is necessary to avoid excessive taxation of capital but the necessary commitment under representative democracy corresponds closely to that provided by the actual institutions of most democracies

does globalization increase child labor abstract there is no empirical evidence that trade exposure per se increases child labor as trade theory and household economics lead us to expect the crosscountry evidence seems to indicate that trade reduces or at worst has no significant effect on child labor consistently with the theory a comparatively well educated labor force and active social policies appear to be conducive to a reduction in child labor for countries with a largely uneducated workforce the problem is not so much globalization as not being allowed to take part in it

explanations for the instability of equity beta risk free rate changes and leverage effects this paper is an initial attempt to bridge the gap that presently exists between the theoretical and empirical literature on the instability of equity beta we focus on two factors from the joint option pricing model capital asset pricing model framework leverage and unexpected changes in the risk free rate which are hypothesized to influence the instability of equity beta across firms and over time using alternative variable parameter regression models we find that highly leveraged firms exhibit greater equity beta instability than firms with lower leverage over time equity betas exhibit greater instability during periods of large unexpected changes in the risk free rate when compared to periods with small unexpected changes in the risk free rate

a contribution to event study methodology with an application to the dutch stock market abstract this paper proposes an extended market model for event studies based on daily stock returns for actual data the assumptions of the simple market model are violated the return distribution is not normal and neither the variance of the error term nor the risk parameter beta are constant our model incorporates the generalized autoregressive conditional heteroskedasticity garch model with t distributed errors and a time dependent beta we test for anomalies by adding dummy variables in the regression equation our model is fairly general and could be used in a wide variety of event study situations we illustrate the model by an analysis of the weekend and the option expiration effect we use return data from the dutch stock market the weekend effect on stock returns is significant but no expiration effect could be detected

a new test of the relationship between regulatory change in financial markets and the stability of beta risk of depository institutions the us economy experienced major regulatory changes in the banking and finance industry with the passage of five major acts over the period 1980 to 1991 this has generated an extensive literature investigating the effects of these changes on the us banking industry in particular this body of research has examined the share market reaction to regulatory changes as well as their impact on the risk return market value and profitability of banking industry stocks generally it has been found that the regulatory changes have had a substantial impact although the effect has not been uniform across all depository institutions this paper extends this literature by analysing the stability of a sample of eighteen us banking industry stock betas across five periods a pre regulatory change period a monetary experiment period a deregulation period a reregulation period and a post regulatory change period based on an analysis of weekly returns we find that the level of bank risk has increased further we also find a tendency towards greater beta instability in both the monetary experiment and deregulation samples the degree of beta instability is lowest in the pre regulatory change and post regulatory change samples overall the monetary experiment and regulatory change coincided with an increased tendency towards beta instability we also compare our results to a randomly selected control sample of non banks and find some more general effects of regulatory change on individual stock betas

the impact of household income on child labour in urban turkey abstract the aim of this study is to investigate the determinants of child labour in urban turkey with a special reference to low household income or poverty as one of its root causes studies done elsewhere have produced mixed results which necessitate the relationship to be studied at country level the data from urban turkey indicate that children from poorer families stand at a higher risk of employment this finding is confirmed using various measures of household material well being simulation results have further pointed out that current interventions are not likely to produce a sizeable impact on the child labour problem

an empirical investigation of the possibility of stochastic systematic risk in the market model in most empirical work on the market model the parameters of that model are estimated by ordinary least squares effectively assuming that the systematic risk of an asset or portfolio is constant through time however a plausible alternative hypothesis would allow the systematic risk of the stock of a company to vary through time such variation may arise through the influence of either microeconomic factors such as operational changes in the company or changes in the business environment peculiar to the company or macroeconomic factors such as the rate of inflation general business conditions and expectations about relevant future events a detailed discussion of these points is provided by rosenberg and guy 1976a 1976b support for the hypothesis that systematic risk varies through time is provided in the studies by jacob 1971 blume 1975 and fabozzi and francis 1978 in this paper we allow the possibility that systematic risk of an asset is stochastic in principle an attempt to model this stochastic behavior could be made through allowing systematic risk to follow a member of the general arima class of models of box and jenkins 1970 ideally the available data would be employed to suggest a specific model from this general class however this approach has to face very serious we discuss the market model in which the possibility is allowed that beta is stochastic and obeys a first order autoregressive process following a brief discussion of methodological issues in the estimation and testing of such models results are reported on an empirical study of a large sample of monthly returns of common stock we find strong evidence indicating stochastic systematic risk but relatively little evidence against the random coefficient model

