revealed social preferences of dutch political parties we measure the redistributive preferences of dutch political parties using unique detailed information from their election proposals by employing the inverse optimal tax method we calculate the political weights across the income distribution for each political party we find that all dutch political parties give a higher political weight to middle incomes than to the poor moreover the political weights of the rich are close to zero furthermore we detect a strong political status quo bias as the political weights of all political parties hardly deviate from the weights implied by the pre existing tax system we argue that political economy considerations are key in understanding these results

the varying impacts of agricultural support programs on u s farm household consumption farm households are economic agents whose income is derived from farm off farm and government sources this article uses farm level data from the agricultural resource management survey arms and recent advances in the econometric theory of dynamic pseudo panels to show that farm households consume various sources of income differently at the margin particular attention is given to a specific type of lump sum government transfer payment intended to be decoupled from independent of farm production decisions the results suggest that relatively decoupled government subsidies have a greater marginal effect on farm household consumption than subsidies that are tied to market conditions farm households often receive income from off farm employment and government support payments in addition to farm production revenues if income is fungible then marginal consumption should not vary by income source however carriker et al 1993 show that farm household consumption does vary at the margin by income source they find that off farm income and income from government subsidies are consumed at a higher marginal rate than income from farm production revenues if farm household consumption varies at the margin by income source different types of government payments may affect consumption differently closely following carriker et al 1993 this analysis further disaggregates sources of farm household income and compares how different types of government payments affect farm household consumption it is shown that government payments that are relatively decoupled from farm production decisions are consumed at a much higher marginal rate than government payments that

do decoupled payments affect investment financing constraints evidence from irish agriculture abstract this paper empirically tests whether decoupled subsidies decrease investment financing constraints faced by farms using a panel dataset from ireland over the period 2005 2010 we test whether the cap decoupled subsidy payments reduce credit constraints by altering the risk profile of farm earnings we test for financing constraints in a neoclassical q model using investment cash flow sensitivities our econometric methodology controls for censoring heterogeneity and endogeneity we find that decoupled subsidies do reduce credit constraints the effect is greater for farms that face higher constraints dairy farmers and younger farms this evidence suggests that over and above the effect on production indicated in previous research decoupling affects farm investment through financial channels

nonpecuniary benefits to farming implications for supply response to decoupled payments we develop a household model wherein farmers allocate labor to maximize utility from leisure consumption and nonpecuniary benefits from farming the model shows that farmers with decreasing marginal utility of income respond to higher decoupled payments by decreasing off farm labor and increasing farm labor resulting in greater agricultural output we then estimate the difference between farm and off farm returns to labor using data from three nationally representative farm household surveys the finding of a large on farm off farm wage differential provides compelling evidence of substantial nonpecuniary benefits from farming

estimating economies of scale in higher education abstract if colleges and universities periodically operate at unexpected enrollment levels measured costs may reflect short run rather than long run minimum average costs for different levels of output if there is a systematic relationship between operating at disequilibrium and institutional size cross sectional estimates of the degree and level of scale economies may be biased using data from 1987 88 we assess the importance of the equilibrium assumption for estimates of scale economies in higher education

individual versus joint taxation in models with household production in a recent paper piggott and whalley 1996 challenge the conventional wisdom that says that the individual rather than the household should be the unit of taxation and argue instead for joint taxation their point of departure is a point well taken the literature on which this wisdom is based in particular boskin and sheshinski 1983 ignores the existence of household production the general argument is a nice one in the theory of the second best in the absence of taxation of market wage income the marginal rates of technical substitution between primary and secondary labor in market and in household production would be equal to each other and the marginal rate of substitution between the market and household good would be equal to the marginal rate of transformation between them thus achieving pareto efficiency introduction of income taxation leads to a distortion of the relation between the marginal rate of substitution and the marginal rate of transformation which is the focus of concern in the literature 2 and given the differing econo

tax planning of married couples and intra household income inequality abstract this paper examines tax planning of married couples under separate taxation it shows that concerns about the intra household income distribution prevent couples from minimizing tax payments the empirical analysis exploits a specific feature of the german tax system which allows married couples to save taxes by deviating from the default symmetric payroll tax treatment and assigning favorable tax treatment to the primary earner and unfavorable tax treatment to the secondary earner based on a representative random sample of individual tax files we find that a couple is less likely to choose the tax minimizing treatment if tax planning is associated with a larger decline of the net of tax income of the secondary earner this applies regardless of whether the husband or the wife is the main earner however couples where the wife is the main earner are generally more reluctant to assign the more favorable tax treatment to the wife

pigou meets ramsey gender based taxation with non cooperative couples abstract this paper explores the implications of gender based income taxation in a non cooperative model of household behavior in a first step we show how gender based taxes can act as pigou taxes and correct the externality induced by a non cooperative household equilibrium we find that the first best pigou tax rules are solely determined by spouses relative marginal rates of substitution between the public household good and private consumption breaking down this general rule into the primitives of the model the spouse with a comparative advantage in home production should be taxed at a higher rate in a second step we embed our non cooperative framework in a standard second best planning problem in which taxes serve a revenue raising purpose in this case the optimal structure of differential taxation by gender is partly determined by a ramsey type inverse elasticity rule and partly by a pigouvian tax element we show that these two forces work in opposite directions in determining whether men or women should be taxed at a higher rate and that either one could be dominant depending on the revenue raising position of the government this result is robust to the introduction of two groups of households that differ in their mode of decision making which can be either cooperative or non cooperative

