can falling supply explain the rising return to college for younger men a cohort based analysis although the college high school wage gap for younger u s men has doubled over the past 30 years the gap for older men has remained nearly constant in the united kingdom and canada the college high school wage gap also increased for younger relative to older men using a model with imperfect substitution between similarly educated workers in different age groups we argue that these shifts reflect changes in the relative supply of highly educated workers across age groups the driving force behind these changes is the slowdown in the rate of growth of educational attainment that began with cohorts born in the early 1950s in all three countries

the effect of land scarcity on farm structure empirical evidence from mali abstractwe analyze the individualization of farm units in mali in the sense of a transformation of purely collective farms into mixed units in which private plots coexist with collective fields since a moral hazard in team problem plagues production on the latter and the household head extracts his income from it he faces a trade off between efficiency and capture we show within the framework of a patriarchal farm household model that private plots become profitable for the head once land becomes sufficiently scarce specifically greater land scarcity raises both the probability to find private plots in afarm and the share of farmland allocated to these plots on the basis of firsthand data collected in southern mali we test and confirm the two predictions yielded by the above theory moreover we show that a higher number of married men within the household has the same effect as land scarcity thus suggesting an interesting refinement of the moral hazard in team argument

consumer demand and the life cycle allocation of household expenditures the purpose of this paper is to estimate the parameters of household preferences that determine the allocation of goods within the period and over the life cycle using micro data in doing so the authors are able to identify important effects of demographics labor market status and other household characteristics on the intertemporal allocation of expenditure they test the validity of the life cycle model using excess sensitivity tests and find that controlling for demographics and labor market status variables can largely explain the excess sensitivity of consumption to anticipated changes in income

payoffs from panels in low income countries economic development and economic mobility economic development is a dynamic process with a time scale of more than a few years the scarcity of household survey data covering long periods of time has meant that most empirical evidence on hypotheses about growth and development has come from cross country aggregate time series data one important limitation of such data is that they cannot provide information on economic mobility thus little is known about which households and individuals are the beneficiaries of economic growth or about the degree of persistence of poverty over sustained time periods or generations as development proceeds disaggregated within country panels covering different time dimensions have been used to shed light on a number of important development topics that go beyond what can be learned from the cross country database carefully planned social experiments or intensive areaspecific fieldwork including the differentiated effects on households of macroeconomic shocks paul glewwe and gillette hall 1998 elizabeth frankenberg et al 2003 the effects of longer term processes such as population growth and technological change on forestation andrew d foster and rosenzweig 2003 and the consequences of institutional change such as local democratization foster and rosenzweig 2002b however household level panel surveys that cover time periods of a decade or more and thus have the potential for studying economic mobility are not only scarce but have design limitations that may bar unbiased inferences about economic mobility for example the indian village level studies of the international crop research institute for the semi arid tropics icrisat which followed households in six villages starting in 1975 for ten years thomas walker and james ryan 1984 dropped the 14 percent of households that divided similarly the 1982 rural economic development survey reds of indian households prem s vashishtha 1989 excluded the one third of 1971 baseline households that had split by 1982 indeed the design of the world bank living standards measurement surveys lsms includes in the panel component of each survey only those members of sampled residences who do not leave glewwe and m grosh 1999 although there is evidence suggesting that panel survey rules that condition on residence provide nonrandom subsamples of the baseline households duncan thomas et al 2001 foster and rosenzweig 2002a little is known about how these selection rules affect inferences about economic mobility or poverty persistence in this article i use data from a new 18 year panel survey from bangladesh to assess whether and how residence based sampling rules affect estimates of economic mobility in the presence of nonrandom household division the results suggest that the biases are substantial

inequality control rights and rent seeking sugar cooperatives in maharashtra this paper presents a theory of rent seeking within farmer cooperatives in which inequality of asset ownership affects relative control rights of different groups of members the two key assumptions are constraints on lump sum transfers from poorer members and disproportionate control rights wielded by wealthier members transfers of rents to the latter are achieved by depressing prices paid for inputs supplied by members and diverting resulting retained earnings the theory predicts that increased heterogeneity of landholdings in the local area causes increased inefficiency by inducing a lower input price and a lower level of installed crushing capacity predictions concerning the effect of the distribution of local landownership on sugarcane price capacity levels and participation rates of different classes of farmers are confirmed by data from nearly 100 sugar cooperatives in the indian state of maharashtra over the period 1971 93

fertility choice in a life cycle model with idiosyncratic uninsurable earnings risk abstract motivated by large shifts in uninsurable earnings risk over time this paper studies the link between delaying and reducing fertility on the one hand and earnings and fertility risks on the other when children are modeled as consumption commitments increases in earnings risk are associated with a reduction in family sizes and patterns of delayed childbearing since household ability to bear children declines with age the postponement of birth associated with the increased earnings risk drives down the number of birth per family further an access to in vitro fertilization ivf is shown to have only a limited offsetting effect

the baby boom and baby bust what caused the baby boom and can it be explained within the context of the secular decline in fertility that has occurred over the last 200 years the hypothesis is that a the secular decline in fertility is due to the relentless rise in real wages that increased the opportunity cost of having children b the baby boom is explained by an atypical burst of technological progress in the household sector that occurred in the middle of the last century this lowered the cost of having children a model is developed in an attempt to account quantitatively for both the baby boom and bust

is the united states still a land of opportunity recent trends in intergenerational mobility abstract we present new evidence on trends in intergenerational mobility in the united states using administrative earnings records we find that percentile rank based measures of intergenerational mobility have remained extremely stable for the 1971 1993 birth cohorts for children born between 1971 and 1986 we measure intergenerational mobility based on the correlation between parent and child income percentile ranks for more recent cohorts we measure mobility as the correlation between a child s probability of attending college and her parents income rank we also calculate transition probabilities such as a child s chances of reaching the top quintile of the income distribution starting from the bottom quintile based on all of these measures we find that children entering the labor market today have the same chances of moving up in the income distribution relative to their parents as children born in the 1970s however because inequality has risen the consequences of the birth lottery t

