addressing leakage in the eu ets border adjustment or output based allocation the eu ets has been criticised for threatening the competitiveness of european industry and generating carbon leakage i e increasing foreign greenhouse gas emissions two main options have been put forward to tackle these concerns border adjustments and output based allocation i e allocation of free allowances in proportion to current production we compare various configurations of these two options as well as a scenario with full auctioning and no border adjustment against this background we develop a model of the main sectors covered by the eu ets electricity steel cement and aluminium we conclude that the most efficient way to tackle leakage is auctioning with border adjustment which generally induces a negative leakage a spillover this holds even if the border adjustment does not include indirect emissions if it is based on eu rather than foreign specific emissions or for some values of the parameters if it covers only imports another relatively efficient policy is to combine auctioning in the electricity sector and output based allocation in exposed industries especially if free allowances are given both for direct and indirect emissions i e those generated by the generation of the electricity consumed although output based allocation is generally less effective than border adjustment to tackle leakage it is more effective to mitigate production losses in the sectors affected by the ets which may ease climate policy adoption c 2011 elsevier b v all rights reserved

measuring and improving the performance of customs valuation controls an illustration with gabon modern customs administrations aim to both facilitate legal trade and combat fraud to meet this dual objective many customs administrations in developing countries must give risk management a highly prominent role in this context of modernisation this paper first provides stylised facts on the performance of the customs controls carried out at the gabon border then we compare gabon s granular import customs data with international trade statistics based on this comparison we identify undetected fraud and present a methodology to target ex post audits finally we define indicators to monitor the performance of customs valuation controls

the carbon footprint of uk households 1990 2004 a socio economically disaggregated quasi multi regional input output model this paper presents a socio economically disaggregated framework for attributing co2 emissions to people s high level functional needs based around a quasi multi regional input output qmrio model the study in theory takes into account all co2 emissions that arise from energy used in production of goods and services to satisfy uk household demand whether the emissions occur in the uk or abroad results show that co2 emissions attributable to households were 15 above 1990 levels in 2004 and that although absolute decoupling occurred between household expenditure and co2 during the uk s switch from coal to gas in the early 1990s since then only slight relative decoupling is evident the proportion of co2 that arises outside uk borders in support of uk consumption is rising and reducing these emissions is particularly problematic in a global trading system investigation into the carbon footprint of different segments of the uk population shows wide variation the segment with the highest carbon footprint emits 64 more co2 than the segment with the lowest results show that recreation and leisure are responsible for over one quarter of co2 emissions in a typical uk household in 2004 we conclude that expanding lifestyle aspirations are significant factors in driving household co2 emissions but the study also emphasizes that attention must be paid to the infrastructures and institutions that result in considerable amounts of co2 being locked up in basic household activities through which people meet their everyday needs for subsistence protection and communication with family and friends the findings highlight the sheer scale of the challenge facing uk policy makers and suggest that policies should be targeted towards segments of society responsible for the highest carbon footprints

multi region input output analysis of co2 emissions embodied in trade the feedback effects energy related co2 emissions embodied in international trade have been widely studied by researchers using the environmental input output framework despite the increasing interest in using the multi regional input output mrio model by researchers few studies have looked into the mechanism of feedback effects we introduce a method called the stepwise distribution of emissions embodied in trade swd eet to reveal how the emissions embodied in trade are absorbed by a country s final demands through a series of allocation steps a country s indirect absorption patterns and its indirect trade balance of emissions from bilateral trade with other countries are also studied based on the proposed method an empirical study using the data of asian economies shows significant differences in the consumption based emission estimates for some economies due to feedback effects through international trade the differences can be largely captured by the first step or the first two steps of the adjustment procedure in the swd eet analysis other findings and some recommendations are also presented

fiscal paradise foreign tax havens and american business the tax haven affiliates of american corporations account for more than 20 percent of u s foreign direct investment and nearly a third of the foreign profits of u s firms american companies report extraordinarily high profit rates on their tax haven investments in 1982 this behavior implies that the revenue maximizing tax rate for a typical haven is around 5 8 percent american and foreign investment in tax havens has an uncertain effect on u s tax revenue but since low tax rates encourage american companies to shift profits out of high tax foreign countries it is possible that low foreign tax rates ultimately enhance u s tax collections

the role of wages and auditing during a crackdown on corruption in the city of buenos aires abstract we study the prices paid for basic inputs during a crackdown on corruption in the public hospitals of the city of buenos aires argentina during 1996 97 we find a well defined negative effect on the measures used to capture corruption prices paid by hospitals for basic homogeneous inputs decrease by 15 percent during the first 9 months of the crackdown after this period prices increase but they are still 10 percent lower than those prevailing before the crackdown relative to the precrackdown period higher wages play no role in inducing lower input prices when audit intensity can be expected to be maximal during the first phase of the crackdown but have a negative and well defined effect when audit intensity takes intermediate levels the last phase of the crackdown controlling for fixed effects we find that the wage elasticity of input prices exceeds 20 these results are consistent with the standard model of bribes of gary becker and george stigler

alternative designs for tariffs on embodied carbon a global cost effectiveness analysis in the absence of effective world wide cooperation to curb global warming import tariffs on embodied carbon have been proposed as a potential supplement to unilateral emissions pricing we consider alternative designs for such tariffs and analyze their effects on global welfare within a multi region multi sector computable general equilibrium cge model of global trade and energy our analysis suggests that the most cost efficient policy could be region specific tariffs on all products based on direct plus electricity emissions in the end however the potential cost savings through carbon tariffs must be weighed against the administrative costs as well as legal issues and political considerations

