more shock than therapy market transition employment and income in russia 1991 1995 sixteen predictions from market transition theory are assessed using survey data on employment earnings and income in russia during the first five years of market reform although the private sector has grown self employment is still rare incomes are down and unemployment is up a distended income distribution reflects unprecedented income inequality distinctive features of late soviet era stratification persist low returns to education a gender gap in earnings and low earnings among professionals the russian market transition offers more opportunity in trade consumer services and speculation and less in manufacturing than do other emerging makets this corresponds to merchat capitalism and contradicts the predictions of market transition theory everything the communists told us about communism was a lie everything they told us about capitalism turns out to be true popular russian joke circa 1996

moral hazard adverse selection and health expenditures a semiparametric analysis theoretical models predict asymmetric information in health insurance markets may generate inefficient outcomes due to adverse selection and moral hazard however previous empirical research has found it difficult to disentangle adverse selection from moral hazard in health care consumption we propose a two step semiparametric estimation strategy to identify and estimate a canonical model of asymmetric information in health care markets with this method we can estimate a structural model of demand for health care we illustrate this method using a claims level data set with confidential information from a large self insured employer we find significant evidence of moral hazard and adverse selection

the market transition debate toward a synthesis in his seminal 1989 article a theory of market transition victor nee offered a new theory of social inequality and applied it to the study of the problem of transition from state socialist redistributive economy to market capitalism nee claimed that the emergence of markets in state socialist redistributive economies had unexpected consequences the most privileged stratum or class of state socialism the redistributors lost some of their privilege while those at the bottom of the state socialist hierarchy the direct producers benefited for earlier formulations see szelenyi and konrad 1969 szelenyi 1978 and whyte 1984 as a result inequality as measured by income or access to scarce goods was reduced nee s theory identified the mechanisms by which markets generated equality under redistributive systems if wages are not administratively set but established by transactive relations then producers are likely to have more power market power if markets operate then human capital is likely to be rewarded more while political loyalty is likely to matter less market incentive if there are markets in a redistributive economy then entrepreneurship becomes an alternative avenue of socioeconomic mobility market opportunity nee 1989 data collected in 1985 in rural china offered support to the theory of market transition between 1977 and 1985 overall income inequalities in china declined the income gap between urban residents and farmers shrank the income gap in the countryside between peasants and cadres also narrowed the decline of inequality arguably was the result of deregulation of state policies in agriculture after 1977 chinese peasants received land their production targets were less strictly regulated by planners and they were allowed to bring their produce to urban markets as

an equilibrium model of incentive contracts in the presence of information manipulation abstract this paper develops an agency model in which stock based compensation is a double edged sword inducing managers to exert productive effort but also to divert valuable firm resources to misrepresent performance we examine how the potential for manipulation affects the equilibrium level of pay for performance sensitivity and derive several new cross sectional implications that are consistent with recent empirical studies in addition we analyze the impact of recent regulatory changes contained in the sarbanes oxley act of 2002 and show how policies intended to increase firm value by reducing misrepresentation can actually reduce firm value or increase the upward bias in manipulated disclosures

portfolio rebalancing and the turn of the year effect this paper finds that for the 1935 1986 period the market s risk return relation does not have a january seasonal the findings differ from those of other studies due to the use of value weighted rather than equally weighted portfolios inferences are sensitive to the weighting procedure because of the small firm return patterns in january in particular even in those januaries for which the market return is negative small firm returns are positive and they are more positive the higher is beta this is consistent with the portfolio rebalancing explanation of the turn of the year effect since at least 1926 the average return on small firms in january has been unusually high a phenomenon known as the turn of the year effect in this paper we present new evidence regarding the risk return characteristics of small firms in january we find that for small firms there is a positively sloped riskreturn relation in both up and down markets this pattern is difficult to reconcile with the belief that the high return on small firms in january is equilibrium compensation for risk bearing we show how these patterns in small firms returns have led others to conclude that the market s risk return relation has a january seasonal in particular rozeff and kinney 21 and tinic and west 22 23 among others using equally weighted portfolios formed on the basis of historical betas have found a steeper slope for the capm s risk return relation in january than in other months we demonstrate that this pattern exists only for small firms consequently statistical inferences about the risk return relation are heavily dependent upon whether equally weighted or value weighted portfolio returns are used in the estimation we show that for 1935 86 when monthly cross sectional regressions are estimated using value weighted portfolio returns there is no more of a statistically significant difference in the estimated return to risk bearing in january than in the other eleven months of the year the notion that there is a january seasonal in the capm s risk return relation for the us has rapidly become accepted knowledge for example corhay hawawini and michel 6 accept this conclusion and investigate whether other