consumption inequality and family labor supply we examine the link between wage and consumption inequality using a life cycle model incorporating consumption and family labor supply decisions we derive analytical expressions for the dynamics of consumption hours and earnings of two earners in the presence of correlated wage shocks nonseparability progressive taxation and asset accumulation the model is estimated using panel data for hours earnings assets and consumption we focus on family labor supply as an insurance mechanism and find strong evidence of smoothing of permanent wage shocks once family labor supply assets and taxes are properly accounted for there is little evidence of additional insurance jel d12 d14 d91 j22 j31

should we track migrant households when collecting household panel data household relocation economic mobility and attrition biases in the rural philippines based on household panel data that tracked migrant households with an additional survey cost of 17 percent this article describes behavior of household relocation and quantifies the extent of attrition biases in estimating the determinants of percapita household consumption and of its growth rate many households relocate for non economic reasons and to rural destinations while the small number of urban migrants improved their wellbeing faster than did others such heterogeneity among migrants may be a reason behind the negligible attrition biases caused by the omission of migrants in the inference on the average behavioral coefficients among the original population

estimating marginal returns to education this paper estimates marginal returns to college for individuals induced to enroll in college by different marginal policy changes the recent instrumental variables literature seeks to estimate this parameter but in general it does so only under strong assumptions that are tested and found wanting we show how to utilize economic theory and local instrumental variables estimators to estimate the effect of marginal policy changes our empirical analysis shows that returns are higher for individuals with values of unobservables that make them more likely to attend college we contrast our estimates with iv estimates of the return to schooling

intra and inter household externalities in children s schooling evidence from rural residential neighborhoods in bangladesh this article tests for neighbourhood effects on children s schooling using unique data on rural residential neighbourhoods from bangladesh we find that school completion of children is positively and significantly affected by the mean grade completion of other children in the neighbourhood we then present three pieces of evidence that suggest that the social effect offers a valid explanation firstly the evidence we find of inter household externalities is not driven out by control for a host of neighbourood and household attributes secondly the result remains robust to neighbourhood composition effects it is unchanged as we purge our main sample of the households within the neighbourhood that are potentially linked in terms of their recent history of partition thirdly a similar peer effect is found for adults who completed schooling before the introduction of existing educational reforms in rural areas suggesting that the observed effect of growing up in educated neighbourhood does not merely ca

intergenerational persistence of earnings the role of early and college education recent empirical evidence from the united states indicates a high degree of persistence in earnings across generations designing effective public policies to increase social mobility requires identifying and measuring the major sources of persistence and inequality in earnings we provide a quantitative model of intergenerational human capital transmission that focuses on three sources innate ability early education and college education we find that approximately one half of the intergenerational correlation in earnings is accounted for by parental investment in education in particular early education we show that these results have important implications for education policy

the macroeconomic implications of rising wage inequality in the united states in recent decades american workers have faced a rising college premium a narrowing gender gap and increasing wage volatility this paper explores the quantitative and welfare implications of these changes the framework is an incomplete markets life cycle model in which individuals choose education intrafamily time allocation and savings given the observed history of the u s wage structure the model replicates key trends in cross sectional inequality in hours worked earnings and consumption recent cohorts enjoy welfare gains on average as higher relative wages for college graduates and for women translate into higher educational attainment and a more even division of labor within the household

wage risk and employment risk over the life cycle we specify a structural life cycle model of consumption labour supply and job mobility in an economy with search frictions that allows us to distinguish between different sources of risk and to estimate their effects the sources of risk are shocks to productivity job destruction the process of job arrival when employed and unemployed and match level heterogeneity our model allows for four main social insurance programmes in contrast to simpler models that attribute all income fluctuations to shocks our framework allows us to disentangle the effects of the shocks from the responses to these shocks estimates of productivity risk once we control for employment risk and for individual labour supply choices are substantially lower than estimates that attribute all wage variation to productivity risk increases in productivity risk impose a considerable welfare loss on individuals and induce substantial precautionary saving increases in employment risk have large effects on output and primarily through this channel affect welfare the welfare value of government programs such as food stamps which partially insure productivity risk is greater than the value of unemployment insurance which provides partial insurance against employment risk and no insurance against persistent shocks

fiscal policy with heterogeneous agents and incomplete markets i undertake a quantitative investigation into the short run effects of changes in the timing of proportional income taxes for model economies in which heterogeneous households face a borrowing constraint temporary tax changes are found to have large real effects in the benchmark model a temporary tax cut increases aggregate consumption on impact by around 29 cents for every dollar of tax revenue lost comparing the benchmark incomplete markets model to a complete markets economy income tax cuts provide a larger boost to consumption and a smaller investment stimulus when asset markets are incomplete copyright 2005 wiley blackwell

why are fertility rates and female employment ratios positively correlated across o e c d countries we develop a quantitative theory of fertility and labor market participation de cisions in order to investigate the role of labor market frictions to understand the positive association between fertility and employment among o e c d countries we nd that unemployment induces females to postpone and space births which in turn reduces the total fertility rate moreover diferences in female labor outcomes across the u s and spain can account for the low fertility rate in spain relative to the u s we also nd that labor market frictions low probability of nding a job determine how employment and fertility are associated across economies in particular fertility and employment are positively associated across economies with low employment ratios low probability of nding a job on the other hand fertility and employment are negatively associated across economies with a high probability of nding a job

intra household resource allocation an inferential approach if household income is pooled and then allocated to maximize welfare then income under the control of mothers and fathers should have the same impact on demand with survey data on family health and nutrition in brazil the equality of parental income effects is rejected unearned income in the hands of a mother has a bigger effect on her family s health than income under the control of a father for child survival probabilities the effect is almost twenty times bigger the common preference or neoclassical model of the household is rejected if unearned income is measured with error and income is pooled then the ratio of maternal to paternal income effects should be the same equality of the ratios cannot be rejected there is also evidence for gender preference mothers prefer to devote resources to improving the nutritional status of their daughters fathers to sons

testing the neoclassical model of family labor supply and fertility the mcelroy horney nash bargaining model of family demand behavior relaxes the restriction that nonearned income of husband and wife has the identical effect on family labor supply and commodity demands this restriction of the neoclassical model offamily behavior is tested for the determination of husband and wife labor supply andfertility based on the 1981 socioeconomic survey of thailand the neoclassical restriction is rejected for female labor supply andfertility another unexplored limitation offamily demand studies due to the sample self selection of intact marriages is empirically treated through alternative estimation strategies in this case a more sharply focused theory of marital behavior is needed to identify family demand models