heterogeneity and the evaluation of efficiency the case of italian universities a random parameters stochastic frontier model is applied to italian data in order to evaluate the cost function and efficiency of higher education institutions the method yields useful information about inter institutional variation in cost structure and technical efficiency returns to scale and scope are evaluated for the typical university and it is found that these returns are almost ubiquitously decreasing a finding with clear policy implications

groundnut trade liberalization could the south help the south summary this paper analyzes policies affecting global groundnut products markets the new us groundnut policy is now a minor source of distortion in world markets where india and china stand out as the major distorters we analyze and quantify the effects of groundnut products trade liberalization on consumer welfare and producer income our analysis shows that african exporters would gain significantly from reductions in protection and subsidies in india and to a lesser extent china although china s exports of food quality groundnuts would expand dramatically net importing oecd countries would suffer from higher world prices the paper draws direct implications for the doha trade negotiations

assessing the influence of direct payments on the rental value of agricultural land economic theory suggests that coupled and decoupled direct payments have different impacts on agricultural rental values because of the different production responses associated with these payments this study investigates the impact of both coupled and decoupled eu cap direct payments on rental values in northern ireland using panel data taken from the farm business survey for the period from 1994 to 2002 theoretically agricultural land rents are a function of expected market returns and expected associated direct payments the unobservable nature of expected returns means that actual market returns must be used as a proxy for the former in the empirical specification as a consequence the problem of bias due to expectation error arises using a gmm technique to take account of this problem the results of this study show that the impact of cap direct payments on rental values depends on the type of payment and on the nature of the production characteristics of the associated agricultural commodity

acreage decisions under risk the case of corn and soybeans an acreage supply response model is developed under expected utility maximization the resulting framework is used to specify and estimate a system of risk responsive acreage equations for corn and soybeans in the united states particular attention is given to the truncation effects of government price supports on the distribution of corn and soybean prices also a wealth variable is included in the acreage equations the empirical results indicate that risk and wealth variables play an important role in cornsoybean acreage decisions the analysis also shows that cross commodity risk reduction is important in acreage allocation decisions

replacement of agricultural price supports by area payments in the european union and the effects on pesticide use this article determines the contribution of recent european union agricultural policy reforms on the use of pesticides our theoretical model extends the multioutput generalization of the lichtenberg zilberman damage control technology model developed by chambers and lichtenberg our empirical analysis uses farm level data for a sample of french farms results suggest that price effects on the use of pesticides are always more elastic than area payment effects this indicates that policy reforms consisting of a reduction in price supports in favor of area payments may reduce application of crop protection inputs such policy changes which represent a certain degree of decoupling took place under the 1992 common agricultural policy reforms

income taxation of couples spouses labor supplies and the gender wage gap abstract we study the taxation of couples when female wages do not reflect their true productivity we show that the expression for the marginal tax rates of the male spouses is the same as in a mirrleesian world where wages reflect true productivities marginal taxes for the female spouses are reduced because of a pigouvian correction consequently the wage discrimination pleads for a lower marginal tax on the female spouse furthermore the distortion of a couples tradeoff between male and female labor supply is the same as in a mirrleesian world without a gender wage gap it only depends on true productivities and not on wages in other words the tax system completely neutralizes the extra distortion introduced by the wedge between the female spouse s wage and her true productivity

optimal taxation of business and individual incomes abstract this paper applies the optimal taxation approach to two versions of fisher s consumption and investment model it then shows that eliminating the business or corporation income tax through full integration of this tax with the individual income tax is non optimal by both efficiency and equity standards in the case where business investment is financed completely by borrowing the business income tax should be assigned to the goal of raising revenue efficiently and the individual tax is associated only with the equity objective

the tax unit and household production comment in a recent paper published in this journal piggott and whalley 1996 challenge the conventional wisdom that taxing individuals rather than households is preferred from an efficiency point of view p 398 they argue that once household production is taken into account things are more complicated since tax design should also not distort the input of family members time in household production they support their view by providing computational results these results seem to demonstrate that welfare can indeed be enhanced if households are taxed as a unit and not as individuals this comment sets out to show however that their analysis contains some quite critical points in our opinion if piggott and whalley s approach is followed through to its end it only enforces the conventional view piggott and whalley work with an extended family labor supply model the extension concerns household production expressed by some function n there are two model variants with different degrees of complexity in the first variant a representative household is considered and producer prices are held constant the model serves to demonstrate piggott and whalley s basic line of argumentation within a simple framework the second variant extends the first one in several respects its functional specification is more complex and it is a general equilibrium model with two household types the model is parameterized using australian tax rates and data it is shown that aggregate welfare gains can occur under well designed income tax reforms the reforms are such that the individual tax base is replaced with a household tax base additionally average and marginal tax rates are proportionally adjusted to preserve revenue