economic transformation and income inequality in urban china evidence from panel data using panel data of 4 730 urban residents drawn from 20 cities in china this article examines changes in income determinants between the prereform and reform eras to guide this empirical study a conceptual model is developed that emphasizes the coevolution of politics and markets to synthesize theoretical ideas in the recent debate on the transformation of state socialist societies the findings show significant changes in returns to education and in the rise of private hybrid firms in the reform era there is also strong evidence of institutional persistence in returns to positional power and in the organizational hierarchy these findings reveal multifaceted processes of transformation that call for more sophisticated theoretical models and in depth institutional analyses

dilemmas of local governance under the development zone fever in china a case study of the suzhou region this article aims to explore the mechanisms of the development zone fever in the suzhou region located in the fast growing yangtze river delta and investigates from an institutional perspective the practice of relevant intragovernmental governance in the context of rapid industrialisation since the 1990s a specific mode of governance the evaluative economic indicators scheme inherited from the earlier socialist planning system combined with the party state s promotion evaluation system plays an essential role in this transformation of farmland property rights however this model of development is not necessarily helpful for local financial conditions and it results in the disclacement of peasants and the loss of land resources based on the resulting dilemmas of governance it is argued that in addition to the economic paradigm which focuses on consequences of fiscal reforms and devolution scholars should pay more attention to factors such as the party state s promotion evaluation system and

incentives discretion and asset valuation in closed end mutual funds this paper studies earnings management using 363 closed end mutual fund firm years of data closed end fund assets consist of unrestricted and restricted securities and realized and unrealized income while unrestricted securities are not subject to earnings management restricted security values are largely discretionary managerial valuation of restricted securities is modeled as contingent on unrestricted returns relative to a performance benchmark four unrestricted performance regions are identified known multi period compensation incentives become the basis for hypothesizing earnings management behaviors in the regions in the form of restricted security valuation across several benchmarks the results are consistent with multi period maximization rather than simpler single period compensation maximization or income smoothing funds with extreme unrestricted performance show relatively larger income decreasing earnings management and funds with slightly below benchmark returns show relatively larger income increasing earnings management than those slightly above these results clarify the relationship between complex earnings management behavior and managerial incentives

return smoothing liquidity costs and investor flows evidence from a separate account platform we use a new hedge fund data set from a separate account platform to examine 1 how much of hedge fund return smoothing is due to main fund specific factors such as managerial reporting discretion and 2 the costs of removing hedge fund share restrictions these accounts trade pari passu with matching hedge funds but feature third party reporting and permissive share restrictions we use these properties to estimate that 33 of reported smoothing is due to managerial reporting methods the platform s fund level liquidity is associated with a 1 7 performance reduction on an annual basis investor flows chase monthly past performance on the platform but not in the associated funds this paper was accepted by neng wang finance

moral hazard and the demand for physician services first lessons from a french natural experiment abstract this paper presents empirical results on moral hazard in demand for medical care using a longitudinal dataset on 4578 individuals followed during two years the dataset contains two subgroups one for which a copayment rate of 10 for physician visits was introduced in 1994 and an other for which no change occurred during the period of the study this enables us to use these data as coming from a controlled natural experiment we test if the number of visits per agent was modified by this copayment rate the data reject the hypothesis for office visits but do not for home visits this suggests that there is moral hazard in demand for some physician services but also that when non monetary costs are important small changes in monetary price may not induce any major change in behavior

the continuing wind of change in the balkans sources of housing inequality in bulgaria the research in this paper explores the institutional changes in the housing system during the period of market transition in bulgaria which follow suit with the greater societal transformations the societal changes are linked theoretically with polanyi s understanding of the transition from a non market to a market society his argument helps in establishing the institutional context of the macroeconomic changes in the past decade the article then focuses on the changing sources of housing inequality it is argued that there are two urban regimes of housing inequality the regime of controlled uniformity during the period of socialism and the regime of primitive diversity during the period of market transition the two regimes are produced mainly through the changing role of the state

flows price pressure and hedge fund returns the authors studied how capital flows affect hedge fund returns and found that funds with high inflows outperform funds with high outflows during the month of the flows this immediate reaction combined with feedback trading gives rise to a cycle flows exert price pressure this effect on returns induces more flows and these flows cause further price pressure the cycle is so strong that it takes two years for a full return reversal and it contributes to the observed persistence in hedge fund performance the impact of flows on returns has clear implications for performance evaluation one third of estimated hedge fund alphas are due to flows