intersectoral labor mobility and the growth of the service sector one of the most striking changes in the u s economy over the past 50 years has been the growth in the service sector between 1950 and 2000 service sector employment grew from 57 to 75 percent of total employment however over this time the real hourly wage in the service sector grew only slightly faster than in the goods sector in this paper we assess whether or not the essential constancy of the relative wage implies that individuals face small costs of switching sectors and we quantify the relative importance of labor supply and demand factors in the growth of the service sector we specify and estimate a two sector labor market equilibrium model that allows us to address these empirical issues in a unified framework our estimates imply that there are large mobility costs output in both sectors would have been double their current levels if these mobility costs had been zero in addition we find that demand side factors that is technological change and movements in product and capital prices were responsible for the growth of the service sector

the impact of household structure on female autonomy in developing countries abstractjoint household structures in which several generations co reside in a single house are common across developing countries such households may confer benefits on all the family members through household public goods with the patriarch exercising greater control over resources therefore the household structure may affect the bargaining power of its members this paper estimates the effect of joint versus nuclear household structure in india on the autonomy of women and their labour force participation and the heterogeneity in the effects by income caste and region i use an instrumental variable approach and find that women living in nuclear households have greater decision making power

market opportunities genetic endowments and intrafamily resource distribution child survival in rural india the authors examine how intrafamily resource allocations respond to changes in economic conditions and to genetic differences in children by estimating the determinants of variations in the sex specific survival differentials of rural indian children based on standard census and household survey data they explore in particular the hypothesis that such differences are related to the relative returns to survival with households selectively allocating resources to children in response to variation in sex differences in their expected earnings opportunities as adults data are from the 1961 census and a 1971 household survey excerpt

rational household labor supply traditionally household behavior is derived from the maximization of a unique utility function in this paper we propose an alternative approach in which the household is modeled as a two member collectivity taking pareto efficient decisions the consequences of this assumption are analyzed in a three good model in which only total consumption and each member s labor supply are observable if the agents are assumed egoistic i e they are only concerned with their own leisure and consumption it is possible to derive falsifiable conditions upon household labor supplies from both a parametric and nonparametric viewpoint if alternatively agents are altruistic restrictions obtain in the nonparametric context useful interpretation stems from the comparison with the characterization of aggregate demand for a private good economy

an empirical analysis of life cycle fertility and female labor supply this paper examines us household fertility and female labor supply over the life cycle using data from the panel study of income dynamics the authors investigate how maternal time inputs and market expenditures on offspring as well as the benefits they yield their parents vary with ages of offspring and influence female labor supply and contraceptive behavior the econometric framework combines a female labor supply model and a contraceptive choice index function it also accounts for the fact that conceptions are not perfectly controllable events using longitudinal data on married couples the authors estimate these equations and test alternative specifications of the technologies governing child care the findings suggest that while parents cannot perfectly control conceptions variations in child care costs do affect life cycle spacing of births furthermore the results demonstrate the gains of modeling the linkages between female labor supply and fertility behavior at the household level authors modified

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

wealth distribution in life cycle economies abstract this paper compares the age wealth distribution produced in life cycle economies to the corresponding distribution in the us economy the idea is to calibrate the model economies to match features of the us earnings distribution and then examine the wealth distribution implications of the model economies the findings are that the calibrated model economies with earnings and lifetime uncertainty can replicate measures of both aggregate wealth and transfer wealth in the us furthermore the model economies produce the us wealth gini and a significant fraction of the wealth inequality within age groups however the model economies produce less than half the fraction of wealth held by the top 1 percent of us households

where there is a will fertility behavior and sex bias in large families this paper demonstrates that the social institutions of lineage maintenance patrilocality and joint families have a significant role in explaining sex differences in survival and health outcomes in rural india tests using panel data from rural households support this explanation which accounts for 7 percent of excess female mortality in haryana and rajasthan and 4 percent in punjab an institutional explanation suggests limits on the role for public policy in addressing large sex differences in health and mortality outcomes

inequality income growth and mobility the basic facts during the 1950s and 1960s mean wages in the united states grew rapidly and the dispersion around this growing mean changed very litde starting in the 1970s and continuing into the 1980s and 1990s these patterns were reversed mean wages grew slowly and inequality increased rapidly these changes in labor markets were reflected in changes in the distribution of family income the mean of the distribution of family income did increase after 1973 in spite of the near constancy of mean real wages as family members increased the number of hours they worked however the increase in inequality of wages was mirrored by an increase in the dispersion of family income a large descriptive literature has documented the rise in inequality while a smaller behavioral literature has sought to delineate the causes of this rise these changes in the distribution of family income a fected rates of poverty directly during the 1950s and 1960s temporary increases in poverty during recessions were more than offset by declines in poverty during economic expansions as long as the poor gained along with everyone else fi om the secular growth in the mean one could be confident that poverty rates would ratchet down this is exactly what happened as poverty rates fell from 22 4 percent in 1959 to 11 1 percent in 1973

productive inefficiency in extended agricultural households evidence from mali abstract in sub saharan african farm households two types of plot management often coexist collective fields are farmed jointly by household members under the authority of the head while individual plots are autonomously managed by members in this paper we explore the productivity differentials between collective and individual plots in the context of extended family farms we find that land yields are significantly larger on male private plots than on common plots after all appropriate controls have been included yet the disadvantage of common plots exists only for care intensive crops and for cash crops we provide evidence that the yield differentials stem from labor incentive problems they may arise from the prevailing reward function and or from preference heterogeneity over the use of the proceeds from the collective field

default risk and private student loans implications for higher education policies abstract in recent years the proportion of students facing a binding constraint on government student loans has grown this has led to substantially increased use of private loans as a supplementary source of finance for households higher education investment a critical aspect of the private market for student loans is that loan terms must reflect students risk of default college investment will therefore differ from a world in which government student loans whose terms are not sensitive to credit risk are expanded to no longer bind moreover beyond simply crowding out private lending expansions of the government student loan program will feed back into default risk on private loans the goal of this paper is to provide a quantitative assessment of the likely effects of the private market for student loans on college enrollment we build a model of college investment that reflects uninsured idiosyncratic risk and a well defined life cycle that is consistent with observed borrowing and default behavior across family income and college preparedness we find that higher government borrowing limits increase college investment but lead to more default in the private market for student loans while tuition subsides increase college investment and reduce default rates in the private market consequently higher limits on government student loans have small negative welfare effects while tuition subsidies increase aggregate welfare