multiproduct monopoly regulation and firm costs regulation of public utiilties has traditionally been justified on the grounds that firm long run average costs fall with increased output in these industries for this reason it has been argued that cost efficiency dictates that a single firm supply the product ideally regulation of public utilities prevents monopolistic pricing while still permitting the most cost efficient industrial structure a large amount of theoretical and applied research has shown however that regulation in these industries generally does not guarantee that regulated firm costs are held at the lowest possible level for a given amount of output it seems then that regulation results in a tradeoff between cost savings from efficient industrial organization and cost inefficiencies generically known as x inefficiencies in this paper a new dimension of this tradeoff is examined specifically the paper explores whether cost efficiencies that are thought to characterize multiproduct public utilities are offset by increased costs permitted by a lack of inter energy competition in the next section a framework is constructed that is capable of identifying the cost structure for multiproduct firms and its relationship to efficient industrial structure section iii examines the sources of multiproduct economies and diseconomies for regulated multiproduct public utilities the cost structure is then estimated in section iv for single and multiproduct electricity and natural gas utilities section v considers the implications of the empirical analysis

optimal tax treatment of the family married couples abstract this paper examines the appropriate tax treatment of the family in a series of analytical models and numerical examples for a population of taxpaying couples which differ in earning capacity we drive the optimal tax rates for each potential earner these rates depend crucially upon own and cross labor supply elasticities and the joint distribution of wage rates our results suggest that the current system of income splitting in the united states under which husbands and wives face equal marginal tax rates is nonoptimal using results from recent econometric studies and allowing for a sensitivity analysis the optimal tax rates on secondary workers in the family are much lower than those on primary earners indeed our best estimate is that the secondary earner would face tax rates only one half as high as primary earners

household bargaining and the design of couples income taxation this paper studies the design of couples income taxation when consumption and labor supply decisions within the couple are made by maximizing a weighted sum of the spouses utilities bargaining weights are given but specific to each couple information structure and labor supply decisions follow the mirrleesian tradition however while the household s total consumption is publicly observable the consumption levels of the individual spouses are not observable with a utilitarian social welfare function we show that the expression for a spouses marginal income tax rate includes a pigouvian paternalistic and an incentive term the pigouvian term favors a marginal subsidy tax for the high weight low weight spouse whose labor supply otherwise tends to be too low high the sign and the magnitude of the incentive term depends on the weight structure across couples in some cases both terms have the same sign and imply a positive marginal tax for the low weight spouse who may be female and a negative one for the high weight spouse possibly the male this is at odds with the traditional boskin and sheshinski results our conclusions can easily be generalized to more egalitarian welfare functions finally we present numerical simulations based on a calibrated specification of our model the calculations confirm that the male spouse may well have the lower and possibly even negative marginal tax rate

for love or money the impact of income taxes on marriage higher sometimes lower than their combined single income tax obligations in this paper we explore the impact of the federal individual income tax as well as other economic and demograplhic variables on the marriage decisionis of individuals using longitudinal data from the panel study on income dynamics for the period 1968 92 we estimate a discrete time hazard model of the time to first marriage we find that the probability of marriage is significantly affected by a range of economic and demographic variables importantly we find that an increase in total income taxes paid by married versus single women has a negative effect on the likelihood of marriage and that the change in the marginal tax rate is also a significant determinant of marriage in some cases in contrast the tax effects are rarely significant in determining marriage probabilities among men although there are some differential responses by race in general the impacts of the income tax variables even when statistically significant are small

the effect of taxes on labour in efficiency wage models abstract this paper analyses the effects of labour taxation on wage and employment in a moral hazard efficiency wage model where effort is a continuous variable and workers are risk averse in the model examined ad valorem and specific taxes on labour do not have the same consequences on the real wage both taxes have a negative effect on employment but the imposition of a specific tax causes an increase in the net real wage including firms to raise the quality of their workers these results are compared with those obtained in other versions of the shirking efficiency wage model

institutions of higher education as multi product firms economies of scale and scope a multiple output cost function is estimated for institutions of higher education in the united states employing data for 1981 82 the authors flexible fixed cost quadratic function includes three outputs undergraduate teaching graduate teaching and research grants and one input price average faculty salaries results indicate the existence of scope economies at least up to a point for both public and private institutions of higher education ray economies of scale are more pronounced in the private sector and product specific economies of scale are observed only in the public sector for research and graduate teaching copyright 1989 by mit press

