a simple estimator for simultaneous models with censored endogenous reggressors this paper presents a simple two step estimator for models with censored endogenous regressors and sample selection bias the approach unifies the literature on censored endogenous regressors and sample selection bias and provides extensions the procedure employs generalized residuals to adjust for the inconsistency caused by the endogeneity of the censored regressors the paper also provides two new tests of weak exogeneity an empirical example examining the trade off between fringe benefits and wages indicates that the estimation procedure works well a monte carlo experiment suggests that the proposed tests have good power properties copyright 1993 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

fat tails exponents extreme uncertainty simulating catastrophe in dice abstract the problem of low probability catastrophic risk is increasingly central to discussion of climate science and policy but the integrated assessment models iams of climate economics rarely incorporate this possibility what modifications are needed to analyze catastrophic economic risks in an iam we explore this question using dice a well known iam we examine the implications of a fat tailed probability distribution for the climate sensitivity parameter a focus of recent work by martin weitzman and the shape of the damage function one of the issues raised by the stern review forecasts of disastrous economic outcomes in dice can result from the interaction of these two innovations but not from either one alone

using genuine savings for climate policy evaluation with an integrated assessment model there has been a recent increase in efforts to develop broader models to assess the impact of climate change and climate change policies both in terms of impact measures beyond gdp and in terms of modelling complexity beyond dice rice models climate policies aimed at reducing co2 emissions can have impacts in multiple sectors of the economy and can change consumption levels over time we show how the sustainability indicator genuine savings can be endogenised within a general equilibrium model and used as a criterion for judging the impacts of such policies in terms of future well being differences in genuine savings rates between co2 emission reduction scenarios are discussed we show how a broader genuine savings based assessment of climate change can result in a re evaluation of the consequences and costs of inaction in terms of various climate change related policies and how multiple environmental and well being outcomes can be analysed within a unified modelling framework

extended benefits and the duration of ui spells evidence from the new jersey extended benefit program abstract this paper examines the impact on the duration of unemployment insurance receipt of a politically motivated program that offered 13 weeks of extended benefits for 6 months in 1996 using state level data and individual administrative records from before during and after the program we find that it raised the fraction of claimants who exhausted their regular benefits by 1 3 percentage points had the program run long enough to affect claimants from the first day of their spell the fraction exhausting would have risen by 7 percentage points and the average recipient would have collected regular benefits for one extra week

how do households cope with aggregate shocks evidence from the mexican peso crisis abstract household surveys are used to examine the micro impact of a large aggregate shock the 1995 mexican peso crisis this paper examines how the impact of the crisis differed across households and the adjustment mechanisms used by households to cope with this shock the coping strategies examined include changes in household structure fertility household labor supply child schooling and interhousehold transfers many of the mechanisms households use to adapt to idiosyncratic shocks are found not to work with an aggregate shock

unemployment assistance and transition to employment in argentina abstractin 2001 2 argentina experienced a wrenching economic crisis plan jefes implemented in may 2002 was argentina s institutional response to the increase in unemployment and poverty triggered by the crisis the program provided a safety net and appears to have protected some families against indigence despite this success the continued existence of the program which provides benefits to eligible unemployed individuals for an unlimited duration may have unappealing consequences reliance on the plan may reduce the incentive to search for work and in the long run may damage individual employability and perpetuate poverty motivated by these concerns this article examines the effect of participating in plan jefes on the probability of exiting unemployment regardless of the data set the specification and the empirical approach the article shows that plan enrollees are at least 14 percentage points less likely to transit to employment as compared to individuals who applied but did not join the

climate change policy what do the models tell us very little a plethora of integrated assessment models iams have been constructed and used to estimate the social cost of carbon scc and evaluate alternative abatement policies these models have crucial flaws that make them close to useless as tools for policy analysis certain inputs e g the discount rate are arbitrary but have huge effects on the scc estimates the models produce the models descriptions of the impact of climate change are completely ad hoc with no theoretical or empirical foundation and the models can tell us nothing about the most important driver of the scc the possibility of a catastrophic climate outcome iam based analyses of climate policy create a perception of knowledge and precision but that perception is illusory and misleading jel c51 q54 q58