consumption over the life cycle facts from consumer expenditure survey data this paper uses consumer expenditure survey data and a seminonparametric statistical model to estimate life cycle profiles of consumption controlling for demographics cohort and time effects we construct age profiles for total and nondurable consumption as well as expenditure patterns for consumer durables special emphasis is placed on the comparison of different approaches to control for changes in demo graphics over the life cycle we find significant humps over the life cycle for total nondurable and durable expenditures changes in household size account for roughly half of these humps bootstrap simulations suggest that our empirical estimates are tight in that standard errors are small

a new test of borrowing constraints for education we discuss a simple model in which parents and children make investments in the children s education investments for other purposes and parents can transfer cash to their children we show that for an identifiable set of parent child pairs parents will rationally under invest in their child s education for these parent child pairs additional financial aid will increase educational attainment the model highlights an important feature of higher education finance the expected family contribution efc that is based on income assets and other factors the efc is neither legally guaranteed nor universally offered our model identifies the set of families that are disproportionately likely to not provide their full efc using a common proxy for financial aid we show in data from the health and retirement study that financial aid increases the educational attainment of children whose families are disproportionately likely to under invest in education financial aid has no effect on the educational attainment of children in other families the theory and empirical evidence identifies a set of children who face quantitatively important borrowing constraints for higher education

consumption and labor supply with partial insurance an analytical framework we develop a model with partial insurance against idiosyncratic wage shocks to quantify risk sharing closed form solutions are obtained for equilibrium allocations and for moments of the joint distribution of consumption hours and wages we prove identification and demonstrate how labor supply data are informative about risk sharing the model estimated with us data over the period 1967 2006 implies that i 39 percent of permanent wage shocks pass through to consumption ii the share of wage risk insured increased until the early 1980s and iii preference heterogeneity is important in accounting for observed dispersion in consumption and hours jel e21 e23 e31 e52

the baby boom and world war ii a macroeconomic analysis we argue that one major cause of the u s postwar baby boom was the rise in female labor supply during world war ii we develop a quantitative dynamic general equilibrium model with endogenous fertility and female labor force participation decisions we use the model to assess the impact of the war on female labor supply and fertility in the decades following the war for the war generation of women the high demand for female labor brought about by mobilization leads to an increase in labor supply that persists after the war as a result younger women who reach adulthood in the 1950s face increased labor market competition which impels them to exit the labor market and start having children earlier the effect is amplified by the rise in taxes necessary to pay down wartime government debt in our calibrated model the war generates a substantial baby boom followed by a baby bust

savings behaviour in low income countries the empirical literature on savings in low income countries has exploited some remarkable data sets to shed new light on savings behaviour in the poor agricultural households that make up the majority of the population in such countries a number of conclusions have emerged i the degree of consumption smoothing over seasons within the year and across years in response to very large income fluctuations is higher than was supposed ii the lack of complete insurance and credit markets however is manifested in asset stocks and asset compositions among farmers especially small farmers that are inefficient iii the combination of low and volatile incomes is an important cause of inefficiency and income inequality iv the proximity of formal financial institutions increases financial savings and crowds out informal insurance arrangements thus in principle better facilitating financial intermediation and iv simple life cycle models of savings do not appear to explain long term savings in low income settings copyright 2001 oxford university press

redistribution and education subsidies are siamese twins abstract we develop models of optimal linear and non linear income taxation with endogenous human capital formation to explore optimal education subsidies optimal subsidies on education ensure efficiency in human capital accumulation and thus play an important role in alleviating the tax distortions on learning induced by redistributive policies if the government cannot verify all investments in human capital education policy offsets some but not all tax induced distortions on learning non pecuniary educational costs benefits may increase decrease subsidies on education especially if they are complementary to work effort

income risk and household schooling decisions in burkina faso summary i study the effects of income uncertainty on household schooling decisions households with more volatile incomes have a greater incentive to build a buffer stock to insure against unforeseen adverse shocks and non enrollment can be part of such a strategy i use data from rural burkina faso where school attainment is low and income shocks are frequent to show that income uncertainty reduces several educational outcomes including enrollment education expenditures and years of education completed the findings suggest that income uncertainty has larger welfare costs in terms of human capital than is implied by studies that only focus on realized income shocks

risk sharing and internal migration over the past two decades more than half the population in rural tanzania migrated within the country profoundly changing the nature of traditional institutions such as informal risk sharing mass internal migration has created geographically disperse networks on which the authors collected detailed panel data by quantifying how shocks and consumption co vary across linked households they show how migrants unilaterally insure their extended family members at home this finding contradicts risk sharing models based on reciprocity but is consistent with assistance driven by social norms migrants sacrifice 3 to 7 percent of their very substantial consumption growth to provide this insurance which seems too trivial to have any stifling effect on their growth through migration

fertility risk in the life cycle in this paper i study fertility decisions of women in the u s economy with special emphasis on the timing of births and abortions over the life cycle given the policy debate regarding abortion availability along with empirical evidence on its positive impact on women outcomes understanding the fertility process in a broad sense should help guide the discussion in this paper i present a life cycle model of consumption savings and fertility decisions in an environment with uninsurable income shocks and imperfect fertility control my model presents a unified framework in which opportunity costs of child rearing as well as technological restrictions in the form of contraception effectiveness have roles to understand lifetime fertility the model extends important earlier work on contraceptive decisions by women in the sense that it allows for stochastic fertility outcomes and is able to account for the interplay between asset accumulation and fertility decisions observed in the data