efficient estimation of structural hedonic systems when a product or job is not homogeneous but instead embodies several different characteristics it is difficult to use price information about the product to learn anything about the structure of the supply and demand for the embodied characteristics s rosen 1974 highlighted this problem and suggested that the estimated slope of the price characteristic relation the marginal price could be used instead of standard prices in otherwise standard estimation of the supply and demand system however recently brown and h rosen 1982 brown 1983 and mendelsohn 1985 have pointed out that this method is applicable only when the marginal price depends on variables not found in the supply and demand equations in this paper we show that since the hedonic system matches consumers with high demand for the characteristic to firms with low costs of producing it exogenous variables from the supply equation are not valid instruments in the demand equation and vice versa therefore even when the brown rosen mendelsohn brm condition holds estimation of the identified system by standard simultaneous equations techniques will produce inconsistent estimates we then show that the system can be identified despite the absence of the standard instruments and develop an efficient estimator for the identified system since cross equation constraints make estimation of hedonic systems particularly vulnerable to specification error we also consider some specification tests in this section we consider a simple model with only one characteristic the extension to several characteristics is straightforward the basic model developed by rosen can be described as follows firms with different technologies produce products which provide consumers with varying levels of some characteristic z each consumer buys one unit of the good the product is such that an amount of z from two units of the good provides less utility than the same amount of z embodied in a single unit e g acceleration in a car safety in a job consumers

a comparison of bribery and bidding in thin markets abstract this paper compares bribery to competitive bidding in a government purchasing context while competitive bidding is one method of procurement bribery is a common alternative in many third world countries although bribery is often considered to be the ethical antithesis of competitive bidding the analysis shows there is a fundamental isomorphism between bribery and competitive bidding on the supply side of the transaction

corruption trade costs and gains from tariff liberalization evidence from southern africa this paper exploits quasi experimental variation in tariffs in southern africa to estimate trade elasticities traded quantities respond only weakly to a 30 percent reduction in the average nominal tariff rate trade flow data combined with primary data on firm behavior and bribe payments suggest that corruption is a potential explanation for the observed low elasticities in contexts of pervasive corruption even small bribes can significantly reduce tariffs making tariff liberalization schemes less likely to affect the extensive and the intensive margins of firms import behavior the tariff liberalization scheme is however still associated with improved incentives to accurately report quantities of imported goods and with a significant reduction in bribe transfers from importers to public officials

the estimation of demand parameters in hedonic price models this paper shows that the econometric problem of estimating hedonic demand parameters is not a standard identification problem caused by demand supply interaction as has been often assumed estimation procedures based on this assumption lead to biased results the hedonic estimation problem is instead caused by the endogeneity of both prices and quantities when households face a nonlinear budget constraint an instrumental variables solution to this problem is suggested using instruments that exogenously shift the budget constraint

pensions and wages an hedonic price theory approach this paper examines whether a trade off exists between the level of pension benefits and wages the 1983 survey of consumer finance is used to match detailed information on pension plans to worker characteristics for a random sample of the population the pension wage tradeoff is estimated using both a contractual model of the labor market and the spot market model used in previous studies the results indicate a large negative tradeoff in the contractual model but only a negligible tradeoff in the spot market model results from estimating the underlying structural equations for pensions are also presented copyright 1992 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

evaluating the effects of childcare policies on children s cognitive development and maternal labor supply to explore the role of childcare policies in the development of early cognitive skills this paper jointly estimates a cognitive achievement production function and a dynamic discrete choice model of maternal labor supply and childcare decisions using counter actuals from the model i investigate how the designs of two childcare programs head start and childcare subsidies affect the formation of cognitive skills through maternal work and childcare decisions the results suggest large impacts on cognitive skills from expanding head start to current noneligibles and negligible impacts of subsidies on cognitive skills of current eligibles abstract from author

an equilibrium queuing model of bribery it is sometimes argued that bribery is inefficient because bureaucrats may cause delays for attracting more bribes this hypothesis is examined in the context of a queue where customers having different values of time are ranked by their bribe payments to the queue s server the nash equilibrium strategies of the customers are derived it is shown that the server is unlikely to slow down the allocation process when bribery is allowed the model does not have stringent informational requirements and the equilibrium outcome minimizes the average value of time costs of the queue it also suggests a useful auctioning procedure

a structural decomposition analysis of the emissions embodied in trade abstract the aim of this study is to quantify the driving forces behind the growth of carbon dioxide emissions embodied in trade eet the world input output database is used to estimate eet in 40 countries during 1995 2007 after which a structural decomposition analysis is applied to avoid biases in the results we have used the input output tables in previous year s prices and chained the outcomes in many developed countries the growth of emissions embodied in imports is much higher than the growth of emissions embodied in exports a key reason for this finding is the change in the structure of trade both in intermediate and in final products emerging economies like the bric countries have increased their share in production and trade at the expense of developed countries producers and consumers in developed countries have shifted towards importing a larger share of products from emerging countries this is the distinguishing feature that led to an increase of emissions embodied in imports for developed countries and an increase of emissions embodied in exports for emerging countries these results suggest policy makers to monitor eet more carefully and take the effects of trade on emissions into consideration

trading off positive and negative service changes in childcare a choice experiment using a latent class modelling approach theoretically the choice of childcare mode should be influenced by the quality of the childcare attributes however such preference relations have been difficult to identify in past studies one