should economists be kicked upstairs academic folklore has it that faculty of the same discipline seldom meet together even for merriment and diversion but that the conversation turns to a conspiracy inevitably being wrought upon them by their university s administration 1 economists are not immune from such suspicions about the competence of academic administrators if economists were running academe they tend to believe a good dose of competition incentives marginal analysis and a realistic appreciation for opportunity costs would surely boost efficiency some economists do get to reallocate inputs on the basis of marginal revenue products and some have actually met a payroll a handful have worked their way into executive offices of fortune 500 firms others manage smaller consulting businesses the largest concentration of economists in complex leadership and management positions however is in academe itself these economists are the subject of this article the belief of colleagues in the humanities and natural sciences that economists would make better administrators than incumbents seems widespread the only exception to this faith in economists occurs it seems at institutions where an incumbent is already an economist the esteem in which economists are held as prospective university administrators by noneconomists however seems frequently based on false premises consider this quotation from a conversation in the faculty lunchroom economists know all about money and balancing and cutting a budget they can read a balance sheet and an income statement and know how to reconcile a checkbook these proponents of economists as good administrators have apparently never conducted empirical research to check for example the accuracy of their premises with a few economists spouses who have struggled to untangle a checkbook bordering on chaos or who have tried in vain to convince their economist partners that personal expenditures are also subject to a budget constraint seldom do the champions of economists as academic administrators argue that an understanding of economics provides an edge in recognizing trade offs tracing indirect effects of policy changes being alert to alternatives focusing on incremental benefits and costs ignoring past mis

on the taxation of trade within and between households abstract tax reform proposals affect individual welfares in ways which strongly depend on the nature of specialisation in household production and the pattern of trade within households variation in the degree of specialisation in domestic production across households strongly influences the impacts on individual tax burdens of a given tax reform the standard models of the economics literature cannot be used to analyse these issues because they ignore the two person nature of households and the existence of household production and trade this paper proposes a simple and tractable model to remedy this and uses it to analyse the impacts of the types of tax reform that have been the subject of recent policy debate

until taxes do us part tax penalties or bonuses and the marriage decision the tax regimes applied to couples in many countries including the us france and germany imply either a marriage penalty or a marriage bonus we study how they affect the decision to get married by considering two potential spouses who play a marriage proposal game at the end of the game they may get married live together without formal marriage or split up in this signaling game proposing or getting married is costly but can indicate strong love the striking property we obtain is that a marriage bonus may actually reduce the probability that a couple gets married if the bonus is sufficiently large the signaling mechanism breaks down and only a pooling equilibrium in which fewer couples get married remains similarly a marriage penalty may increase the marriage probability specifically the penalty may lead to a separating equilibrium with efficiency enhancing information transmission which was otherwise not possible our results also imply that marriage decisions in the laissez faire are not necessarily privately optimal in some cases a bonus or a penalty may effectively make the marriage decision more efficient it may increase the number of efficient marriages that otherwise may not be concluded

do business cycles affect state appropriations to higher education 1 introduction and motivation business cycles affect higher education in a number of important ways anecdotal evidence from college admissions officers and administrators as well as empirical evidence on the behavior of students and institutions of higher education suggest that enrollment in higher education is countercyclical for example betts and mcfarland 1995 recently showed that enrollments in community colleges are highly responsive to changes in local labor market conditions these authors found a 1 increase in the unemployment rate among all adults associated with a 4 increase in enrollment at community colleges in a large panel of community colleges across the united states leslie and ramey 1986 found a similar relationship between economic conditions and enrollment using data aggregated to the regional level this paper examines the relationship between state appropriations to higher education and state specific measures of business cycle conditions in order to better understand the effects of the business cycle on government funding of higher education 1 i further investigate the relationship between the business cycle and state government appropriations to higher education reported by betts and mcfarland 1995 and leslie and ramey 1986 both of these studies aggregated state and local government appropriations to higher education to the regional and national level while data aggregated to the regional and national levels are readily available decisions about government funding to higher education are made at the state and local levels and these decisions may be affected more by local economic conditions than by aggregate economic conditions if the timing of turning points in the business cycle varies across states then aggregating government appropriations data across states may obscure important statespecific phenomena most research has focused on the effects of economic conditions on demand for higher education one notable exception is leslie and ramey 1986 who examined the relationship between enrollment business cycles and state appropriations to higher education using regional appropriations and enrollment data and a national measure of business cycle conditions that study found a procyclical relationship between the nber coincident index and regional level government appropriations to higher education for one region the estimated elasticity of appropriations with respect to changes in the coincident index was three suggesting that a 1 change in the nber coincident index was associated with a 3 change in appropriations to higher education in that region this study also highlighted the complex relationship between state funding for higher education enrollment and business cycle conditions by documenting a statistically significant relationship between enrollment and state appropriations at the regional level although they found that the appropriations enrollment relationship weakened after 1977 betts and mcfarland 1995 also describe in an informal way using aggregate data a procyclical relationship between the business cycle and funding for higher education these authors report that aggregate state and local government appropriations to higher education fell in the years 1971 1975 1980 1982 as well as in several years in the early 1990s all of these years are either coincident with or immediately following years when the nber dating committee has identified a cyclical downturn in the economy the transmission mechanism linking business cycles and government appropriations to higher education during recessionary periods seems clear recessions reduce tax revenues state and local governments most of which operate under legally required balanced budget restrictions reduce appropriations to institutions of higher education as well as other types of expenditures in order to balance their budgets betts and mcfarland point out that these cyclical patterns of government support for higher education may place tremendous financial pressure on institutions of higher education during economic downturns because the cuts in government funding happen at the same time enrollments are increasing