censored quantile instrumental variable estimates of the price elasticity of expenditure on medical care efforts to control medical care costs depend critically on how individuals respond to prices i estimate the price elasticity of expenditure on medical care using a censored quantile instrumental variable cqiv estimator cqiv allows estimates to vary across the conditional expenditure distribution relaxes traditional censored model assumptions and addresses endogeneity with an instrumental variable my instrumental variable strategy uses a family member s injury to induce variation in an individual s own price across the conditional deciles of the expenditure distribution i find elasticities that vary from 0 76 to 1 49 which are an order of magnitude larger than previous estimates

health insurance and the demand for medical care instrumental variable estimates using health insurer claims data this paper takes a different approach to estimating demand for medical care that uses the negotiated prices between insurers and providers as an instrument the instrument is viewed as a textbook cost shifting instrument that impacts plan offerings but is unobserved by consumers the paper finds a price elasticity of demand of around 0 20 matching the elasticity found in the rand health insurance experiment the paper also studies within market variation in demand for prescription drugs and other medical care services and obtains comparable price elasticity estimates

costly search and mutual fund flows this paper studies the flows of funds into and out of equity mutual funds consumers base their fund purchase decisions on prior performance information but do so asymmetrically investing disproportionately more in funds that performed very well the prior period search costs seem to be an important determinant of fund flows high performance appears to be most salient for funds that exert higher marketing effort as measured by higher fees flows are directly related to the size of the fund s complex as well as the current media attention received by the fund which lower consumers search costs

the soviet transition from socialism to capitalism worker control and economic bargaining in the wood industry analyses oftlze transition from state socialisnz to capitalism pically focus on political impedimerlrs and underesritnate tlle economic obsracles to economic rransformatior1 based or1 a c ase srudy c f the soviet o o d indusrr y we argue tlzur there hill he no economic tr ansition so long as enterprises rerain two hisroric features nanzely anarchy in pr oduction and barqainit g in exrernal r elarions far jtom consrituting a re olution tlze witllerirlg away of the party srate has esaggerared rlle parhologies of rhe old econotnic order barrer has hecome nzo1 e inzpor tant conglonzerates ha1 e strengrhened their monopoly and wrkers 1la1 e greater conrr ol of tlze shop floor if there is a nzolbemenr to sar d a nzar ket economy at all it is to sar da jb1 m ofmerchant capitalisnz rlzut deepens economic under de elol nzet t and lz arts tlze rise of nzodern bourgeois capiralism

estimating the tradeoff between risk protection and moral hazard with a nonlinear budget set model of health insurance insurance induces a tradeoff between the welfare gains from risk protection and the welfare losses from moral hazard empirical work traditionally estimates each side of the tradeoff separately potentially yielding mutually inconsistent results i develop a nonlinear budget set model of health insurance that allows for both simultaneously nonlinearities in the budget set arise from deductibles coinsurance rates and stoplosses that alter moral hazard as well as risk protection i illustrate the properties of my model by estimating it using data on employer sponsored health insurance from a large firm

a theory of market transition from redistribution to markets in state socialism state socialist redistributive economies are characterized by the allocation and distribution of goods through central planning this paper develops a theory of market transition which argues that in reforming socialist economies the transition from redistributive to market coordination shifts sources of power and privilege to favor direct producers relative to redistributors the shit improves incentives for direct producers stimulates the growth of private markets and provides to entrepreneurs an alternative path for socioeconomic mobility a set of hypotheses test the market transition theory with householdand village level data

markets and income inequality in rural china political advantage in an expanding economy when market reform generates rapid growth in an agrarian subsistence economy changes in inequality may be due to economic growth and structural change rather than to the intrinsic features of markets the case of post mao china is examined using nationally representative survey data gathered in 1996 to address unresolved questions about findings from 1980s surveys well into reform s second decade political officeholding has a large net impact on household income comparable to that of operating a private enterprise contrary to findings based on earlier surveys and expectations about the impact of growth cadre household advantages are stable across levels and forms of economic expansion returns to entrepreneurship however decline sharply with the spread of wage employment future declines in relative returns to political position are therefore unlikely to occur due to the further spread of private household entrepreneurship and theories of change based on this mechanism appear untenable