the characteristics model hedonic prices and the clientele effect in this paper the characteristics model of lancaster is reconsidered it is shown by example that equilibrium prices need not be linearly decomposable it does follow that equilibrium prices must be a convex function of characteristics however further it is shown that this fact holds independent of the form of firm competition e g perfect or monopolistic finally the predictions of the theory are discussed in the context of two empirical examples

carbon footprint taxes we analyze whether a carbon consumption tax is logistically feasible we consider a carbon footprint tax cft which would be modeled after a credit method value added tax the basis for the tax would be a product s carbon footprint which includes all of the emissions released during production of the good and its inputs as well as any greenhouse gases latent in the product our analysis suggests that a pure cft requiring the calculation of the carbon footprint of every individual product may be prohibitively costly however a hybrid cft seems economically feasible the hybrid cft would give firms the option to either calculate the carbon footprint of their outputs and have their products taxed based on those footprints or use product class specific default carbon footprints as the tax basis thereby saving on calculation costs because the cft would be levied on all goods consumed domestically the cft would keep domestic firms on an even footing with those producing in countries without active climate policy protecting competitiveness and reducing leakage

statistical analysis of under and overinvoicing of imports abstract this paper uses trading partners data comparisons at three different levels of refinement to verify whether the elimination of an over valued exchange rate which itself has been claimed to lead to over valuation of imports affects the valuation practice of importers the advantages of correcting the import and export data of trading partners for eventual discrepancies in the volume of these trade flows is highlighted data for turkey pakistan and the netherlands are used turkey devalued in 1970 while pakistan devalued in 1972 data availability and the large discrepancy between reported exports to and imports from the netherlands suggested the analysis of the data for this country

economic growth with endogenous corruption an empirical study the effect of corruption on the rate of economic growth for a panel of countries during 1984 2007 is investigated using recent improvements in dynamic panel data techniques to control for the endogeneity of corruption and investment corruption has a significant effect on the growth rate of real per capita income this effect is non linear

tariffs enforcement and customs evasion evidence from india we examine the effect of tariff policies on evasion of customs duties in the context of the trade reform in india of the 1990s by exploiting the variation in tariff rates across time and products we identify a robust positive elasticity of evasion with respect to tariffs a second contribution of the paper is to provide some evidence on the impact of enforcement while we cannot identify the direct impact of enforcement on evasion we can establish the extent to which enforcement related factors such as product characteristics that determine the ease of detection of evasion affect the evasion elasticity the results render support to the hypothesis that improvements in enforcement can reduce the responsiveness of evasion to tariffs

organized crime corruption and punishment we analyze an oligopoly model in which differentiated criminal organizations globally compete on criminal activities and engage in local corruption to avoid punishment when bribing costs are low that is badly paid and dishonest law enforcers work in a weak governance environment and the rents from criminal activity are sufficiently high we find that increasing policing and sanctions can generate higher crime rates indeed beyond a threshold further increases in intended expected punishment create incentives for organized crime to extend corruption rings and ensuing impunity results in a fall of actual expected punishment that yields more rather than less crime

the impact of corruption on entry strategy evidence from telecommunication projects in emerging economies with globalization and the growth in emerging economies multinational enterprises mnes now frequently confront challenges associated with corrupt governments already a growing body of research has demonstrated that corruption significantly reduces a countrys aggregate inflows of foreign direct investment through its effects on firm performance we move the analysis of corruption from aggregate financial flows toward managerial theory and practice by examining how firms adjust their strategy for entering foreign markets in corrupt environments and how different types of corruption affect firms choices building on institutional theory we predict that mnes will respond to pervasive and arbitrary corruption in a host country by selecting particular types of equity and nonequity modes of entry using data on 220 telecommunications development projects in 64 emerging economies we find that firms adapt to the pressures of corruption via short term contracting and entry into joint ventures we also find that the arbitrariness surrounding corrupt transactions has a significant impact on firms decisions in addition to the overall level of corruption in contrast to extant research we show that mnes use nonequity entry modes or partnering as an adaptive strategy to participate in markets despite the presence of corruption

taxpayer response to an increased probability of audit evidence from a controlled experiment in minnesota abstract in 1995 a group of 1724 randomly selected minnesota taxpayers was informed by letter that the returns they were about to file would be closely examined compared to a control group that did not receive this letter low and middle income taxpayers in the treatment group on average increased tax payments compared to the previous year which we interpret as indicating the presence of noncompliance the effect was much stronger for those with more opportunity to evade in fact the difference in differences is not statistically significant for those who do not have self employment or farm income and do not pay estimated tax surprisingly however the reported tax liability of the high income treatment group fell sharply relative to the control group

a note on competitive bribery games abstract within a competitive bribery game in which each player has incomplete information we show that there exists a unique nash equilibrium which is symmetric similar results hold for another bribery game form that prevails in the literature implications for corrupt practices in relation to economic development are also discussed

the simple economics of extortion evidence from trucking in aceh this paper tests whether the behavior of corrupt officials is consistent with standard industrial organization theory we designed a study in which surveyors accompanied indonesian truck drivers on 304 trips during which they observed over 6 000 illegal payments to police soldiers and weigh station attendants using plausibly exogenous changes in the number of checkpoints we show that market structure affects the level of illegal payments we further show that corrupt officials use complex pricing schemes including third degree price discrimination and a menu of two part tariffs our findings illustrate the importance of considering the market structure for bribes when designing anticorruption policy