income splitting among the self employed under individual taxation with progressive marginal tax rates households in which the distribution of income is unequal benefit from attributing income to the lower income household member self employment provides greater potential to split income in this way because of the absence of a third party reporting income using the canadian experience as a case study this paper develops a unique estimator of the incidence of illegal income splitting among self employed couples the results suggest that the incidence of income splitting among self employed men in canada is non trivial but no evidence is found that self employed women attribute income to their spouses jel classification h26 h21 h31 j22 le fractionnement du revenu chez les travailleurs autonomes dans un regime fiscal qui a des taux marginaux d imposition progressive des revenus les membres d un menage dans lequel la repartition des revenus n est pas g rien n indique que les femmes qui sont travailleurs autonomes attribuent une portion de leurs revenus a leur epoux

market structure in the production of economics ph d s a century ago economics began to develop as a separate and significant part of the curriculum in american colleges and universities along with increased popularity and enrollment came the need for faculty specifically trained in economics a number of american scholars turned to europe germany in particular for their training and brought the german ph d back as a model for graduate education the first economics ph d s earned in this country were awarded by harvard 1875 yale 1877 and johns hopkins 1878 1 these first ph d s were two year degrees by 1900 economists had generally upgraded the ph d to three years beyond the baccalaureate degree consisting of two years of course work and another year for the dissertation graduate classes were taught in seminar format with considerable interaction between professors and students as the production process matured dissertations became longer more sophisticated and more specialized i e they were no longer the mark of a cultured gentleman but the demonstration of a professional skill 15 11 the newly formed american economic association began to keep track of doctoral candidates in economics in 1904 6 in 1904 there were 8 institutions which reported having men working on ph d s and by 1928 that number had increased to 27 2 while the american economic association did not tabulate the output of completed ph d s the national research council has compiled a database containing the number of ph d s by institution by year since 1920 their survey of earned doctorates indicates that 22 ph d s were awarded in economics by 6 different universities in 1920 by 1992 that number had grown to 910 ph d s from 123 different institutions

flat income taxation redistribution and labour market performance a flat tax rate on labour income has gained popularity in european countries this article assesses the attractiveness of such a flat tax in achieving redistributive objectives with the smallest distortions to employment we do so by using a detailed applied general equilibrium model for the netherlands the model is empirically grounded in the data and encompasses decisions on hours worked labour force participation skill formation wage bargaining between unions and firms and a wide variety of institutional details the simulations suggest that the replacement of the current tax system in the netherlands by a flat rate will harm labour market performance if aggregate income inequality is contained only flat tax reforms that reduce redistribution will raise employment this finding bolsters the notions from optimal tax literature regarding the equity efficiency trade off and the superiority of nonlinear taxes to obtain redistributive goals in an efficient way

do decoupled payments affect u s crop area preliminary evidence from 1997 2000 the federal agriculture improvement and reform fair act of 1996 changed the manner in which the u s government provides direct payments to u s farmers under the fair act producers are eligible for fixed production flexibility contract pfc payments independent of the production of specific crops 1 with a few exceptions 2 supplemental market loss assistance mla payments authorized in subsequent legislation have been made to producers under similar terms i e a producer cannot increase or decrease mla payments by increasing or decreasing production the united states has declared that pfc

family specific investments and divorce with dynamically inconsistent households marital contracts and policy abstract this paper bridges two distinct areas of inquiry the economic theory of the family and behavioral research on time inconsistent preferences motivated by anecdotal and survey evidence suggesting that present bias plays a role in intra household decision making we propose a model in which hyperbolic discounting couples engage in home production activities thereby accumulating family specific capital over time at any given point in time the gains to continued marriage depend on the accumulated stock of this capital and a temporary random shock to match quality couples whose match quality deteriorates may choose to divorce and this is more likely to happen if past investments in family specific capital have been low we obtain three main sets of results first present biased preferences induce couples to underinvest in family specific capital and to overdivorce second sophisticated couples but not naive ones may choose to enter marriage on terms which make divorce more costly to obtain third the inefficiencies in the behavior of time inconsistent couples can be completely undone by means of earnings and divorce taxes that vary over the marital life cycle

optimum taxation in an efficiency wage model recently efficiency wage models of unemployment have received much attention in public economics for example johnson and layard 3 and pisauro 4 have used different versions of these models to examine how an ad valorem tax on labor i e a wage tax or a specific tax an employment tax affects the after tax wage and unemployment the rudimentary model proposed for expositive purpose by yellen 6 can also be used to examine the effects of different labor taxes agell and lundborg 1 specified a two sector general equilibrium model with fair wages and involuntary unemployment to study the effects of tax policy and unemployment benefits on employment resource allocation and tax incidence rather than involving in the debates of the effects of different tax policies the present paper will examine the optimal tax structure using the framework of such a model the primary question addressed is the following given that a wage tax may adversely affect after tax wages and employment while a commodity tax should not have such harmful effects how should the government impose taxes on labor and commodities to minimize the welfare loss of taxation it should be noted that the exercise here is not merely of academic interest it has important implications for policy making efficiency wage models were invented to better describe existence of involuntary unemployment with prevailing unemployment in most economy design of any tax policy should not neglect the influences of taxation on employment and resource allocation the model specified below differs from most efficiency wage models in two important respects first it explicitly introduces commodities demanded and labor supplied rather than wage income and work effort into an individual s utility function a two stage approach is used to show that this way of specifying utility provides the micro foundation of the shirking version of efficiency wage models especially the one used by pisauro 4 in which a worker chooses work effort to maximize expected utility second the one sector model used widely in the efficiency wage literature is extended to a two sector model by allowing for differences in the production methods used by the two sectors or industries 2 in addition to revealing how different tax policies