the role of accruals in asymmetrically timely gain and loss recognition we investigate the role of accrual accounting in the asymmetrically timely recognition incorporation in reported earnings of gains and losses timely recognition requires accruals when it precedes complete realization of the gains and losses in cash we show that nonlinear accruals models incorporating the asymmetry in gain and loss recognition timelier loss recognition or conditional conservatism offer a substantial specification improvement explaining substantially more variation in accruals than equivalent linear specifications conversely conventional linear accruals models by omitting the loss recognition asymmetry exhibit substantial attenuation bias and offer a comparatively poor specification of the accounting accrual process linear specifications also understate the ability of current earnings to predict future cash flows these findings have implications for our understanding of accrual accounting and conservatism as well as for researchers estimating discretionary accruals earnings management and earnings quality

an econometric model of serial correlation and illiquidity in hedge fund returns the returns to hedge funds and other alternative investments are often highly serially correlated in sharp contrast to the returns of more traditional investment vehicles such as long only equity portfolios and mutual funds in this paper we explore several sources of such serial correlation and show that the most likely explanation is illiquidity exposure i e investments in securities that are not actively traded and for which market prices are not always readily available for portfolios of illiquid securities reported returns will tend to be smoother than true economic returns which will understate volatility and increase risk adjusted performance measures such as the sharpe ratio we propose an econometric model of illiquidity exposure and develop estimators for the smoothing prole as well as a smoothing adjusted sharpe ratio for a sample of 908 hedge funds drawn from the tass database we show that our estimated smoothing coecien ts vary considerably across hedge fund style categories and may be a useful proxy for quantifying illiquidity exposure

getting ahead in urban china this article argues that structural segmentation is a universal phenomenon in all complex societies and across political economies each political economy uses specific criteria in delineating segments of its economic and work organizations furthermore it is argued that segmentation identification constitutes a critical destination status for individuals engaged in the status attainment process a representative sample of the working population in tianjin china is analyzed to show that entrance into the core sectors state agencies and enterprises rather that the job per se constitutes the primary goal of status attainment entering into a more desirable work unit sector in china takes on differential significance and process for males and females formales the direct effect of intergenerational factors i e the effect of father s work unit sector is evident for females such an effect is only indirect instead to a great extent their status attainment also upward occupational mobility acr

demand elasticities and service selection incentives among competing private health plans we examine selection incentives by health plans while refining the selection index of mcguire et al 2014 to reflect not only service predictability and predictiveness but also variation in cost sharing risk adjusted profits profit margins and newly refined demand elasticities across 26 disaggregated types of service we contrast selection incentives measured by service selection elasticities across six plan types using privately insured claims data from 73 large employers from 2008 to 2014 compared to flat capitation concurrent risk adjustment reduces the elasticity by 47 prospective risk adjustment by 43 simple reinsurance system by 32 and combined concurrent risk adjustment with reinsurance by 60 reinsurance significantly reduces the variability of individual level profits but increases the correlation of expected spending with profits which strengthens selection incentives

ownership organization and income inequality market transition in rural vietnam in transitional economies the scale of economic enterprise and the allocation of property rights shape social structures and influence income distribution in agrarian economies where labor intensive family enterprises dominate political officials income advantages decline rapidly relative to those of private entrepreneurs larger enterprises however provide greater income opportunities for officials especially when a government retains an ownership stake in the initial phases of reform this article replicates the findings from an earlier study of rural china using comparable survey data from vietnam we find that during the first two decades of rural market reform in vietnam and china the scale and ownership of firms differed radically small family enterprises dominated rural development in vietnam whereas china s development was dominated by larger firms initially established by rural governments consequently while cadre income advantages have kept pace with those of private entrepreneurs

of tournaments and temptations an analysis of managerial incentives in the mutual fund industry we test the hypothesis that when their compensation is linked to relative performance managers of investment portfolios likely to end up as losers will manipulate fund risk differently than those managing portfolios likely to be winners an empirical investigation of the performance of 334 growth oriented mutual funds during 1976 to 1991 demonstrates that mid year losers tend to increase fund volatility in the latter part of an annual assessment period to a greater extent than mid year winners furthermore we show that this effect became stronger as industry growth and investor awareness of fund performance increased over time

health insurance and the demand for medical care evidence from a randomized experiment we estimate how cost sharing the portion of the bill the patient pays affects the demand for medical services the data come from a randomized experiment a catastrophic insurance plan reduces expenditures 31 percent relative to zero out of pocket price the price elasticity is approximately 0 2 we reject the hypothesis that less favorable coverage of outpatient services increases total expenditure for example by deterring preventive care or inducing hospitalization