integrity for hire an analysis of a widespread customs reform abstract can governments improve bureaucratic performance by hiring integrity from the private sector in the past 2 decades a number of developing countries have hired private firms to conduct preshipment inspections of imports generating independent data on the value and tariff classification of incoming shipments i find that countries implementing such inspection programs subsequently experience large increases in import duty collections by contrast the growth rate of other tax revenues does not change appreciably additional evidence suggests that declines in falsification of import documentation are behind the import duty improvements the programs also lead to declines in undervaluation and misreporting of goods classifications historically this hired integrity appears to have been cost effective with improvements in import duty collections in the first 5 years of a typical inspection program amounting to 2 6 times the program s costs

input output analysis of co2 emissions embodied in trade and the driving forces processing and normal exports in recent years energy related co2 emissions embodied in international trade and the driving forces have been widely studied by researchers using the environmental input output framework most previous studies however do not differentiate different input structures in manufacturing processing exports and normal exports using china as an example this paper exemplifies how implications of results obtained using different export assumptions differ the study posits that the utilization of traditional i o model results in an overestimation of emissions embodied in processing exports and an underestimation in normal exports the estimate of co2 emissions embodied in china s exports drops by 32 when the extended i o model is used the choice of export assumption has more impact on the decomposition results for processing exports the study further highlights that for a country with an export structure similar to china it is meaningful to look into the impact of export assumption in embodied emission studies

economic and environmental effects of a co2 tax in latin american countries abstract the environmental extension from the leontief pricing model is used to simulate the economic and environmental effects of setting different co2 tax rates in three latin american countries brazil mexico and chile it considers a regulatory scenario in which the tax is applied only to emissions from the electricity sector and another scenario in which tax is applied to emissions from all economic sectors the results show that the effects of a co2 tax on sectoral prices and emissions in each country are very different for the same tax rate but these effects are similar in each country when comparing both regulatory scenarios this is explained by the composition carbonization of the electric generation and energy matrix of each of the countries which significantly affects the effectiveness of co2 taxes to reduce emissions in addition the economic sectors most affected by the different regulatory scenarios are similar in all countries

corruption and development a review of issues in this paper we start with a discussion of some of the different denotations of the problem of corruption we then consider the ways in which the damaging consequences of corruption operate in a developing economy while not ignoring its possible redeeming features in some cases we pursue the question of why corruption is perceptibly so different in different societies and also persistent finally we examine the feasible policy issues that arise in this context

the effects of direct trade within china on regional and national co2 emissions curbing national carbon emissions and clarifying regional carbon reduction responsibility are two challenges faced by china both of which are influenced by interregional trade to exclude the influence of trade balance this paper proposes a methodology to parcel the pollution haven hypothesis into a multi regional input output model applies it to a longer time gap which is made up of two representative periods of chinese economy 1997 2002 and 2002 2007 and clarifies the provincial and sectoral contributions to national emissions we find that 1 embodied co2 emissions first remain relatively stable and then increase sharply for the two periods and the changing trends are mainly determined by the decreasing carbon intensity and the expanding trade scale respectively 2 with the secondary industry as the main contributor regional carbon spillover is mainly concentrated in the coastal provinces but it contributes to an increase of co2 emissions in the central and western regions 3 the coastal and inland provinces contribute to the increase of national carbon emissions through interregional imports and exports respectively but the pollution haven hypothesis is not obvious and is only observed in 2002

bribery in health care in uganda i examine the role of household permanent income in determining who bribes and how much they bribe in health care in uganda i find that rich patients are more likely than other patients to bribe in public health care doubling household expenditure increases the bribery probability by 1 2 percentage points compared to a bribery rate of 17 the income elasticity of the bribe amount is about 0 37 bribes in the ugandan public sector appear to be fees for service extorted from the richer patients amongst those exempted by government policy from paying the official fees bribes in the private sector appear to be flat rate fees paid by patients who do not pay official fees i do not find evidence that the public health care sector is able to price discriminate less effectively than public institutions with less competition from the private sector

tax rates and tax evasion evidence from missing imports in china tax evasion by its very nature is difficult to observe we quantify the effects of tax rates on tax evasion by examining the relationship in china between the tariff schedule and the evasion gap which we define as the difference between hong kong s reported exports to china at the product level and china s reported imports from hong kong our results imply that a one percentage point increase in the tax rate is associated with a 3 percent increase in evasion furthermore the evasion gap is negatively correlated with tax rates on closely related products suggesting that evasion takes place partly through misclassification of imports from higher taxed categories to lower taxed ones in addition to underreporting the value of imports

driving factors of carbon embodied in china s provincial exports in this paper we use the multi regional input output model mrio and logarithm mean divisia index approach to analyze the changes in china s carbon embodied in exports cee at the national and provincial levels the results indicate that the total cee and the cee of 17 provinces including all eastern provinces decreased between 2007 and 2010 the largest decrease in total cee is caused by an input structural effect which decreases the cee of most of the provinces the technique effect arising from changes in provincial carbon intensities causes the second largest decrease in total cee and it effectively reduces the cee of most of the provinces especially the eastern provinces changes in the export composition of most of the provinces also decrease the provincial cee a change in the provincial distribution of exports decreases the cee in 11 provinces on the one hand and increases the cee in 19 provinces on the other hand a change in export volume increases the cee of each province and the whole country but its total effect is evidently lower than the input structural effect and the technique effect c 2015 elsevier b v all rights reserved