taxation and the household abstract previous analyses of demand systems and the welfare effects of taxing male and female labour supplies suppress the analysis of household resource allocation by assuming a household utility function to analyse the implications of assuming this is not the case we construct a simple but fairly general model of household resource allocation and use the properties of the equilibrium of this model to characterise the effects of tax policy on individual utilities as determined by the household resource allocation process

taxation and the earnings of husbands and wives evidence from sweden i examine the response of husbands and wives earnings to a tax reform in which husbands and wives tax rates changed independently allowing me to examine the effect of both spouses incentives on each spouse s behavior i analyze the large swedish tax reform of 1990 1991 and find that in response to a compensated fall in one spouse s tax rate each spouse s earnings rise i compare these results to those of simplified econometric models used in the typical setting in which independent variation in each spouse s tax rate is unavailable i find that standard econometric specifications may produce substantially biased estimates

the optimal income taxation of couples this paper analyzes the general nonlinear optimal income tax for couples a multidimensional screening problem each couple consists of a primary earner who always participates in the labor market but makes an hours of work choice and a secondary earner who chooses whether or not to work if second earner participation is a signal of the couple being better worse off we prove that optimal tax schemes display a positive tax subsidy on secondary earnings and that the tax subsidy on secondary earnings decreases with primary earnings and converges to zero asymptotically we present calibrated microsimulations for the united kingdom showing that decreasing tax rates on secondary earnings is quantitatively significant and consistent with actual income tax and transfer programs

the responses of youth to a cash transfer conditional on schooling a quasi experimental study summary we estimate the effect of cash transfers given to youth conditional on high school attendance on the labor supply decisions and academic performance of youth we exploit differences in the size of the total transfer received based on timing of birth to identify the causal effects of interest specifically individuals born late in a quarter receive a larger total transfer than comparable individuals born early in the following quarter we find that the transfer increases the labor market participation of youth and the number of months worked the estimated effect is larger for individuals from low income families the results suggest that some youths are borrowing constrained since we find no evidence of corresponding effects on academic performance alleviating the constraint appears only to affect consumption decisions and not human capital investment copyright 2011 john wiley sons ltd the provision of cash transfers to parents children and youth is an integral part of public policy in many organisation for economic co operation and development oecd countries however it is an open question whether cash transfers given to families is an effective way of increasing equality of opportunity as is the goal in this paper we investigate the relationship between adolescent outcomes and a publicly provided cash transfer to youth given conditional on high school attendance our contribution is twofold first we provide evidence on the effect of giving cash transfers to youth in a setting characterized by a high general transfer level and free access to education second using large administrative datasets covering the entire danish population combined with a quasi experimental setup we are able to identify the causal relation between cash transfers and adolescent behavior and outcomes

the effects of farm subsidies on farm exports in the united states we estimate the elasticity of u s farm exports to u s farm subsidies using a gravity model of state level farm exports to 100 major trading destinations for the period 1999 to 2011 our identification strategy exploits the within state variation that is free of endogeneity bias in the levels and trends of farm subsidies and farm exports we find that a 1 decrease in farm subsidies would reduce u s farm exports by 0 40 per annum this equivalently means that the complete abolishment of the farm subsidy program would reduce u s farm exports by approximately 15 3 billion per year importantly we document robust evidence that amber box subsidy programs such as counter cyclical payments and marketing loan gains have the strongest effect on farm exports while green box subsidy payments such as direct payments have negligible effects finally subsidy payments affect exports only in agricultural commodities not in livestock our subsidy elasticity estimates are statistically significant stable and economically meaningful and are vitally needed by u s and global policymakers in the face of critical domestic and international developments

subject mix and productivity in portuguese universities abstract recent changes in higher education especially associated with its massification have led to calls for more accountability and to an increasing need to evaluate universities performance however comparing universities with different subject mixes poses some significant problems in this article a linear mixed effect model methodology allowing for random effects at university level is used to measure the productivity of portuguese public universities taking into account their subject composition for a period of five years 1997 2001 the results show that subject mix is an important factor in explaining the variability in productivity between universities however even taking account of subject mix a lot of inefficiency is found in the system and a significant variability in productivity among universities exists

taxing women a macroeconomic analysis based on well known evidence on labor supply elasticities several authors have concluded that women should be taxed at lower rates than men we evaluate the quantitative implications and merits of this proposition relative to the current system of taxation setting a proportional tax rate on married females equal to 4 8 increases output and married female labor force participation by about 3 9 3 4 and 6 9 4 0 respectively gender based taxes improve welfare and are preferred by a majority of households nevertheless welfare gains are higher when the u s tax system is replaced by a proportional gender neutral income tax 2011 published by elsevier b v