empirical research on accounting choice abstract we review research from the 1990s that examines the determinants and consequences of accounting choice structuring our analysis around the three types of market imperfections that influence managers choices agency costs information asymmetries and externalities affecting non contracting parties we conclude that research in the 1990s made limited progress in expanding our understanding of accounting choice because of limitations in research design and a focus on replication rather than extension of current knowledge we discuss opportunities for future research recommending the exploration of the economic implications of accounting choice by addressing the three different reasons why accounting matters

the sensitivity of ceo wealth to equity risk an analysis of the magnitude and determinants abstract to control risk related incentive problems equity holders are expected to manage both the convexity and slope of the relation between firm performance and managers wealth i find stock options but not common stockholdings significantly increase the sensitivity of ceos wealth to equity risk cross sectionally this sensitivity is positively related to firms investment opportunities this result is consistent with managers receiving incentives to invest in risky projects when the potential loss from underinvestment in valuable risk increasing projects is greatest firms stock return volatility is positively related to the convexity provided to managers suggesting convex incentive schemes influence investing and financing decisions

dispersion as cross sectional correlation we introduce the concept of cross sectional dispersion of stock market returns as an alternative to the time series approach to estimating the global correlation level of equity markets our objective is to derive a simple instantaneous measure of the general level of global market correlation our cross sectional method of estimating global correlation is dynamic and using cross sectional data gives instantaneous information on the trend of global correlation the traditional time series method requires a long period of observations and overlapping data have to be used to study the change in correlation both methods yield similar estimates for a long period however so a combination of the cross sectional and time series approaches should be of practical use to global asset managers

estimating demand elasticities using nonlinear pricing abstract nonlinear pricing is prevalent in industries such as health care public utilities and telecommunications however this pricing scheme introduces bias into estimating elasticities for welfare analysis or policy changes i develop a local elasticity estimation method that uses nonlinear price schedules to isolate consumers expenditure choices from selection and simultaneity biases this method improves over previous approaches by using commonly available observational data and requiring only a single general monotonicity assumption using claims level data on health insurance with two nonlinearities i am able to measure two separate elasticities and find that elasticity declines from 0 26 to 0 09 by the second nonlinearity these estimates are then used to calculate moral hazard deadweight loss this method enables estimation of many policies with nonlinear pricing which previous tools could not address

are hedge fund managers systematically misreporting or not a discontinuity or kink at zero in the hedge fund net return distribution has been interpreted as evidence of managers manipulating returns to avoid showing small losses instead we propose alternative explanations for this phenomenon in particular we show that incentive fees can mechanistically create a kink in the net return distribution this mechanism accounts for almost the entire kink observed in the large liquid long short equity style furthermore we show that asset illiquidity and the bounding of yields at zero can generate distribution discontinuities as well therefore we conclude that the observed hedge fund return discontinuities are not direct proof of manipulation

price elasticity of expenditure across health care services policymakers in countries around the world are faced with rising health care costs and are debating ways to reform health care to reduce expenditures estimates of price elasticity of expenditure are a key component for predicting expenditures under alternative policies using unique individual level data compiled from administrative records from the chilean private health insurance market i estimate the price elasticity of expenditures across a variety of health care services i find elasticities that range between zero for the most acute service appendectomy and 2 08 for the most elective psychologist visit moreover the results show that at least one third of the elasticity is explained by the number of visits the rest is explained by the intensity of each visit finally i find that high income individuals are five times more price sensitive than low income individuals and that older individuals are less price sensitive than young individuals

do hedge fund managers misreport returns evidence from the pooled distribution we find a significant discontinuity in the pooled distribution of monthly hedge fund returns the number of small gains far exceeds the number of small losses the dis continuity is present in live and defunct funds and funds of all ages suggesting that it is not caused by database biases the discontinuity is absent in the 3 months culminating in an audit suggesting it is not attributable to skillful loss avoidance the discontinuity disappears when using bimonthly returns indicating a reversal in fund performance following small gains this result suggests that the discontinuity is caused at least in part by temporarily overstated returns