sustainability and technical progress a rigorous model connects together the following three basic concepts 1 sustainability meaning the generalized future power of an economy to consume over time 2 green nnp meaning a current measure of national income that subtracts off from gnp not just depreciation of capital but also more generally depletion of environmental assets evaluated at current efficiency prices 3 technological progress meaning a projection onto the future of the so called solow residual a simple general formula is derived some crude calculations suggest a possibly strong effect of the residual which hints that our best present estimates of long term sustainability may be largely driven by predictions of future technological progress

the impact of the potential duration of unemployment benefits on the duration of unemployment abstract this paper examines the impact of the potential duration of unemployment insurance ui benefits on unemployment in the united states first we use a large sample of household heads to examine differences in the unemployment spell distributions of ui recipients and nonrecipients sharp increases in the escape rate from unemployment both through recalls and new job acceptances are apparent for ui recipients around the time of benefits exhaustion such increases are not apparent at similar points of spell duration for nonrecipients second our analysis of accurate administrative data from 12 states indicates that a one week increase in potential benefit duration increases the average duration of the unemployment spells of ui recipients by 0 16 to 0 20 weeks

do benefit cuts boost job finding swedish evidence from the 1990s in june 1995 the swedish parliament decided to cut the replacement rate in unemployment insurance from 80 percent to 75 percent a change that took effect on january 1 1996 this paper examines h

environmental prices uncertainty and learning there is an increasing demand for putting a shadow price on the environment to guide public policy and incentivize private behaviour in practice setting that price can be extremely difficult as uncertainties abound there is often uncertainty not just about individual parameters but about the structure of the problem and how to model it a further complication is the second best nature of real environmental policy making in this paper we propose some practical steps for setting prices in the face of these difficulties drawing on the example of climate change we consider how to determine the overall target for environmental protection how to set shadow prices to deliver that target and how we can learn from the performance of policies to revise targets and prices perhaps most significantly we suggest that estimates of the marginal cost of environmental protection rather than the marginal benefit will often provide the more consistent and robust prices for achieving targets

one sided sustainability tests with amenities and changes in technology trade and population abstract if an economy with multiple consumption goods including environmental amenities uniquely maximises present value with constant discounting it is unsustainable at some time if either of two measures augmented net investment or the change in augmented green net national product are zero or negative then augmented denotes that time is treated as a productive stock which includes in each measure the value of future exogenous changes in technology or terms of trade adjustments are found to make each measure a test for individual sustainability when population grows exogenously the practical and philosophical rationale for testing sustainability in a present value maximising and therefore fully prescribed development path is discussed

supporting communities in transition the impact of the armenian social investment fund the armenian social investment fund supports communities efforts to improve local infrastructure during armenia s economic transition away from central planning financing community designed and implemented projects to rehabilitate primary schools water systems and other infrastructure this article considers the targeting household impact and community effects of the social fund s activities it relies on a nationally representative household survey oversampled in areas where the social fund was active using propensity and pipeline matching techniques to control for community self selection into the social fund it evaluates the household effects of rehabilitating schools and water systems the results show that the social fund reached poor households particularly in rural areas education projects increased households spending on education significantly and had mild effects on school attendance potable water projects increased household access to water and had mild positive effects on health communities that completed a social fund project were less likely than the comparison group to complete other local infrastructure projects suggesting that social capital was expended in these early projects by contrast communities that joined the social fund later and had not yet completed their projects took more initiatives not supported by the social fund in centrally planned economies national governments exerted tremendous economic control this control extended to investment in local infrastructure including building and maintaining roads schools and water systems when these economies collapsed governments became bereft of resources systems for maintaining local infrastructure began to fail as deep economic recession took hold schools and water systems fell into disrepair local public services deteriorated compounding other hardships for people living in postcommunist conditions but because communities were accustomed to relying on central authorities to meet local needs they often were unable to address their problems