specific experience household structure and intergenerational transfers farm family land and labor arrangements in developing countries data from indian rural household survey was used to test th hypothesis that the coexistence in traditional rural societies of extended intergenerational families infrequent land sales and high reliance on family members as farm laborers is the result of the economic advantages which accrue from the knowledge gained by farming a particular ploy of land over a long period of time the land specific experience of elderly members of a intergenerational household who farmed the land as a child and then as an adult are expecially critical in adverse weather years most previous investigators attributed the existence of multigenerational households the use of family members rather than hired laboreds and the infrequency of land sales to deficiencies in the market i e labor market imperfections and an absence of capital insurance and asset markets in the present investigations these same characteristics are viewed as having an economic advantages a model for estimating the contribution of the experience of the elderly household members to agricultural profits was developed and applied to data from a 3 year panel study of 2900 indian rural farm households the data was collected between 1968 71 by the national council of applied economic research the survey collected information on farm profits farm inputs demographic characteristics and the effects of weather conditions on profits a major limitation of the study was a lack of information on the duration of land ownership age of household members was substituted as a proxy for duration of ownership findings were consistent withe the hypothesis in poor agricultural years gross returns for households which contained an elderly household member were greater than the gross returns for comparable households which did not contain an elderly member the economic advantages of specific knowledge embodied in the experienced elderly farmer were comparable to the economic advantages which accrued to households whose members were more educated the hypothesis cannot fully explain the existence of intergenerational families since there is a relatively large proportion of such families among nonfarm families in many countries including india findings suggest that intergenerational families may provide for more occupational diversity and thereby reduce income risks the specific experience hypothesis has policy implications if technological changes are introduced the value of specific experience may be lost and the frequency of intergenerational households may decline the hypothesis may also explain why farmers are reluctant to agree to land redistribution and consolidation schemes this reluctance may disappear after sufficient technological change has occurred

family planning in a life cycle model with income risk several us states have recently restricted the access to abortions we study fertility intentions and how family planning and abortions are used as mechanisms to control fertility among couples facing income risk we formulate and estimate a life cycle consumption saving model with uninsurable income risk and imperfect contraceptive control that matches fertility behavior in the british household panel survey bhps well we use the estimated model to investigate how family planning and abortions are used to control fertility in our model our simulations suggest that income risk affects family planning and that abortion is used to control fertility due to the presence of income risk this indicates that the availability of abortions might play a role as an insurance mechanism

vanishing children from high unemployment to low fertility in developed countries during the last four decades the average total fertility rate in oecd countries witnessed a dramatic fall from 2 9 in 1960 to 2 0 in 1975 and then to 1 6 in the late 1990s reaching 1 25 in southern europe with the exception of the united states all advanced countries now have fertility rates well below the replacement rate of 2 1 in the absence of either sharp changes in fertility behavior or large inflows of immigrants their populations are set to shrink particularly in europe still within this generalized fall cross national differences in fertility behavior have remained significant by 2000 fertility rates ranged from 2 1 in the united states and over 1 8 in france and norway to less than 1 3 in greece italy and spain most standard accounts attribute the fall in fertility rates to a shift in personal preferences over the size of the family due to either changes in religious beliefs or growing female participation in the labor market yet even though the ideal number of children for men and women 20 34 years old has declined it is fairly similar across the european union at around the replacement level of 2 1 eurostat 2001 hence the sources of cross national variation in fertility behavior must lie somewhere else as women have joined the labor force fertility rates have adjusted as a function of the institutional structures that shape the job market and determine its long run unemployment rate exploiting the considerable variation of fertility rates and employment conditions across industrial countries this paper shows that the current demographic transition is ultimately associated with the constraints of the labor market where fertility decisions are taken

cyclical dynamics in idiosyncratic labor market risk is individual labor income more risky in recessions this is a difficult question to answer because existing panel data sets are so short to address this problem we develop a generalized method of moments estimator that conditions on the macroeconomic history that each member of the panel has experienced variation in the cross sectional variance between households with differing macroeconomic histories allows us to incorporate business cycle information dating back to 1930 even though our data do not begin until 1968 we implement this estimator using household level labor earnings data from the panel study of income dynamics we estimate that idiosyncratic risk is i highly persistent with an annual autocorrelation coefficient of 0 95 and ii strongly countercyclical with a conditional standard deviation that increases by 75 percent from 0 12 to 0 21 as the macroeconomy moves from peak to trough

earnings inequality and mobility in the united states evidence from social security data since 1937 this paper uses social security administration longitudinal earnings micro data since 1937 to analyze the evolution of inequality and mobility in the united states annual earnings inequality is u shaped decreasing sharply up to 1953 and increasing steadily afterward short term earnings mobility measures are stable over the full period except for a temporary surge during world war ii virtually all of the increase in the variance in annual log earnings since 1970 is due to increase in the variance of permanent earnings as opposed to transitory earnings mobility at the top of the earnings distribution is stable and has not mitigated the dramatic increase in annual earnings concentration since the 1970s long term mobility among all workers has increased since the 1950s but has slightly declined among men the decrease in the gender earnings gap and the resulting substantial increase in upward mobility over a lifetime for women are the driving force behind the increase in long term mobility among all workers

the nature of precautionary wealth abstract this paper uses the panel study of income dynamics to provide some of the first direct evidence that wealth is systematically higher for consumers with predictably greater income uncertainty however the apparent pattern of precautionary wealth is not consistent with a standard parameterization of the life cucle model in which consumers are patient enough to begin saving for retirement early in life wealth is estimated to be far less sensitive to uncertainty than implied by that model instead our results suggest that over most of their working life time consumers behave in accordance with the buffer stock models of saving described in carroll 1992 1997 or deaton 1991 in which consumers hold wealth principally to insulate consumption against near term fluctuations in income

risk pooling between households and risk coping measures in developing countries evidence from rural bangladesh abstract using data from rural bangladesh i test whether income risks are pooled among villagers between neighboring households and between related households living in different villages i find evidence that risks to food consumption are pooled between neighboring households and between related households but not among villagers as for nonfood consumption i find little evidence of risk pooling except between unrelated neighboring households i also find that while households belonging to a neighborhood network do not take any special measures during an economic hardship those not belonging to any such network try to smooth consumption by selling off livestock and other assets and by getting interest free loans negative income shocks are found to have little effect on labor supply or private transfers

the effectiveness of government debt and transfers as insurance abstract government debt and redistributive taxation can help people to smooth consumption when facing uninsurable individual specific risk i examine the effects that variations in public debt and transfers have on risk sharing efficiency and the distribution of resources i find that risk sharing can be improved significantly by both debt and transfers but that debt has adverse effects on equity when used in isolation debt will enhance welfare if transfers are lower than optimal however the beneficial effects of public debt vanish if transfers are used optimally