the demand for child care quality an hedonic price theory approach i use an hedonic price theory approach to estimate the demand for child care quality two complementary surveys the national child care survey 1990 nccs and the profile of child care settings study pcs allow me to derive an implicit price for staff to child ratio i use this price as an explanatory variable in a demand equation for this quality attribute direct purchase of service contracts or voucher programs by subsidizing only those providers that satisfy state regulatory requirements effectively lower the implicit price of regulated attributes such as staff to child ratio results of this study suggest that such tied subsidies have almost no influence on the demand for child care quality

estimating the demand for the characteristics of housing a hstract estimates of the demand for the characteristics contained in a differentiated product such as housing can be based on hedonic regressions however previous studies have not dealt with several potential problems in such estimation a more appropriate framework for the estimation is provided in this paper also data from a number of cities are used to eliminate the identification problem and the endogeneity of the marginal prices derived from non linear hedonic equations is considered in the estimation the results on own and cross price elasticities expenditure elasticities and the effects of socio economic vafiables accord well with expectations

ghost house busters the electoral response to a large anti tax evasion program the incentives of political agents to enforce tax collection are key determinants of the levels of compliance we study the electoral response to the ghost buildings program a nationwide anti tax evasion policy in italy that used innovative monitoring technologies to target buildings hidden from tax authorities two million buildings were registered as a result of the program our difference in differences identification strategy exploits both variation across towns in the ex ante program scope to increase enforcement as well as administrative data on actual building registrations local incumbents experience an increase in their reelection likelihood as a consequence of the policy in addition these political returns are higher in areas with lower tax evasion tolerance and with higher speed of public good provision implying complementarity among enforcement policies the underlying tax culture and government efficiency

monitoring motivation and management the determinants of opportunistic behavior in a field experiment economic models of incentives in employment relationships are based on a specific theory of motivation employees are rational cheaters who anticipate the consequences of their actions and shirk when the marginal benefits exceed costs we investigate the rational cheater model by observing how experimentally induced variation in monitoring of telephone call center employees influences opportunism a significant fraction of employees behave as the rational cheater model predicts a substantial proportion of employees however do not respond to manipulations in the monitoring rate this heterogeneity is related to variation in employee assessments of their general treatment by the employer jel d2 j2 l2 l8 m12

corruption as a gamble abstract in the following model of corruption a simple game is set up whose players are a government official granting a permit conditional on a test and a candidate requesting the permit the game is solved under different assumptions as to the information sets of the players perfect information asymmetric information and imperfect information on both sides in the latter case after characterizing the solution and presenting some important comparative statics results the paper moves on to show the emergence of multiple equilibria in corruption illustrating the interaction of corruption at different hierarchical levels of an administration

price quality and income in child care choice recent legislation may substantially expand federal assistance in paying for child care this paper examines the potential effects of three aspects of federal assistance reducing child care price through vouchers or grants to providers improving its quality through incentives or regulation and increasing family income through tax credits on the child care choices employed mothers make the data come from the 1985 wave of the national longitudinal survey of youth ohio state university both multinomial and universal logit models are used the results suggest that price is a critical variable in child care choice the higher the price the lower the probability a mode of care will be chosen parents do not consistently select high quality care although overall quality improvements may increase the use of family day care mothers who earn more per hour and families who have higher incomes other than the mother s earnings are more likely to select center care over other modes consequently subsidizing child care expenditures directly through vouchers and reduced fees or increasing other family income through tax credits consistently increases the use of center based programs all else equal

estimating the performance effects of business groups in emerging markets business groups confederations of legally independent firms are ubiquitous in emerging economies yet very little is known about their effects on the performance of affiliated firms we conceive of business groups as responses to market failures and high transaction costs in doing so we develop hypotheses about the effects of group affiliation on firm profitability affiliation could either boost or depress firm profitability and members of a group are likely to earn rates of return similar to other members of the same group using a unique data set compiled largely from local sources we test for these effects in 14 emerging markets argentina brazil chile india indonesia israel mexico peru the philippines south africa south korea taiwan thailand and turkey we find evidence that business groups indeed affect the broad patterns of economic performance in 12 of the markets we examine group affiliation appears to have as profound an effect on profitability as does industry membership yet strategy scholars have a much clearer grasp of industries than of groups moreover membership in a group raises the profitability of the average group member in several of the markets we examine this runs contrary to the wisdom conventional in advanced economies that unrelated diversification depresses profitability overall our findings suggest that the roots of sustained differences in profitability may vary across institutional contexts conclusions drawn in one context may well not apply to another copyright 2001 john wiley sons ltd

childcare quality and pricing evidence from wisconsin childcare prices vary dramatically both between and within states we identify the effects of demographic and provider characteristics on childcare pricing but focus primarily on whether unique government provided information on childcare quality has an effect on pricing using provider level observations across three adjacent counties in southern wisconsin we find that this government provided information on childcare quality does not significantly affect pricing recognizing that information asymmetry may be the root cause of the insignificant relationship we test the relationship further within multiple subsamples and with alternative models only the lowest quality childcare providers are significantly associated with lower prices in areas that we hypothesize suffer from greater information asymmetry

the market for public office why the indian state is not better at development abstract how and why officials are transferred from one post to another can in india does have far reaching consequences for the effectiveness of public service organizations such as irrigation agriculture forestry and soil conservation departments the transfer mechanism used in many departments of indian states involves a kind of internal labor market a truer market than in the way that term is often used by labor market economists it allows pressures for corrupt behavior to bear down on the incumbents of certain posts and itself amplifies those pressures frequently the pressures on officials to be corrupt cause them to behave in ways contrary to the ostensible objectives of their departments why is the indian state not better at promoting development to an important degree because of the corruption transfer mechanism and its effects on bureaucratic initiatives