informality over the life cycle abstract in developing countries informality is mainly concentrated among younger and older workers and low skilled workers in this study we propose a dual labor market theory that highlights how frictions and taxation in the formal sector and educational choices interact to shape the informality rate over the life cycle we develop a life cycle model with search frictions skill heterogeneities and endogenous educational choices we carry out a numerical analysis and show that our model reproduces remarkably well the life cycle patterns of informality non employment and formal employment in argentina we analyze several public policies and show that an educational grant reduces both informality and non employment and may be fully financed by the extra tax revenues generated by the increase in formal employment and wages lowering taxes may achieve similar results but is detrimental to the government budget despite increasing the base on which they are levied

the structure of economic modeling of the potential impacts of climate change grafting gross underestimation of risk onto already narrow science models scientists describe the scale of the risks from unmanaged climate change as potentially immense however the scientific models because they omit key factors that are hard to capture precisely appear to substantially underestimate these risks many economic models add further gross underassessment of risk because the assumptions built into the economic modeling on growth damages and risks come close to assuming directly that the impacts and costs will be modest and close to excluding the possibility of catastrophic outcomes a new generation of models is needed in all three of climate science impact and economics with a still stronger focus on lives and livelihoods including the risks of large scale migration and conflicts

genuine savings and sustainability genuine savings gs has emerged as the leading economic indicator of sustainable economic development at the country level it derives from the literatures on weak sustainability wealth accounting and national income accounting we discuss the theoretical underpinnings of gs focusing on the relationship between changes in a nation s extended capital stock and the future path of consumption the indicator has entered widespread use propelled by the world bank s publications despite its varying performance as a predictor for future consumption notwithstanding the extensive body of literature reviewed promising future research avenues are identified

designing climate mitigation policy this us paper provides an exhaustive review of critical issues in the design of climate mitigation policy by pulling together key findings and controversies from diverse literatures on mitigation costs damage valuation policy instrument choice technological innovation and international climate policy the authors begin with the broadest issue of how high assessments suggest the near and medium term price on greenhouse gases would need to be both under cost effective stabilization of global climate and under net benefit maximization or pigouvian emissions pricing the remainder of the paper focuses on the appropriate scope of regulation issues in policy instrument choice complementary technology policy and international policy architectures

towards a more inclusive and precautionary indicator of global sustainability abstract we construct a hybrid economic indicator of the sustainability of global well being which is more inclusive than existing indicators and incorporates an environmentally pessimistic physical constraint on global warming our methodology extends the world bank s adjusted net saving ans indicator to include the cost of population growth the benefit of technical progress and a much higher precautionary cost of current co 2 emissions future warming damage is so highly unknowable that valuing emissions directly is rather arbitrary so we use a novel inductive approach we modify damage and climate parameters in the deterministic dice climate economy model so it becomes economically optimal to control emissions in a way likely to limit warming to an agreed target here 2 c if future emissions are optimally controlled our ans then suggests that current global well being is sustainable but if emissions remain uncontrolled our base case ans is negative now and our corresponding modified dice model has an unsustained development path with well being peaking in 2065 current ans on an uncontrolled path may thus be a useful heuristic indicator of future unsustainability our inductive method might allow ans to include other very hard to value environmental threats to global sustainability like biodiversity loss and nitrogen pollution

augmenting the world bank s estimates ireland s genuine savings through boom and bust abstract the world bank computes estimates of genuine savings gs a leading indicator of sustainable development for most countries a well established literature has called for methodological enhancement this paper presents augmented estimates of irish gs throughout a period of unprecedented economic expansion and decline 1990 2016 a time series constructed predominantly from national sources includes the most comprehensive coverage of pollutants in the literature surveyed we apply a novel method to aid the property rights designation assessment required for transboundary pollutant accounting in sharp contrast to the world bank s estimates our findings suggest that a modern developed economy can exhibit signs of unsustainability furthermore extended environmental damages drive these results suggesting expanded country specific gs may diverge considerably from the world bank s estimates we find rapid economic development and rapid declines in environmental damages can occur concurrently and on the transition away from an unsustainable path