property rights and stratification in socialist redistributive economies in socialist economies work organizations differ widely in the compensation they provide employees despite the absence of key product and labor market processes thought to ex plain such inequalities in market economies existing theories of stratification in socialist economies focus on the power and privilege of elites but inequalities among organizations are not created by political particularism or elite power in this paper i sketch elements of an institutional theory of stratification anchored in a conception of property rights the right to derive income from productive assets two aspects of property rights guide the analysis 1 the dispersion of property rights across a hierarchy of governmentjurisdictions and 2 the exercise of these rights by government jurisdictions as they extract revenues primarily through taxation extraction of revenues from a work organization varies with the budgetary resources of a government jurisdiction and the dependence of that jurisdiction on the out puts of the organization variation in revenue extraction in turn creates inequalities among work organizations in their abilities to provide benefits to employees an analysis of survey data on the provision of housing and benefits by work organizations in the large industrial city of tianjin china provides provisional support for these ideas s tudents of communist states have had little reason to dispute lenski s 1966 claim that the distribution of rewards in a society is a func tion of the distribution of power p 63 as ex emplified in szelenyi s wedding of elite theory to institutional economics this idea has been de veloped primarily in terms of the power of class es or occupational groups szelenyi 1978 be gan with the observation that planned economies operate according to redistributive rather than market principles however the process of re

the impact of performance based compensation on misreporting abstract this paper examines the effect of ceo compensation contracts on misreporting we find that the sensitivity of the ceo s option portfolio to stock price is significantly positively related to the propensity to misreport we do not find that the sensitivity of other components of ceo compensation i e equity restricted stock long term incentive payouts and salary plus bonus have any significant impact on the propensity to misreport relative to other components of compensation stock options are associated with stronger incentives to misreport because convexity in ceo wealth introduced by stock options limits the downside risk on detection of the misreporting

the first shall be last entrepreneurship and communist cadres in the transition from socialism this article reviews the sociological literature on the transition from socialism to capitalism it distinguishes between the erosion and transition phases and between traditional and corporate segments in the emerging private sector panel survey data from hungary show that during the transition ex communist cadres maintain their advantageous position and do especially well in the more dynamic corporate segment they are successful because human capital is important in both capitalism and socialism and because the cadres are able to convert past political power to economic advantage contrary to the findings of studies based only on agriculture the transition increases income inequalities

private health insurance and utilization of health services in chile this paper analyses the choice of private health insurance in chile and how this relates to the utilization of health services the results show the importance of some demographics on the insurance decision particularly age gender and marital status socio economic factors such as education income employment status and zone of residence all influence the probability of purchasing private insurance the relevance of these determinants is confirmed using a simulation analysis with four representative decision makers this simulation also provides evidence of a positive selection into private insurance although this would be driven by the different criteria used to set premiums under private and public insurance schemes the potential linkage between utilization of health services and private health insurance is examined using a simultaneous two equation framework two measures of utilization are estimated outpatient health services and length of stay in hospital a number of explanatory variables s

adverse selection in insurance markets policyholder evidence from the u k annuity market in this paper we investigate the importance of adverse selection in insurance markets we use a unique data set consisting of all annuity policies sold by a large u k insurance company since the early 1980s to analyze mortality differences among individuals who purchased different types of policies we find systematic relationships between ex post mortality and annuity policy characteristics such as whether the annuity will make payments to the estate in the event of an untimely death and whether the payments from the annuity rise over time these mortality patterns are consistent with the presence of asymmetric information in the annuity market we find no evidence of substantive mortality differences however across annuities of different size even though models of insurance market equilibrium with asymmetric information would predict such differences we also find that the pricing of various features of annuity contracts is consistent with the self selection patterns we find in mortality rates our results therefore suggest that selection may occur across many specific features of insurance contracts and that the absence of selection on one contract dimension does not preclude its presence on others this highlights the importance of considering the detailed features of insurance contracts when testing theoretical models of asymmetric information

health care demand elasticities by type of service we estimate within year price elasticities of demand for detailed health care services using an instrumental variable strategy in which individual monthly cost shares are instrumented by employer year plan month average cost shares a specification using backward myopic prices gives more plausible and stable results than using forward myopic prices using 171 million person months spanning 73 employers from 2008 to 2014 we estimate that the overall demand elasticity by backward myopic consumers is 0 44 with higher elasticities of demand for pharmaceuticals 0 44 specialists visits 0 32 mris 0 29 and mental health substance abuse 0 26 and lower elasticities for prevention visits 0 02 and emergency rooms 0 04 demand response is lower for children in larger firms among hourly waged employees and for sicker people overall the method appears promising for estimating elasticities for highly disaggregated services although the approach does not work well on services that are very expensive or persistent

risk and return abstract this paper examines the seasonality in the basic relationship between expected return and risk during 1935 82 the results reveal that the positive relationship between return and risk is unique to january the risk premiums during the remaining eleven months are not significantly different from zero