the global child labor problem what do we know and what can we do the problem of child labor has moved from a matter of regional and national concern to one of international debate and possible global persuasion and policy intervention in crafting policy for mitigating this enormous problem of our times it is important to start with a proper theoretical and empirical understanding of the phenomenon what gives rise to child labor and what are its consequences what interventions might end child labor without hurting children a well meaning but poorly designed policy can exacerbate the poverty in which these laboring children live even leading to starvation the article surveys the large and rapidly growing literature on this subject focusing mainly on the new literature based on modern economic theory and econometrics it also looks at some of the broad policy implications of these new findings with the objective of contributing to better informed discussion and policy design

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

crop choice school participation and child labor in developing countries cotton expansion in burkina faso we estimate the effects of changes in cotton adoption on children s schooling and child labor in rural burkina faso using time and spatial variations we find evidence that expansion of cotton farming has led to an increase in enrollment and to a reduction of participation in child labor for girls there are however no detectable effects on boys in theory cotton adoption could increase household income leading to increased demand for schooling and reduced child labor on the other hand because children are productive on cotton farms adoption of cotton could increase the opportunity cost of child time and the demand for child labor we provide suggestive evidence showing that boys are more productive than girls on cotton farms taken together the results suggest that the income effect from cotton adoption might have been larger than the wage effect for girls hence the overall positive impacts on school enrollment for girls

child labour and resistance to change we study the interaction between technological innovation investment in human capital and child labour in a two stage game first firms decide on innovation then households decide on education in equilibrium the presence of inefficient child labour depends on parameters related to technology parents altruism and the diffusion of firms property child labour is due either to firms reluctance to innovate or to households unwillingness to educate or both in some cases compulsory schooling laws or a ban on child labour are welfare reducing whereas a subsidy for innovation is the right tool to eliminate child labour and increase welfare

time inconsistency in environmental policy tax earmarking as a commitment solution tax earmarking imposes a constraint on government policymaking and may be desirable if i t solves a time inconsistency problem in tax policy in a two period economy in which the policy decisions regarding taxes public goods provision and pollution abatement are taken by a majority elected individual we show how the time inc onsistency problem in environmental policy arises we demonstrate that the commitment equilibrium under no earmarking rules cannot be as fully implemented as a no commitment equilibrium under earmarking rules however th e earmarking rules do act as a partial commitment mechanism

the problem of population and growth a review of the literature from malthus to contemporary models of endogenous population and endogenous growth abstract this paper deals with the evolution of the literature on the problem of population and growth from the classical period to the recent literature on endogenous growth and development the problem concerns two distinct issues 1 how to explain the observed covariation of the levels and rates of growth of per capita income and population size over time and space and 2 how to improve the human condition represented by these variables through an accommodating social policy the evolution of the literature we survey is reflected by the progressive treatment of key variables as endogenous rather than exogenous to the growth process it is also reflected by a shift from the historical concern about population explosion and its implications for growth to the more recent concern about the association between growth and population implosion in many developed countries

the global child labor problem the problem of child labor has moved from a matter of regional and national concern to one of international debate and possible global persuasion and policy intervention in crafting policy for mitigating this enormous problem of our times it is important to start with a proper theoretical and empirical understanding of the phenomenon what gives rise to child labor and what are its consequences what interventions might end child labor without hurting children a well meaning but poorly designed policy can exacerbate the poverty in which these laboring children live even leading to starvation the article surveys the large and rapidly growing literature on this subject focusing mainly on the new literature based on modern economic theory and econometrics it also looks at some of the broad policy implications of these new findings with the objective of contributing to better informed discussion and policy design

families and firms agency costs and labor market imperfections in sialkot s surgical industry abstract the family firm is generally viewed as an organizational solution to agency costs in the labor market for managers and institutional underdevelopment consistent with this view this paper links the preponderance of family firms in the surgical instrument industry of sialkot to the prevailing agency and institutional problems however strong dependence on family management coupled with restrictions on family size constrains the firms from optimally choosing management size the resulting labor market distortion is manifested by a significant positive correlation between the founder s family size and the firm size such that the founders who have more brothers a larger pool of potential managers end up with bigger firms