the rise fall and sustainability of capital resource economies in debates about green accounting it is sometimes argued that a positive value of aggregate investments indicates that an economy is developing sustainably asheim 1994 and pezzey 1994 have shown that this is wrong using a version of the well known dasgupta heal economy with one capital and one non renewable resource stock as a counterexample asheim s proof referred to the unproved assumptions that in such an economy a higher rate of time preference induces higher initial consumption and vice versa and that optimal consumption is initially rising and then falling here we show that these assumptions do hold true under certain circumstances thereby also proving some of dasgupta and heal s other conjectures about sustainability

unemployment insurance in theory and practice a hallmark of modern labor economics is the close interplay between the development of theory data sources and econometric testing the evolution of the economic analysis of unemployment insurance provides a good illustration new theoretical approaches in particular job search theory have inspired a large amount of empirical research some of it methodologically innovative and most of it highly relevant for economic policy the paper presents a broad survey and an assessment of the economic analysis of unemployment insurance as it has evolved since the 1970s

unemployment duration and economic incentives a quasi random assignment approach abstract we investigate how economic incentives and spell duration affect hazard rates out of insured unemployment we take into account that insured unemployment not always ends in employment but also in disability training programs or benefit sanctions our empirical basis is norwegian register data containing variation in economic incentives and spell duration similar to that of random assignment experiments we find that the employment and benefit sanction hazards are negatively affected by the unemployment insurance replacement ratio but that the effects vary considerably among individuals there is negative duration dependence in the employment hazard and positive duration dependence in the disability hazard

the economic effects of climate change greenhouse gas emissions are fundamental both to the world s energy system and to its food production the production of co2 the predominant gas implicated in climate change is intrinsic to fossil fuel combustion specifically thermal energy is generated by breaking the chemical bonds in the carbohydrates oil coal and natural gas and oxidizing the components to co2 and h2o one cannot have cheap energy without carbon dioxide emissions similarly methane ch4 emissions an important greenhouse gas in its own right are necessary to prevent the build up of hydrogen in anaerobic digestion and decomposition one cannot have beef mutton dairy or rice without methane emissions climate change is the mother of all externalities larger more complex and more uncertain than any other environmental problem the sources of greenhouse gas emissions are more diffuse than any other environmental problem every company every farm every household emits some greenhouse gases the effects are similarly pervasive weather affects agriculture energy use health and many aspects of nature which in turn affects everything and everyone the causes and consequences of climate change are very diverse and those in low income countries who contribute least to climate change are most vulnerable to its effects climate change is also a long term problem some greenhouse gases have an atmospheric life time measured in tens of thousands of years the quantities of emissions involved are enormous in 2000 carbon dioxide emissions alone and excluding land use change were 24 billion metric tons of carbon dioxide tco2

unemployment insurance and unemployment spells this paper tests the effects of the level and length of unemployment insurance benefits on unemployment durations the paper particularly studies individual behavior during the weeks just prior to when benefits lapse higher unemployment insurance benefits are found to have a strong negative effect on the probability of leaving unemployment however the probability of leaving unemployment rises dramatically just prior to when benefits lapse individual data are used with accurate information of spell durations and the level and length of benefits the semiparametric estimation techniques used in the paper yield more plausible estimates than conventional approaches and provide useful diagnostics copyright 1990 by the econometric society

spatial association and heterogeneity issues in land price models urban planners frequently use regression analysis for the empirical estimation of land price models which are used to investigate the spatial structure of a city or to calculate the implicit price of environmental characteristics a concern with this kind of analysis is that often spatially associated or heterogeneous data are used which leads to estimation pitfalls most notably spatial autocorrelation and model structural instability over space in this paper we introduce a modelling methodology that combines a spatial autoregression with a switching regression to incorporate effectively both association and heterogeneity as part of the analysis in addition using sendai city in north eastern japan as a case study we use local statistics of spatial association to assist us in the exploration and definition of heterogeneous regimes finally we show how some measures commonly used to counter spatial effects fail at times thus highlighting the importance of a spatial modelling methodology such as th