a theory of misgovernance this paper tries to explain why government bureaucracies are often associated with red tape corruption and lack of incentives the paper identifies two specific ingredients that together can provide an explanation the fact that governments often act precisely in situations where markets fail and the presence of agency problems within the government we show that these problems are exacerbated at low levels of development and in bureaucracies dealing with poor people we also argue that we need to posit the existence of a welfare oriented constituency within the government in order to explain red tape and corruption

how corruption may corrupt abstract the incidence of corruption appears to vary strongly across societies even for comparable activities the model highlights how the profitability of bureaucratic corruption may be related to its frequency and points toward a few mechanisms that can be used in explaining the stylized facts of varying incidence of corruption there might be multiple self fulfilling equilibria levels of corruption even when both supply and demand of corrupt acts are considered

simultaneity in the market for housing characteristics abstract the nature of simultaneity in the markets for housing characteristics is examined simultaneity is found to arise in the implicit markets for individual characteristics because of the presence of nonlinearity in the market hedonic price function for housing however this simultaneity is not the kind discussed by s rosen j political econ 82 34 55 1974 between firm supplies and household demands as a result the rosen suggestion of identifying demand with firm supply shifters is inappropriate among the alternative approaches to identification the most desirable involve use of data over two or more markets in which residence for a given household is exogenous to the choice of housing

the impact of border carbon adjustments under alternative producer responses border carbon adjustments bcas have been proposed to address leakage and competitiveness concerns in traditional assessments firms regard bcas as output taxes rather than implicit emissions taxes using a stylized energy economic model we analyze the impact of bcas for alternative producer responses when firms view bcas as an implicit emissions tax the outcome depends on whether or not firms can differentiate production across destination markets if firms are able to produce a lowemissions variety for regions imposing bcas results are similar to when firms regard bcas as an output tax if firms produce a single variety for all markets bcas result in larger leakage reductions than in standard approaches we also find that bcas are less effective at addressing competitive concerns in scenarios that result in larger leakage reductions jel codes f18 q54

local capture evidence from a central government transfer program in uganda according to official statistics 20 percent of uganda s total public expenditure was spent on education in the mid 1990s most of it on primary education one of the large public programs was a capitation grant to cover schools nonwage expenditures using panel data from a unique survey of primary schools we assess the extent to which the grant actually reached the intended end user schools the survey data reveal that during 1991 1995 the schools on average received only 13 percent of the grants most schools received nothing the bulk of the school grant was captured by local officials and politicians the data also reveal considerable variation in grants received across schools suggesting that rather than being passive recipients of flows from the government schools use their bargaining power to secure greater shares of funding we find that schools in better off communities managed to claim a higher share of their entitlements as a result actual education spending in contrast to budget allocations is regressive similar surveys in other african countries confirm that uganda is not a special case

the effects of border crossing frequencies associated with carbon footprints on border carbon adjustments abstract the fragmentation of production across national boundaries has become an important feature of the world economy this present paper adopts the viewpoint that not only the size and composition of carbon footprints are relevant but also the border crossing frequency associated with these carbon footprints which is defined as the number of borders a product crosses in a supply chain this process will affect the spatial accounting of the carbon emissions produced to support the economic activity the calculation of border crossing frequencies of carbon footprint is accomplished by decomposing the leontief inverse matrix derived from the world input output database we find that the aggregated average border crossing frequencies of carbon footprints show an increasing tendency which is influenced by the economic crisis obviously the policy application focuses on the united states which we assume to levy carbon tariffs on foreign emissions embodied in imports we find that the indirect carbon tariff on emissions embodied in international trade take a significant share the border carbon adjustments are mainly targeted at emissions generated in china which also pays the greatest share of the tariff burden the implication of carbon tariffs faces the problem of multiple taxation

technology adjusted national carbon accounting for a greener trade pattern abstract crediting green trade patterns is essential for effective national carbon accounting neither production nor consumption based accounting satisfies this condition thus kander et al kander a jiborn m moran d d wiedmann t o 2015 national greenhouse gas accounting for effective climate policy on international trade nature climate chang 5 5 431 435 proposed a technology adjusted consumption based carbon accounting method that focuses on interregional differences in sectoral carbon intensity the intermediate input structure is also closely related to the production technology level therefore this study recommends a new technology adjusted consumption based carbon accounting framework that distinguishes between direct and cumulative exports forward and backward industrial linkages and different trade patterns based on the consideration that production based accounting will remain the core indicator for regional emissions in the near future this study proposes a technology adjusted production based accounting framework the empirical study is based on the world input output database and the results indicate that technology adjusted carbon accounting will redraw the global emissions map if the intermediate input linkage is considered the technology adjusted carbon accounting method satisfies the conditions of additivity sensitivity monotonicity and scale invariance through proper selection of the world average emissions multipliers

the demand for quality in child care we estimate a model of demand for quality related attributes of child care group size staff child ratio and provider training the model is estimated jointly with equations for mode expenditure on and hours of care and the mother s labor supply the results show that a lower price of child care in a particular mode leads to substitution toward that mode and an increase in the use of paid child care a decrease in the price of care causes an increase in hours of care demanded and a decrease in the demand for qualityrelated attributes income effects on demand for quality are small