consumer durables and the real interest rate one important channel through which real interest rates affect aggregate demand is consumer expenditure on durable goods this paper examines empirically the link between interest rates and consumer durables solving for the decision rule relating income and interest rates to consumer demand is an intractable task this paper avoids this problem by examining the first order conditions necessary for maximization by the representative consumer structural parameters of there presentative utility function are thus recovered the estimated model suggests that expenditure on consumer durables is far more sensitive to changes in the interest rate than is expenditure on nondurables and services this abstract was borrowed from another version of this item

random earnings differences lifetime liquidity constraints and altruistic intergenerational transfers abstract this paper develops a model of private savings behavior in which households care about their descendants cannot have negative net worth and have lifetime earnings depending on random draws from an exogenous distribution of abilities the elements interact very lucky parents are likely to leave large estates constrained children are unusually likely to receive intergenerational transfers the paper proves the existence of a stationary cross sectional distribution of wealth endogenously determines where liquidity constraints will bind and shows that the long term interest rate must be such that ricardian neutrality fails its last section generates several illustrative numerical simulations

galton versus the human capital approach to inheritance a century ago francis galton proposed a simple yet powerful model of inheritance gary backer s human capital model is often used to analyze important empirical and policy questions but does it dominate galton s from a positive point of view i derive nine implicatiions of the human capital approach that are distinct from galton s evidence from the pis scf and nlsy micro data sets as well as results reported in previous literatures suggest that four of the unique implications are refuted two implications are verified and mixed results are obtained for three others some extensions of economics recently developed by becker and others when applied to inheritance may improve economics predictions

life cycle schooling and dynamic selection bias models and evidence for five cohorts of american males this paper examines an empirical regularity found in many societies that family influences on the probability of transiting from one grade level to the next diminish at higher levels of education we examine the statistical model used to establish the empirical regularity and the intuitive behavioral interpretation often used to rationalize it we show that the implicit economic model assumes myopia the intuitive interpretive model is identified only by imposing arbitrary distributional assumptions onto the data we produce an alternative choice theoretic model with fewer parameters that rationalizes the same data and is not based on arbitrary distributional assumptions

children and household economic behavior this paper looks at some of the methodological issues that arise in modeling the effects of children on household behavior and presents some estimates for selected areas for our purposes household behavior will be taken to refer to household decisions on labor supply the allocation of expenditure to different periods and the decision as to what to do with the difference between income and expenditure i shall be concerned mainly with the effects of dependent children and i restrict attention largely to western societies excerpt

inequality and growth why differential fertility matters we argue that inequality and growth are linked through differential fertility and the accumulation of human capital we build an overlapping generations model in which dynasties differ in their initial endowment with human capital growth the income distribution and fertility are endogenous due to a quantiy quality tradeoff families with less human capital decide to have more children and invest less in education when initial inequality is high large fertility differentials lower the growth rate of average human capital since poor families who invest little in education make up a large fraction of the population in the next generation a calibrated model shows that this fertility differential effect is quantitatively important we also provide empirical evidence to confirm the links between inequality differential fertility and growth suggested by the model

income variance dynamics and heterogeneity recent theoretical work has shown the importance of measuring microeconomic uncertainty for models of both general and partial equilibrium under imperfect insurance in this paper the assumption of i i d income innovations used in previous empirical studies is removed and the focus of the analysis is placed on models for the conditional variance of income shocks which is related to the measure of risk emphasized by the theory we first discriminate amongst various models of earnings determination that separate income shocks into idiosyncratic transitory and permanent components we allow for education and time specific differences in the stochastic process for earnings and for measurement error the conditional variance of the income shocks is modelled as a parsimonious arch process with both observable and unobserved heterogeneity the empirical analysis is conducted on data drawn from the 1967 1992 panel study of income dynamics we find strong evidence of sizeable arch effects as well as evidence of unobserved heterogeneity in the variances

borrowing constraints college enrollment and delayed entry in this article i propose and estimate a dynamic model of education borrowing and work decisions of high school graduates i examine the effect of relaxing borrowing constraints on educational attainment by simulating increases in the amount students are permitted to borrow from government sponsored loan programs my results indicate that borrowing constraints have a small impact on attainment the removal of education related borrowing constraints raises bachelor s degree completion by 2 4 percentage points tuition subsidies are necessary to obtain larger increases i find that higher subsidies for average ability students are the most cost effective targeted tuition subsidies

college entry by blacks since 1970 the role of college costs family background and the returns to education college enrollment of black 18 19 year old high school graduates declined from 1980 through 1984 and then rebounded after 1984 this paper presents data from a time series of cross sections of 18 19 year old youths from 1973 through 1988 to test the role of family background direct college costs local economic conditions and returns to college in driving these trends the evidence suggests that on the one hand increases in direct college costs were driving enrollment rates downward throughout the eighties on the other hand dramatic increases in average parental education for black youths exerted upward pressure on college enrollment by blacks particularly in the latter half of the decade the net effect of these two factors contributed to the pattern of decline and recovery observed during the eighties

is the extended family altruistically linked direct tests using micro data this paper uses panel study of income dynamics data on parents and their adult children to test the standard altruism model this model predicts that within the extended family the distribution of consumption is independent of the distribution of resources the authors findings strongly reject this prediction copyright 1992 by american economic association

assets and poverty traps in rural bangladesh using longitudinal survey from rural bangladesh this article examines the determinants of land and asset accumulation over time and explores why some households may be trapped in asset poverty non parametric and parametric methods are used to discern the shape of the asset accumulation path and whether unique or multiple equilibria exist we find evidence for concavity of the dynamic asset frontier but no evidence for multiple equilibria it is suggested that the existence of well functioning factor markets in rural bangladesh and elsewhere in south asia explain the contrasts between our results and those for several african countries

consumption commitments and employment contracts we examine an economy in which the cost of consuming some goods can be reduced by making commitments that reduce exibility we show that such consumption commitments can induce consumers with risk neutral underlying utility functions to be risk averse over small variations in income but sometimes to seek risk over large variations as a result optimal employment contracts will smooth wages conditional on being employed but may incorporate a possibility of unemployment