on the optimal rate structure of an individual income tax what is the optimal rate structure of a personal income tax in the literature on optimal taxation this important question has been approached by introducing a linear income tax formula into a revised ramseyian model which takes into account both efficiency and equity objectives of taxation the assumption of a linear tax enables us to examine the degree of tax progression through the behavior of the average rate but it does not throw light on how the marginal rate should vary with income 1 lecture 13 a classic paper by mirrlees 7 which was later expounded on by atkinson and stiglitz 1 412 22 solves this problem by explicitly considering a general income tax schedule however both linear and general tax formulae provide little guide for policy making since in practice the tax rates are graduated by a bracket system that is the income scale is divided into segments or brackets and rates are applied only to the income in each bracket rates increase or decrease by small percentage points from one bracket to the next in order to avoid large and abrupt changes in tax burden as income rises the present paper attempts to demonstrate how we can easily transform a segment graduated tax system into a multiple linear system and then incorporate it into the standard optimum taxation model we then proceed to derive the conditions governing the optimal value of an upper or lower limit of a tax bracket and the marginal tax rate applied to the bracket combining these conditions together will enable us to infer what the optimal rate structure should be

multilateral agricultural trade liberalisation the contrasting fortunes of developing countries in the doha round an applied general equilibrium model is used to assess the impact of multilateral trade liberalisation in agriculture with particular emphasis on developing countries we use original data and the model includes some specific features such as a dual labour market applied tariffs including those under preferential regimes and regional agreements are taken into account at the detailed product level together with the corresponding bound tariffs on which countries negotiate the various types of farm support are detailed and several groups of developing countries are distinguished simulations give a contrasted picture of the benefits developing countries would draw from the doha development round the results suggest that previous studies have neglected preferential agreements and the binding overhang in tariffs as well as domestic support and have treated developing countries with a high level of aggregation and been excessively optimistic about the actual benefits of multilateral trade liberalisation regions like sub saharan africa are more likely to suffer from the erosion of existing preferences the main gainers of the doha round are likely to be developed countries and cairns group members

the effects of joint taxation of married couples on labor supply and non wage income abstract the united states changed its tax treatment of married couples in 1948 from a system in which each spouse paid taxes on his or her own income to a system in which a married couple is taxed as a unit the switch from separate to joint taxation changed incentives for labor supply and asset ownership this paper investigates the effects of the conversion to joint taxation taking advantage of a natural experiment created by cross state variation in property laws married individuals in states with community property laws had always been taxed as if each spouse had earned half of the couple s income and thus were unaffected by the 1948 legal change comparing the behavior of highly educated taxpayers in affected and unaffected states indicates that the tax change is associated with a decline of approximately 2 percentage points in the employment rate of married women consistent with the higher first dollar tax rates they faced after 1948 women married to self employed men were also less likely to have non wage income after 1948 reflecting pre 1948 allocation of family assets to wives for tax purposes the effects of joint taxation on married men s labor force participation and non wage income holding are generally not statistically significant

the production effects of agricultural income support policies under uncertainty this analysis decomposes the production impacts of income support programs into wealth insurance and coupling effects under the usual assumptions about preferences the wealth and insurance effects of many support programs increase optimal input levels even for supposedly decoupled programs if the program is coupled in the usual sense then all three effects often act in the same direction it is concluded that studies of trade and domestic policy reform in stochastic environments should consider insurance and wealth effects the derivative conditions required to obtain results are also subjected to scrutiny simulations for an iowa corn producer confirm the comparative statics

adjustment costs firm responses and micro vs macro labor supply elasticities evidence from danish tax records we show that the effects of taxes on labor supply are shaped by interactions between adjustment costs for workers and hours constraints set by firms we develop a model in which firms post job offers characterized by an hours requirement and workers pay search costs to find jobs we present evidence supporting three predictions of this model by analyzing bunching at kinks using danish tax records first larger kinks generate larger taxable income elasticities second kinks that apply to a larger group of workers generate larger elasticities third the distribution of job offers is tailored to match workers aggregate tax preferences in equilibrium our results suggest that macro elasticities may be substantially larger than the estimates obtained using standard microeconometric methods

quality and economies of scale in higher education this study attempts to develop and empirically estimate an average cost and output reltion for average total for higher education statistical results based on data for top phd granting institutions suggest there are economies of scale in higher education academic reputation is also an important variable in explaining variations in average total cost

why governments should invest more to educate girls abstract women and men often receive the same percentage increase in their wage rates with advances in schooling because these returns decline with more schooling the marginal returns for women will tend to exceed those for men especially in countries where women are much less educated the health and schooling of children are more closely related to their mother s education than father s more educated women work more hours in the market labor force broadening the tax base and thereby potentially reducing tax distortions these three conditions it is argued justify the disproportionate allocation of public expenditures toward women s education

partial tax reform an optimal taxation perspective this paper presents a framework for evaluating partial tax reform proposals based on the theory of optimal taxation which is complementary to an analysis based on the theory of equitable taxation developed by walter hettich in this journal the analysis focuses on the fundamentally different perspectives on tax reform of the two schools of thought never theless the two approaches are complementary in that first they require decision makers to state explicitly their views on horizontal and vertical equity and second they then provide a systematic means of evaluating partial tax reforms based on those criteria