corruption and optimal law enforcement abstract we analyze corruption in law enforcement the payment of bribes to enforcement agents threats to frame innocent individuals in order to extort money from them and the actual framing of innocent individuals bribery extortion and framing reduce deterrence and are thus worth discouraging optimal penalties for bribery and framing are maximal but surprisingly extortion should not be sanctioned the state may also combat corruption by paying rewards to enforcement agents for reporting violations such rewards can partially or completely mitigate the problem of bribery but they encourage framing the optimal reward may be relatively low to discourage extortion and framing or relatively high to discourage bribery

costs of distrust the virtuous cycle of tax compliance in jordan tax compliance has been extensively researched yet the classic question why do people pay taxes remains unanswered in jordan tax evasion is widespread the state and citizens have been trapped in a continuous hide and seek game which has taken the form of a virtuous cycle this paper investigates tax evasion along with the most noticeable features of the jordanian tax system it also highlights how the virtuous cycle of tax evasion has been established and what could possibly be a way out of it we argue that sociocultural values are the most prominent cause for tax evasion that is the procedures of state formation and functionality in jordan have created mutual distrust between the state and its citizens having been raised in a community characterized by deep distrust tax evasion is no longer considered immoral by substantial numbers of the jordanian population we argue that successive governments need to create a high trust based culture and formulate strategies that serve to acquire normative ethical values in order to enhance voluntary compliance the way to accomplish this necessity is through enforcing the state s transparency and accountability the taxation system needs to concentrate on income tax rather than raise tax rates on essential commodities to collect substantial tax revenues thus further reform of the taxation system along with a reduction in tax incentives need to be considered moreover lowering the exceptionally high personal income tax threshold would bring jordan in line with its peers expand the base and introduce more progressivity there would also be a scope to introduce a minimum tax based on sales as a tool to address tax evasion

measuring corruption in china an expenditure based approach using household survey data most existing micro level empirical analyses of corruption rely on administrative records special purpose surveys or field experiments which can be difficult or very costly to obtain in some situations in this paper we apply an expenditure based method of quantifying the extent of corruption in a particular country using household survey data this method utilizes discrepancies between consumption and reported income to measure corruption another contribution of this paper is that it provides the first objective estimate of the extent of corruption in china we use a quadratic clothing expenditure function to estimate the extent of corruption in china in 2002

building state capacity evidence from biometric smartcards in india anti poverty programs in developing countries are often dicult to implement in particular many governments lack the capacity to deliver payments securely to targeted beneciaries we evaluate the impact of biometrically authenticated payments infrastructure smartcards on beneciaries of employment nregs and pension ssp programs in the indian state of andhra pradesh using a large scale experiment that randomized the rollout of smartcards over 158 subdistricts and 19 million people we nd that while incompletely implemented the new system delivered a faster more predictable and less corrupt nregs payments process without adversely aecting program access for each of these outcomes treatment group distributions rst order stochastically dominated those of the control group the investment was cost eective as time savings to nregs beneciaries alone were equal to the cost of the intervention and there was also a signicant reduction in the leakage of funds between the government and beneciaries in both nregs and ssp programs beneciaries overwhelmingly preferred the new system for both programs overall our results suggest that investing in secure payments infrastructure can signicantly enhance state capacity to implement welfare programs in developing countries

tariff rates tariff revenue and tariff reform some new facts this article compares the statutory and valorem tariff rates official rates with the ratio of tariff revenues to import values collected rates for jamaica kenya and pakistan it identifies four general features of the tariff codes considers whether these features apply to all developing countries and discusses four implications of these features for tariff reform first the collected rate for any given item in the tariff code is only weakly related to the official rate for the item second the variation of collected rates on average increase much less than the official rates fourth the relation between official rates and collected rates is nonlinear because the slope is lower at higher levels of the official rate

taxes and bribery the role of wage incentives this paper presents a simple model to evaluate alternative payment schemes for tax inspectors in the presence of corruption we consider problems of both moral hazard which arises because taking bribes cannot be observed without costly monitoring and adverse selection since not all potential tax inspectors can be identified as being honest or dishonest we identify three wage regimes first one could pay the same wage that a tax inspector could earn elsewhere his reservation wage second one could pay a wage which solves the moral hazard problem i e deters bribery this we call an efficiency wage by analogy with recent models examined i n macro economics third the government could pay a wage below the reservation wage at which only the dishonest become tax inspectors the capitulation wage we make precise the conditions under which each yields the greatest amount o f tax revenues net o f administrative costs many countries in the developing world are undergoing structural adjustment programmes which require fundamental fiscal changes outside agencies advise restoration of budget balance a task which involves expenditure cuts and tax increases the treatment of public employee pay scales often poses a particular dilemma i n this process wages and salaries are a significant component of government expenditures and one important question concerns the extent to which wages rather than employment cuts should be used to save money there is sometimes a reluctance to advocate wage cuts stemming in part from a feeling that this might impair the performance of the public sector hence tanzi 1990 argues that a policy of wage cutting is likely to increase the inefficiency of public sector employees especially at a time when the public sector is expected to play a larger role in restructuring the economy p 16 in the context of tax collection the issue is particularly pressing given the need to raise more tax revenues a reduction in efficiency in this branch of the government i s likely t o mean that fewer returns are processed and when individuals living standards are squeezed their incentive to accept bribes in lieu o f collecting taxes i s increased o n this count i t i s even sometimes suggested that wages of tax inspectors should be increased to aid the effort to the comments of henry bienen john hey and two anonymous referees have been helpful in revising this paper the authors are also grateful t o the john m olin program for the study o f economic organization and public policy at princeton university and the pew charitable trusts for financial support mclaren also acknowledges support from the international finance section of princeton university none of the above should be implicated in any way see for example goode 1984 chapter 1 3 and gould and amaro reyes 1983