intra household resource allocation and familial ties abstract in this paper we investigate the link between intra household resource allocation and familial ties between household members we show that within the same geographic economic and social environments households where members have stronger familial ties nuclear family households achieve near pareto efficient allocation of productive resources and pareto efficient allocation of consumption while households with weaker familial ties extended family households do not we propose a theoretical model of the household based on the idea that altruism between household members vary with familial ties which generates predictions consistent with the observed empirical patterns

education policy and intergenerational transfers in equilibrium this paper compares partial and general equilibrium effects of alternative financial aid policies intended to promote college participation we build an overlapping generations life cycle heterogeneous agent incomplete markets model with education labor supply and consumption saving decisions altruistic parents make inter vivos transfers to their children labor supply during college government grants and loans as well as private loans complement parental transfers as sources of funding for college education we find that the current financial aid system in the u s improves welfare and removing it would reduce gdp by two percentage points in the long run any further relaxation of government sponsored loan limits would have no salient effects the short run partial equilibrium effects of expanding tuition grants especially their need based component are sizeable however long run general equilibrium effects are 3 4 times smaller every additional dollar of government grants crowds out 20 30 cents of parental transfers

general equilibrium treatment effects a study of tuition policy this paper defines and estimates general equilibrium treatment effects the conventional approach in the literature on treatment effects ignores interactions among individuals induced by the policy interventions being studied focusing on the impact of tuition policy and using estimates from our dynamic overlapping generations general equilibrium model of capital and human capital formation we find that general equilibrium impacts of tuition on college enrollment are an order of magnitude smaller than those reported in the literature on microeconomic treatment effects the assumptions used to justify the late parameter in a partial equilibrium setting do not hold in a general equilibrium setting policy changes induce two way flows we extend the late concept to a general equilibrium setting we present a more comprehensive evaluation to program evaluation by considering both the tax and benefit consequences of the program being evaluated and placing the analysis in a market setting this abstract was borrowed from another version of this item

relative wage movements and the distribution of consumption we analyze how relative wage movements among birth cohorts and education groups affected the distribution of household consumption and economic welfare our empirical work draws on the best available cross sectional data sets to construct synthetic panel data on u s consumption labor supply and wages during the 1980s we find that low frequency movements in the cohort education structure of pretax hourly wages among men drove large changes in the distribution of household consumption the results constitute a spectacular failure of between group consumption insurance a failure not explained by existing theories of informationally constrained optimal consumption behavior a welfare analysis indicates that the cost of between group consumption variability is larger than the cost of aggregate consumption variability by two orders of magnitude

saving and liquidity constraints this paper is concerned with the theory of saving when consumers are not permitted to borrow and with the ability of such a theory to account for some of the stylized facts of saving behavior the models presented in the paper seem to account for important aspects of reality that are not explained by traditional life cycle models copyright 1991 by the econometric society

the nature of credit constraints and human capital we develop a human capital model with borrowing constraints explicitly derived from government student loan gsl programs and private lending under limited commitment the model helps explain the persistent strong positive correlation between ability and schooling in the u s as well as the rising importance of family income for college attendance it also explains the increasing share of undergraduates borrowing the gsl maximum and the rise in student borrowing from private lenders our framework ofiers new insights regarding the interaction of government and private lending as well as the responsiveness of private credit to economic and policy changes

how important is intra household risk sharing for savings and labor supply abstract while it is recognized that the family is a risk sharing institution little is known about the quantitative effects of this source of insurance on savings and labor supply in this paper we present a model where workers females and males are subject to idiosyncratic employment risk and where capital markets are incomplete a household is formed by a female and a male who decide on consumption savings and labor supplies in a calibrated version of our model we find that intra household risk sharing has its largest impact among wealth poor households while the wealth rich use mainly savings to smooth consumption across unemployment spells wealth poor households rely on spousal labor supply for instance for low wealth households average hours worked by wives of unemployed husbands are 8 higher than those worked by wives of employed husbands this response in wives hours makes up 9 of lost family income we also study consumption losses upon an unemployment spell precautionary savings and the crowding out effects of the public unemployment insurance program on the extent of risk sharing within the household

accounting for the changing role of family income in determining college entry in this paper i analyze the determinants of college enrolment and the changes in these determinants over time i propose a quantitative life cycle model with college enrolment altruistic parents provide financial support to their children using counterfactual experiments i find that 24 percent of all households are financially constrained in their college decision constraints become more severe over time i show that my model is consistent with a narrow college enrolment gap between students from rich and poor families as previously reported in the empirical literature the estimation of enrolment gaps is a popular reduced form approach for measuring the fraction of constrained households my results suggest that these reduced form estimates are misleading and that a structural model of parental transfers is needed to correctly identify constrained households further i show that parental transfers are an important driver behind the changing role of family income as a determinant of college entry a fact that is well documented for the us economy

whose education matters in the determination of household income evidence from a developing country the plan of this article is as follows section ii discusses the data used and presents a few descriptive statistics on headship in ghana and labor activities of ghanaian households section iii presents three simple paradigms about whose education matters in regression models of household income this section also describes the composition of household income and proposes the appropriate explanatory variables for estimation section iv describes the estimation methodology consistent estimates for the farm and off farm income functions are obtained by using j l powells censored least absolute deviations estimators standard errors are obtained by using a bootstrap methodology that mimics the two stage sample design section v contains a summary of the estimation results most notably the results suggest that the allocative effect is the largest effect for total income while the productivity effect appears to dominate when considering farming and nonfarming activities separately all specifications of household income and its components reject the use of the minimum level of household schooling as well as the schooling level of the head of the household section vi provides some concluding comments excerpt

risk sharing within the extended family evidence from the indonesia family life survey abstractin recent years there has been an increase in the availability of longitudinal household surveys in developing countries that allow the researchers to construct linkages between households with familial ties this type of data allows researchers to look at whether some household outcomes are influenced by decisions made at the extended family level this article utilizes data from two waves of the indonesia family life survey 1997 and 2000 to construct a panel of extended families in order to focus on one particular example of such outcome whether consumption risk sharing occurs among households within the extended family the findings show that after controlling for the extended family fixed effects changes in the household s own income still matter for changes in its consumption rejecting full consumption risk insurance however the coefficients on household own income are small indicating significant degrees of risk sharing results from a set of reduced form estimations suggest that ho