the effect of competition on the efficiency of secondary schools in england abstract in this paper we calculate the technical efficiencies based upon multiple outputs school exam performance and attendance rates of all secondary schools in england over the period 1993 1998 we then estimate models to examine the determinants of efficiency in a particular year and the determinants of the change in efficiency over the period our results suggest that the greater the degree of competition between schools the more efficient they are the strength of this effect has also increased over time which is consistent with the evolution of the quasi market in secondary education competition is also found to be an important determinant of the change in efficiency over time there is however some evidence of conditional convergence between schools

efficiency wage models of unemployment keynesian economists hold it to be self evident that business cycles are characterized by involuntary unemployment but construction of a model of the cycle with involuntary unemployment faces the obvious difficulty of explaining why the labor market does not clear involuntarily unemployed people by definition want to work at less than the going wage rate why don t firms cut wages thereby increasing profits

economies of scale and scope in flemish secondary schools this study estimates a multiproduct translog cost function for the entire population of 1011 flemish secondary schools in order to determine the degree of ray and product specific dis economies of scale as well as the degree of dis economies of scope three types of schools and seven major study fields can be distinguished student loads in these study fields are used as outputs produced by the schools evidence is found for ray economies of scale for the three types of schools even at output levels of 300 of the actual means although the cost elasticities of six out of seven outputs are close to zero most of the values indicating the degree of product specific economies of scale are negative suggesting diseconomies of scale however this can be explained by the considerable scope effects which are incorporated in the definition of the product specific economies of scale

economies of scale and scope and the economic efficiency of china s agricultural research system this article investigates economies of scale and scope and other potential sources of improvements in the economic efficiency of china s crop breeding an industry at the heart of the nation s food economy using data covering 46 wheatand maize breeding institutes from 1981 to 2000 we estimate cost functions for the production of new varieties at china s wheat and maize breeding institutes our results indicate strong economies of scale along with small to moderate economies of scope related to the joint production of new wheat and maize varieties cost efficiency increases significantly with increases in the breeders educational status and with increases in access to genetic materials from outside the institute

optimal tax and transfer programs for couples with extensive labor supply responses this paper analyzes the optimal design of general nonlinear tax transfer schedules for couples under unitary and collective approaches to family decision making we consider a double extensive model of labor supply where each spouse makes a labor force participation choice for given hours of work we present simple and intuitive optimal tax rules that generalize existing findings on the optimal taxation of single person households with extensive responses saez 2002 to the case of two person households with double extensive responses without income effects on labor supply optimal tax rules as a function of sufficient statistics are the same under the unitary and collective approaches with income effects on labor supply optimal tax rules under the two approaches continue to depend on the same sufficient statistics but the collective model features an additional pigouvian term arising from a within family participation externality finally we present microsimulations of tax reform for 15 european countries suggesting that a reduction of tax rates on secondary earners relative to primary earners is associated with strong welfare gains in all countries

the impact of degree programmes on university expenditure this research examines the impact of the number and mix of academic degree programmes on university operating expenditure in the united states statistical results are based on data for doctoral and research institutions without medical schools after controlling for other factors influencing expenditure additional degree programmes are associated with significant increases in expenditure with doctoral programmes having a 40 higher marginal impact on total expenditure than baccalaureate programmes most institutions are found to be smaller than the expenditure minimizing size and to have higher expenditure per full time equivalent student as specified the models explain a large amount of the variation in expenditure across the institutions

the economics of private liberal arts colleges private not for profit liberal arts colleges operate in a knotty market where consumers are both inputs and outputs and the total product is not directly observed our model explains interactions among price quantity reputation and cost the evidence suggests that these institutions alter tuition and financial aid to set price below the market clearing value reputation is more a function of expenditure per student and student quality than tradition and endowment costs depend more on student inputs and the price of faculty than that of capital scale economies occur at less selective colleges with excess capacity and a hierarchy exists among purveyors

reply to apps rees and gottried richter in our earlier paper in this journal 1996 we argued that in a model with both market and household production each of which has two factor inputs primary and secondary worker labor individualbased taxation will distort the factor input ratio whereas household or joint taxation which has similar tax rates for the two workers will not there is an added distortion of household production under individual taxation that does not appear in a model with only consumption of goods and leisure and in which ramsey labor supply elasticity considerations point toward individual taxation we used 1974 australian data to analyze a possible move from an existing individual based income tax to an alternative household based tax a move from a status quo separate tax regime to joint taxation we suggested that the added distortion of household production under individual taxation made such a move more likely to be welfareimproving we considered pairwise comparisons of model solutions under prevailing nonoptimal individual tax rates and common household member rates calculated in various ways our results showed that if the dispersion in individual tax rates is large enough the tax induced distortion of household production can be the dominant consideration in the comparison we neither computed nor characterized optimal tax rate configurations in this application the lessons from optimal tax design seemed uninteresting and rather trivial a de novo design of an optimal tax structure across household members would almost certainly