corruption and the political economy of resource based development a comparison of asia and sub saharan africa we model how the supply and demand for bribes affects resource use by an economy and the reinvestment of resource rents in other assets this requires adjusting the world bank s measure adjusted net savings for any rent dissipation due to corruption the impacts of corruption on long run changes and periodic growth in the adjusted net savings rate are estimated across african and asian economies from 1970 to 2003 corruption rather than resource dependency per se affects negatively the ability of african countries to reinvest resource rents in the short term but for asian countries corruption is less important than point resources corruption influences long run growth in adjusted net savings rates in all countries and is also the pathway through which this growth is affected by patterns of resource use trade and abundance

quantifying the global and distributional aspects of american household carbon footprint abstract analysis of household consumption and its environmental impact remains one of the most important topics in sustainability research nevertheless much past and recent work has focused on domestic national averages neglecting both the growing importance of international trade on household carbon footprint and the variation between households of different income levels and demographics using consumer expenditure surveys and multi country life cycle assessment techniques this paper analyzes the global and distributional aspects of american household carbon footprint we find that due to recently increased international trade 30 of total us household co 2 impact in 2004 occurred outside the us further households vary considerably in their co 2 responsibilities at least a factor of ten difference exists between low and high impact households with total household income and expenditure being the best predictors of both domestic and international portions of the total co 2 impact the global location of emissions which cannot be calculated using standard input output analysis and the variation of household impacts with income have important ramifications for polices designed to lower consumer impacts on climate change such as carbon taxes the effectiveness and fairness of such policies hinges on a proper understanding of how income distributions rebound effects and international trade affect them

fiscal corruption a vice or a virtue abstract recent literature on tax administration in poor countries suggests there are virtues in allowing fiscal corruption by strengthening the bargaining power of corrupt tax officers it is argued that tax evasion may be reduced and tax revenues increased but does such an intriguing paradox justify policies that stimulate corruption our answer is no and this note puts forward three arguments to support our view first while an increase in corruption may raise revenues in the short run in general the opposite will be the case in the longer run second the instrumental value of reducing corruption goes far beyond its effects on tax evasion and tax revenues accepting corruption as a policy strategy to increase tax revenues may undermine values of democracy and good governance third eliminating corruption should be considered an end in itself thus contrary to recent suggestions on incentive reforms in tax administration the reasonable starting point for policy debates in this area should still be that an increase in fiscal corruption is not an appropriate instrument for raising tax revenues sustained development cannot occur in an institutional framework that fosters corruption and extra legal tax enforcement

impact of third party contract enforcement in agricultural markets a field experiment in vietnam we study the effect of alleviating the information asymmetry regarding product quality that is widespread in contracts between agricultural producers and buyers in developing countries opportunistic buyers may underreport quality levels to farmers to reduce the price that they have to pay in response farmers may curb investment thereby negatively affecting farm productivity in an experiment we entitle randomly selected smallholder dairy farmers in vietnam who are contracted by a large company to independently verify milk testing results results indicate that treatment farmers use 12 more inputs and they also increase their output significantly some wider research and policy implications are discussed

cleaning house the impact of information technology monitoring on employee theft and productivity this paper examines how firm investments in technology based employee monitoring impact both misconduct and productivity we use unique and detailed theft and sales data from 392 restaurant locations from five firms that adopt a theft monitoring information technology it product we use difference in differences models with staggered adoption dates to estimate the treatment effect of it monitoring on theft and productivity we find significant treatment effects in reduced theft and improved productivity that appear to be primarily driven by changed worker behavior rather than worker turnover we examine four mechanisms that may drive this productivity result economic and cognitive multitasking fairness based motivation and perceived increases of general oversight the observed productivity results represent substantial financial benefits to both firms and the legitimate tip based earnings of workers our results suggest that employee misconduct is not solely a function of individual differences in ethics or morality but can also be influenced by managerial policies that can benefit both firms and employees this paper was accepted by serguei netessine operations management

hedonic prices and implicit markets estimating demand and supply functions for differentiated products in choosing the level of quality to purchase the buyer of a differentiated product also chooses a point on the marginal price schedule for that product hence in general the demand functions for product characteristics cannot be consistently estimated by ordinary least squares market equilibrium results in a matching of characteristics of demanders and suppliers this matching restricts the use of buyer and seller characteristics as instruments when estimating demand and supply functions for product characteristics the paper develops these issues a stochastic structure for hedonic equilibrium models is then proposed identification results are presented and estimation procedures are outlined

mutual supervision in preshipment inspection programs abstract preshipment inspection psi programmes are implemented in many developing countries to assist governments in the collection of revenue at their borders these programs consist of the delegation of the inspection of imports to a private firm to study these psi programmes we develop a hierarchical agency model in which the government authority can rely on two supervisors namely the private inspection firm and the customs administration to control importers declarations the government s optimal contract is fully characterized we devote some attention to the inspection policy and its comparative statics properties in particular we identify the situations in which psi programmes are revenue enhancing we also discuss the reconciliation policy i e what to do in case of conflicting inspection reports by the inspection firm and the customs administration in the optimal mechanism mutual supervision between the inspection firm and the customs administration is used to provide adequate incentives to all parties