climate policy under sustainable discounted utilitarianism empirical evaluation of policies to mitigate climate change has been largely confined to the application of discounted utilitarianism du du is controversial both due to the conditions through which it is justified and due to its consequences for climate policies where the discounting of future utility gains from present abatement efforts makes it harder for such measures to justify their present costs in this paper we propose sustainable discounted utilitarianism sdu as an alternative principle for evaluation of climate policy unlike undiscounted utilitarianism which always assigns zero relative weight to present utility sdu is an axiomatically based criterion which departs from du by assigning zero weight to present utility if and only if the present is better off than the future using the dice integrated assessment model to run risk analysis we show that it is possible for the future to be worse off than the present along a business as usual development path consequently sdu and du differ and willingness to pay for emissions reductions is sometimes significantly higher under sdu than under du under sdu stringent schedules of emissions reductions increase social welfare even for a relatively high utility discount rate

ranking unemployment duration and wages it explores the implication of one central assumption when firms receive multiple acceptable applications they hire the worker who has been unemployed for the least amount of time this assumption ranking is contrasted with the assumption of random hiring no ranking by embodying this assumption in a model of the labour market with job creation destruction and matching the joint behaviour of unemployment the distribution of unemployment durations and wages are characterized the implication that the re employment prospects of employed workers were they to become unemployed are better than those of the currently unemployed appears to have been an important feature of european unemployment experience in the 1980 s this paper examines the effects of the composition of unemployment on wage determination it explores one central assumption when firms receive multiple acceptable applications they hire the worker who has been unemployed for the least amount of time we refer to this assumption as ranking and contrast it throughout to the assumption of random hiring or no ranking by embodying this assumption in a model of the labour market with job creation destruction and matching we characterize the joint behaviour of unemployment the distribution of unemployment durations and wages ranking has a number of important implications first in addition to the obvious result that the exit rate from unemployment is a decreasing function of duration we show that the effect of duration is stronger the higher the rate of unemployment second with the wage depending on the distributions of prospective unemployment durations the presence of long term unemployed per se has little effect on wages third looking at the relation between the wage and the aggregate level of unemployment and comparing ranking to the case of no ranking the wage moves less with the level of unemployment but more with the change in unemployment put simply ranking and no ranking models show exactly the same aggregate unemployment slightly different long run responses of wages to unemployment and sharply different wage dynamics the paper is organized as follows section i characterizes the matching process and derives a matching function based on an urn ball process with vacancies as urns and applications by unemployed workers as balls thus the distribution of applications per vacancy depends on aggregate unemployment and vacancies vacancies with at least one acceptable application are filled when a vacancy receives more than one acceptable application firms use a rule to choose among applicants thus the rule determines who is hired but does not affect the number of hires section ii uses this matching function in a model of the labour market with continual job creation and destruction and characterizes the equilibrium values of unemployment vacancies and hires

sustainability constraints versus optimality versus intertemporal concern and axioms versus data sustainable sustained or survivable development are defined here as distinct sustainability constraints on intertemporal distribution in a context which ignores uncertainty environmental and intratemporal concerns such constraints are neither self contradictory nor redundant for they can conflict with maximizing the present value of utility optimality nor inferior since the axioms underlying optimality are ethically arbitrary and refuted by empirical psychological data axiomatic arguments may clarify but cannot resolve debates about intertemporal concerns data suggest that sustainability constraints are not respected and that intertemporal welfare functions containing a preference for sustained improvement may better reflect what bodies politic mean by sustainability

on modeling and interpreting the economics of catastrophic climate change with climate change as prototype example this paper analyzes the implications of structural uncertainty for the economics of low probability high impact catastrophes even when updated by bayesian learning uncertain structural parameters induce a critical tail fattening of posterior predictive distributions such fattened tails have strong im plications for situations like climate change where a catastrophe is theoretically possible because prior knowledge cannot place sufficiently narrow bounds on overall damages this paper shows that the economic consequences of fat tailed structural uncertainty along with unsureness about high temperature damages can readily outweigh the effects of discounting in climate change policy analysis