family health care spending in latin america household budget data from surveys in six latin american countries 1966 75 are used to estimate income elasticities of private health care spending for ten cities in five countries the elasticity is constant at 1 5 for metropolitan other urban and rural areas of brazil it is constant at 1 17 the brazilian data also show 30 percent higher spending in small than in large cities and 50 percent higher in the countryside these results are consistent with supposing that private care is a luxury compared to public care and that more is spent on the former when the latter is not available geographic differences may be exaggerated by differences in payment mechanisms since reported out of pocket expenditure is not net of public reimbursement different components of spending such as drugs and hospitalization show very different behavior from the total

economic transition and urban transformation of china the interplay of the state and the market the transition of the chinese economy from plan to market has led to dramatic economic restructuring and urban transformation since the economic reforms and open door policy in 1978 the state and the market which are the two basic regulating mechanisms have significantly changed their role in economic and urban development in this transition in china we attempt to examine the interplay of the state and the market in facilitating economic growth and producing new urban space after replacing socialism with state capitalism four major waves of urbanisation and urban development have been identified in terms of the interaction of the state and the market in producing different forms of urban development which also bring about economic transition in china we further examine the new form of urban development in the fourth stage of urbanisation which is represented by the rapid growth of producer services and the resulting development of central business districts economic transition and urban transfor

performance characteristics of hedge funds and commodity funds natural vs spurious biases it is well known that the pro forma performance of a sample of investment funds contains biases these biases are documented in brown goetzmann ibbotson and ross 1992 using mutual funds as subjects the organization structure of hedge funds as private and often offshore vehicles makes data collection a much more onerous task amplifying the impact of performance measurement biases theis paper reviews these biases in hedge funds we also propose using funds of hedge funds to measure aggregate hedge fund performance based on the idea that the investment experience of hedge fund investors can be used to estimate the performance of hedge funds

earnings management to avoid earnings decreases and losses this paper provides evidence that firms manage reported earnings to avoid earnings decreases and losses specifically in cross sectional distributions of earnings changes and earnings we lind unusually low frequencies of small decreases in earnings and small losscs and unusually high frequencies of small increases in earnings and small positive income we find evidence that two components of earnings cash flow from operations and changes in working capital are used to achieve increases in earnings we present two theories based on stakeholder use of information processing heuristics and prospect theory about the motivation for avoidance of earnings decreases and losses

does service level spending show evidence of selection across health plan types we provide an explanation for the widespread finding that capitated managed care plans attract comparatively healthy low cost enrollees relative to traditional unmanaged plans using disaggregated commercial insurance claims from the thomson reuters marketscan database we show that managed care plans spend proportionally less on those types of services that are predicted to be more profitable to ration tightly using a selection index developed by ellis and mcguire that captures the derivative of profits with respect to reduced spending on disaggregated services conventional diagnosis based risk adjusted premiums reduce selection incentives by about 50 relative to premiums that are not risk adjusted

rethinking internal labor markets new insights from a comparative perspective internal labor markets take different forms in the capitalist and the socialistfirm as the distinctive organizational problems in each economic system produce differing but comparable institutional solutions analysis of systemic uncertainties and the organizational responses of workers and managers yields a comparative model of mirrored opposition in economies in which the firm operates in a market environment systemic uncertainties regarding labor are reduced through internal bureaucratic rules operating according to a classificatory logic in the socialist economy by contrast where systemic uncertainties are produced by a bureaucratic environment the firm responds through internal market transactions based on affiliative ties the market like character of these internal mechanisms is brought into even sharper relief in an analysis of the recent establishment in hungary of semi autonomous subcontracting units inside the enterprise

starting on the wrong foot seasonality in mutual fund performance abstract we document a systematic seasonal component in the aggregate underperformance of active mutual funds at the aggregate level active funds underperform the market and other passive benchmarks only in the first month of a quarter this intra quarter performance seasonality holds across fund sizes and investment styles the pattern is consistent with short term stock return reversal effects along with aggregate window dressing and to a lesser extent nav inflation practices around quarter ends we find marginal or no evidence of microstructure biases fund investor flows or cash distributions as sources of this seasonality our findings highlight new features of the active management underperformance puzzle

tax loss selling and the january effect evidence from municipal bond closed end funds this paper provides direct evidence supporting the tax loss selling hypothesis as an explanation of the january effect examining turn of the year return and volume patterns for municipal bond closed end funds which are held mostly by tax sensitive individual investors we document a january effect for these funds but not for their underlying assets we provide evidence that this effect can be largely explained by tax loss selling activities at the previous year end moreover we find that funds associated with brokerage firms display more tax loss selling behavior suggesting that tax counseling plays a role among the numerous stock return anomalies probably none has generated more interest than that of the turn of the year or january effect the phenomenon in which small capitalization stocks realize unusually high returns in early january 1 the literature offers a number of hypotheses to explain this phenomenon including the tax loss selling hypothesis the window dressing hypothesis the insider trading information release hypothesis and the seasonality of the risk return relation hypothesis given existing evidence in some support for the first two hypotheses the debate continues with respect to which of these the tax loss selling of individual investors or the window dressing of