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

the political economy of pollution taxes in a small open economy abstract this paper develops a positive theory explaining pollution tax policy outcomes in a small open economy the equilibrium tax rate depends on lobby group membership the relative importance of lobbying activities and the tax elasticity of pollution the equilibrium properties are investigated the model is extended to incorporate pollution abatement and a pollution abatement subsidy we show that total pollution may be increasing in the pollution abatement subsidy rate this effect arises because the equilibrium pollution tax rate may be decreasing in the subsidy rate due to altered political influence of the lobby groups in the political equilibrium

the trade off between child labour and human capital formation a tanzanian case study we investigate the degree to which there is a trade off between child labour and human capital formation using time log data of children from a tanzanian household survey we find that a tradeoff between hours of work and study exists and hours of work tend to be more affected by social conditions than hours of study hours of work are negatively correlated to reading and mathematical skills through the reduction of human capital investment activities indicating a trade off between child labour and human capital the results point up the complexity of the issue and the need for detailed time allocation data

child labor and the interaction between the quantity and quality of children this article analyzes the impacts of child labor on the interaction between the quantity and quality of children in the spirit of becker and lewis it shows that without child labor the quantity of children can be a normal good so that it increases with parental income under some fairly standard formulations however the correlation between fertility and parental income becomes negative when the role of child labor is considered the model also implies that fertility increases with the wage rate of child labor moreover it suggests that government intervention not only directly affects the supply of child labor but also influences parents decisions on fertility which indirectly determines children s labor market participations

schooling costs and child labour in rural pakistan a conventional argument in the child labour debate is that improvements in access to schools are an effective way to reduce the labour force participation of children it is argued that schooling competes with economic activity in the use of children s time and enhanced access to schools interpretable as reduction in schooling costs may raise school attendance at the expense of child labour in this article we draw a distinction between child labour within the household intra household and child work in the labour market extra household and examine the separate effects of schooling costs upon these two types of child labour in rural pakistan consistent at least in part with our theoretical framework we find that extra household child labour and schooling costs are positively related whereas intra household child labour is insensitive to changes in the costs of schooling our results suggest that reduction in schooling costs will have limited success in the abatement of child labour in rural p

cropping pattern mechanization child labor and fertility behavior in a farming economy rural egypt tractor and the use of mechanical irrigation is increasing in the countryside the significant policy issue is the role of government in encouraging or discouraging continued labor saving mechanization present policy substantially encourages mechanization diesel oil is available at prices considerably lower than those in many other countries village banks provide farmers with equipment loans at rates below commercial levels machinery is imported at favorable foreign exchange rates and is exempted from import duties the most telling impact of these policies has been on the rapidly growing use of tractors and irrigation pumps both of which are believed to displace labor especially that of children this article addresses the question of whether such changes have indeed had the desired effect on child employment and family size recent developments in the egyptian agricultural sector also reveal significant changes in crop patterns these favor fruit and vegeta

some further evidence on the stochastic properties of systematic risk although there is consensus in the finance literature that the beta risk of equity securities is stochastic there is considerable disagreement as to whether the var iation is purely random or exhibits autocorrelation through time to investigate this issue the authors employ a model that allows beta t o exhibit both random and autoregressive behavior simultaneously the y test this model against alternative specifications on a large sampl e of individual securities and randomly formed portfolios comprising 10 50 and 100 securities results are also presented for portfolios formed according to firm size copyright 1987 by the university of chicago

political uncertainty and the earmarking of environmental taxes abstract far from being used to secure a double dividend by reducing distorting taxes revenues from environmental taxes seem quite often to be earmarked to particular spending programs in the us for example a range of such taxes feed into environmental trust funds such earmarking runs counter to standard notions of good practice in taxing and spending this paper develops and explores an explanation of such apparent inefficiencies in terms of political uncertainty roughly a green incumbent may chose to earmark revenues if the efficiency loss from doing so is outweighed by the value of constraining subsequent and potentially non green policy makers from wasting the funds raised it emerges for example that those most likely to earmark are green politicians who are politically weak and that earmarking then enables such a policy maker to set the corrective tax higher than they otherwise would but nevertheless lower than the pigovian tax