an estimable dynamic general equilibrium model of work schooling and occupational choice this paper develops and estimates a dynamic general equilibrium overlapping generations model of career decisions the model is fit to data on life cycle employment schooling and occupation decisions and on life cycle labor earnings within and between cohorts observed in the us between 1968 and 1993 based on the estimates of the model the impact of cohort size on skill prices and consequently on career decisions is assessed compared to a baseline case in which cohort size increased at a steady average rate and the fertility process was stationary it is found that the male baby bust generations born in the 1930s and 1940s faced higher skill prices by as much as 2 0 completed college at a higher rate by as much as 0 3 percentage points and worked more over the lifetime by as much as 0 1 years in contrast the males from the baby boom generations born in the 1950s and 1960s faced lower skill prices by as much as 1 5 completed college at a lower rate by as much as 1 0 percentage points and worked less over the lifetime by as much as 0 1 years the impact of cohort size is found to differ across gender due to the differential impact of fertility on the value of home production unlike males the female baby bust generations completed college at a lower rate by as much as 1 5 percentage points and worked less over the lifetime by as much as 0 5 years while the female baby boom generations completed college at a lower rate by as much as 1 5 percentage points and worked more over the lifetime by as much as 0 2 years a tuition subsidy experiment is also performed both in a general equilibrium setting in which skill prices are endogenous and in a partial equilibrium setting with fixed skill prices based on the estimated model a 1 increase in tuition is predicted to reduce college enrollment rates by 1 27 in partial equilibrium consistent with previous estimates and by 1 05 in the general equilibrium case thus for this policy experiment the partial equilibrium analysis of schooling choice would not differ significantly from the general equilibrium analysis

intergenerational wealth mobility in rural bangladesh unique residential history data with retrospective information on parental assets are used to study household wealth mobility in 141 villages in rural bangladesh regression estimates of father son correlations and analyses of intergenerational transition matrices show substantial persistence in wealth even when we correct for measurement errors in parental wealth we do not find wealth mobility to be higher between periods of a person s life than between generations we find that the process of household division plays an important role sons who splinter off from the father s household experience greater albeit downward mobility in wealth despite significant occupational mobility across generations its contribution to wealth mobility net of human capital attainment of individuals appears insignificant low wealth mobility in our data is primarily explained by intergenerational persistence in educational attainment

female labour supply human capital and welfare reform we estimate a dynamic model of employment human capital accumulation including education and savings for women in the united kingdom exploiting tax and benefit reforms and use it to analyze the effects of welfare policy we find substantial elasticities for labor supply and particularly for lone mothers returns to experience which are important in determining the longer term effects of policy increase with education but experience mainly accumulates when in full time employment tax credits are welfare improving in the u k increase lone mother labor supply and marginally reduce educational attainment but the employment effects do not extend beyond the period of eligibility marginal increases in tax credits improve welfare more than equally costly increases in income support or tax cuts

female labor supply as insurance against idiosyncratic risk in this paper we explore the role of female labor supply as an insurance mechanism against idiosyncratic earnings risk within the family we use a life cycle model in which a unitary family makes consumption saving and labor supply decisions additional uncertainty increases female participation rates this effect on participation is greatest when the ability to borrow and hence to smooth consumption is limited we calculate the welfare cost of increases in uncertainty and show that the welfare cost is greater when households are unable to adjust female labor supply jel j22 d91

technological change and the distribution of schooling evidence from green revolution india abstract in this paper we develop a two strata general equilibrium model of human capital acquisition with endogenous school construction that permits an assessment of the relative impacts of technological change and school availability on schooling investments in landless and landed households and illuminates how these choices interact through the adult and child labor markets the implications of the model are tested using a unique household level panel data set which constitutes a representative sample of rural india during the peak period of agricultural innovation associated with the green revolution 1968 1982 the empirical results indicate that the operation of the market for child labor worsens the distributional impact of agricultural productivity on school investment across landless and landed households as landless child labor is used to replace landed child labor lost due to increased child school attendance in landed households the results also suggest however that the allocation of school construction diminishes the adverse impact of technical change on the gap between landless and landed schooling investment

does land fragmentation increase the cost of cultivation evidence from india although a large literature discusses the productivity effects of land fragmentation measurement and potential endogeneity issues are often overlooked this paper uses several measures of fragmentation and controls for endogeneity and crop choice by looking at inherited paddy and wheat plots to show that these issues matter empirically while crop choice can mitigate effects fragmentation as measured by the simpson index increases production cost and fosters substitution of labor for machinery especially for small and medium farmers greater distances between fragments have a smaller effect creating opportunities for market based consolidation could be one step to limit fragmentation induced cost increases

moving forward looking back the impact of migration and remittances on assets consumption and credit constraints in the rural philippines abstract this paper investigates the impact of migration and remittances on asset holdings consumption expenditures and credit constraint status of households in origin communities using a unique longitudinal data set from bukidnon philippines taking into account the endogeneity of the number of migrants and remittances received a larger number of migrant children reduces the values of nonland assets and total expenditures per adult equivalent however remittances have a positive impact on housing consumer durables nonland assets total expenditures per adult equivalent and educational expenditures enabling asset accumulation and investment in human capital neither migration nor remittances affects current credit constraint status

can unobserved land quality explain the inverse productivity relationship abstract an inverse relationship between both farm productivity and labor intensity and farm size is a common empirical finding in developing country agriculture the traditional explanation has been imperfect labor markets recently it has been suggested instead that the inverse relationship is a statistical artifact resulting from omitted land quality using a farm level data set from java i investigate whether omitted variable bias can explain the inverse relationship i show that the inverse relationship and accompanying wage responses are inconsistent with a model of neoclassical farm behavior that ignores omitted variable bias instrumental variables techniques yield parameter estimates in which the inverse relationship is eliminated and the estimated wage elasticities are more in line with economic theory further econometric investigation hints that a model of omitted land quality may be a possible source of the inverse relationship these results emphasize the importance of considering the sources of cross sectional variation in estimating microeconomic relationships