the determinants and effects of health expenditure in developed countries previous studies of international differences in health spending have been restricted to the use of relatively small samples of cross sectional data our objective here is to re examine the results of previous work using a sample of 560 pooled time series and cross section observations results confirm the importance of gdp as a determinant of health spending with an estimated income elasticity at or around unity but also suggest that oecd countries should not be regarded as a single homogeneous group the importance of some non income variables is also confirmed although the direct effect of these factors appears to be small

structural estimation of a principal agent model moral hazard in medical insurance despite the importance of principal agent models in the development of modern economic theory there are few estimations of these models i recover the estimates of a principal agent model and obtain an approximation to the optimal contract the results show that out of pocket payments follow a concave profile with respect to costs of treatment i estimate the welfare loss due to moral hazard taking into account income effects i also propose a new measure of moral hazard based on the conditional correlation between contractible and noncontractible variables

estimating risk preferences from deductible choice we develop a structural econometric model to estimate risk preferences from data on deductible choices in auto insurance contracts we account for adverse selection by modeling unobserved heterogeneity in both risk claim rate and risk aversion we find large and skewed heterogeneity in risk attitudes in addition women are more risk averse than men risk aversion exhibits a u shape with respect to age and proxies for income and wealth are positively associated with absolute risk aversion finally unobserved heterogeneity in risk aversion is greater than that of risk and as we illustrate has important implications for insurance pricing

additional evidence on bonus plans and income management abstract we extend healy 1985 by examining the relation between discretionary accruals and bonus plan bounds for a sample of 102 firms for the 1980 1990 period contrary to healy we find that when earnings before discretionary accruals fall below the lower bound managers select income increasing discretionary accruals and vice versa we believe that our results are more consistent with the income smoothing hypothesis than with healy s bonus hypothesis however mechanical selection bias in portfolio formation cannot be entirely ruled out as an alternative explanation for our results

elite opportunity in transitional economies command economies gave communist era elites administrative control and material privilege but severely restricted money income and private wealth markets and privatization have injected new value into public assets and create unprecedented opportunities for elite insiders these opportunities depend on the extent of regime change and barriers to asset appropriation regime change varies from the survival of the entire party hierarchy to its rapid collapse and defeat in competitive elections barriers to asset appropriation vary with the extent pace and form of privatization and the concentration and liquidity of assets different combinations of such circumstances jointly affect the extent to which prior elites obtain ownership or control of privatized assets use political office to extract larger incomes move into salaried elite occupations or fall out of the elite altogether regime change and barriers to asset appropriation affect change at the national level but outcomes vary across economic sectors because of characteristics of organizations elite positions and assets this elementary theory serves to integrate varied findings from recent research on central europe china and russia and yields predictions for other regions

the spread of sharecropping in tuscany the political economy of transaction costs land tenure is central to many agricultural transformations the author examines one of these transformations the spread of sharecropping in late medieval and early modern tuscany previous research suggested that sharecropping spread as agricultural relations were refeudalized in contrast the author s analyses of fixed term and share term leasing sharecropping show that landlords used sharecropping when it lowered their overall costs of labor supervision and land management however to explain the spread of sharecropping the florentine political economy which created particular patterns of land management costs and labor supervision costs must also be considered florence was a well developed center for urban manufacturing landlords were frequently urban merchants and they resided in florence these factors were crucial in shaping agricultural relations landlords use of sharecropping to reduce the overall costs of land management and labor supervision increased as the distance from florence the site of landlords principal activities increased as the size of farms increased and when crops had high costs of labor supervision and land management thus the use of sharecropping to lower costs associated with agricultural production must be considered in the context of the tuscan political economy

do hedge funds manage their reported returns f or funds with high incentives and more opportunities to inflate returns we find that i returns during december are significantly higher than returns during the rest of the year even after controlling for risk in both the time series and the cross section and ii this december spike is greater than for funds with lower incentives and fewer opportunities to inflate returns these results suggest that hedge funds manage their returns upward in an opportunistic fashion in order to earn higher fees finally we find strong evidence that funds inflate december returns by underreporting returns earlier in the year but only weak evidence that funds borrow from january returns in the following year jel g10 g19 g23 g30