labour supply estimation and public policy abstract economists devote considerable energies towards refining their econometric techniques to overcome difficulties connected with conducting empirical research despite advances in technique it is not clear whether further refinement in this direction is worthwhile for policy purposes it may be that no further amount of statistical adjustment of inadequate data will increase understanding and that better data is simply necessary to add to our knowledge but rarely is sufficient credit paid to new forms of data in short econometric technique is emphasized to the neglect of data innovation as if new data were merely lying about waiting for an ingenious suggestion for use this paper surveys advances of the last twenty five years in estimating labour supply for policy purposes with a view towards appreciating the relative contribution of both improvements in econometric technique as well as developments of new data after briefly detailing the key parameters which economists have sought to estimate we describe the early first generation research circa 1970 which is plagued by problems of unobservable variables measurement errors truncation and selectivity bias and non linear budget constraints second generation research constitute attempts to resolve one or more of these difficulties and the respective contribution of econometric technique and new data is acknowledged and assessed including the contribution of data generated by large scale social experiments in which participants are randomly assigned to different guaranteed income plans and their labour supply behaviour measured

labour supply specification and the evaluation of tax reforms this paper investigates the practical importance of the functional specification of labour supply equations for the analysis of tax benefit reform we consider two labour supply specifications one derived from stone geary preferences and the other from a generalisation that relaxes some of the more critical restrictions in that model we use these equations to contrast the effects of two reforms to the u k income tax system one involves income effects almost exclusively while the other implies a significant number of large increases in marginal tax rates

a field study of sales forecasting accuracy and processes abstract as might be expected surveys show accuracy is the most important criterion in selecting a forecasting strategy this may lead to the expectation that computer based software would be used to aid the forecasting effort however despite the wide availability of forecast software management judgement appears to be the preferred method this leads to the question does management judgement provide the most accurate forecast estimates this paper reports a field study of judgemental sales forecasting over thirteen manufacturing organisations to investigate whether these forecasts are accurate unbiased and efficient and whether better ex ante forecasts could have been developed using a computer based model the study shows that the company forecasts were not uniformly more accurate than a simple un seasonally adjusted naive forecast most of the source of error is due to both inefficiency a serial correlation in the errors and bias in the forecasts these two factors seemed to mask any contribution of contextual information to accuracy the results are also discussed in terms of forecasting objectives the organisations may have other than accuracy

labor supply responses and welfare effects of tax reforms during the late 1 980s and early 1 990s taxation of wage income has undergone a change towards a proportional tax regime in many countries our analysis shows that gradual tax reforms in norway may have removed some of the distortions on worker behavior moreover we find that proportional taxes may reduce the inequality in the distribution of disposable household income yet when the distributional consequences are related to changes in individual welfare we find that rich households may benefit far more than households at the other tail of the income distribution because they earn more without any significant increase in effort

welfare analysis of tax reforms using household data abstract this paper discusses a methodology for calculating the distribution of gains and losses from a policy change using data for a large sample of households estimates are based on the equivalent income function which is money metric utility defined over observable variables this enables calculations to be standardised and a computer program to compute the statistics presented in the paper is available for a general demand system equivalent income is related to measures of deadweight loss and standard errors are computed for each of the welfare measures an application to u k data for 5 895 households is given which simulates a reform that involves eliminating housing subsidies

a utility based analysis of the wage subsidy program abstract because the poverty line is usually defined in terms of income two families may be classified as having poverty level incomes even though their hours of work and therefore their utilities may be very different this paper compares a government income support program that defines the poverty line in terms of utility with several other support programs that define the poverty line in terms of income through the use of the wage solution of the indirect utility function we find the amount of wage subsidy required to raise a subpoverty line family to the poverty line as defined by the utility function this subsidy is compared with wage subsidies based on directly observable quantities such as income

child support reform and the labor supply of lone mothers in the united kingdom the reform of child support arrangements including their treatment by the welfare system has been on the policy agenda in a number of countries in recent years this paper simulates the impact of a reform that recently has been implemented in the united kingdom the analysis is based on estimates of a model of discrete choice labor supply for a sample of u k lone mothers we suggest that reform will induce a major reduction in welfare expenditures on lone mothers and a significant rise in their labor force participation due to greater work incentives associated with the changes

the effect of income taxation on the labor supply of married men in sweden abstract this paper presents labor supply functions estimated on a sample of prime age swedish males the model used takes account of the nonlinear character of individuals budget sets caused by the progressive income tax it also allows preferences to vary between individuals calculations with the estimated functions using a partial equilibrium framework indicate a sizeable effect of the income tax on hours of work the average expected deadweight loss of the income tax is found to be approximately 20 percent of tax revenue

a life cycle consistent empirical model of family labour supply using cross section data this paper estimates a utility maximising model of the joint determination of male and female labour supplies using a sample of married couples from the u k family expenditure survey the emphasis is on the estimation of within period preferences that are consistent with intertemporal two stage budgeting under uncertainty however the approach we adopt provides an alternative method of estimating certain aspects of life cycle behaviour to the fixed effects constant approach of heckman and macurdy 1980 macurdy 1981 and browning deaton and irish 1985 moreover it relaxes some of the underlying restrictions that are implicit in these constant models under uncertainty

workfare versus transfers in rural india abstract prevailing methods for evaluating workfare schemes are inconsistent with the arguments made for workfare in poor rural economies those arguments emphasize the existence of higher involuntary underemployment among the poor and the fact that the type of work provided by these schemes gives disutility deterring non poor households from participating to include these features the consumption based welfare metric used in past assessments of workfare schemes in underemployed developing countries is generalized to incorporate a welfare loss from casual manual work while allowing the government to independently value the work done for other reasons using data for india s national rural employment guarantee scheme nregs the paper shows that the policy ranking switches in favor of a basic income guarantee big over workfare allowing for a welfare loss from casual manual labor implies a more poor poor targeting performance but this is not sufficient to compensate for the direct welfare loss from the work requirement for plausible parameter values a big dominates nregs for a given total outlay on workfare wages

labour supply welfare rankings and the measurement of inequality abstract this paper presents an analysis of inequality using utility based measures of welfare derived from different approaches to modelling household labour supplies the almost ideal demand system specification of preferences is selected for the estimation of a neoclassical household model and of individual decision models which incorporate different assumptions concerning the intra household distribution of income using the rosen 1976 tax perception methodology the study also explores the implications of a model which does not constrain time at home to leisure welfare rankings and inequality measures defined on equivalent income are compared for each type of model the analysis uses australian unit record data on 3 352 households drawn from the australian bureau of statistics 1981 82 income and housing sample survey file the results indicate the sensitivity of welfare orderings and inequality measures to the choice of decision model and to the specification of lump sum transfers between family members a comparative study of equivalent incomes and selected money income variables also illustrates the limitations of observed household and individual incomes as welfare indicators for the analysis of inequality and for policy design

note on adjustments to analysts earnings forecasts based upon systematic cross sectional components of prior period errors this study assesses the effectiveness of using systematic components of cross sectional forecast errors from prior years in order to adjust current analysts earnings forecasts the empirical results document that a significant component of the cross sectional mse in analysts forecasts is systematic and that parameter estimates from earlier periods enable the elimination of a substantial portion of the systematic errors in current forecasts further improvements in forecast accuracy are attained by the incorporation of prior year excess security returns in order to reduce unsystematic error

analytical debiasing of corporate cash flow forecasts abstract we propose and empirically test statistical approaches to debiasing judgmental corporate cash flow forecasts accuracy of cash flow forecasts plays a pivotal role in corporate planning as liquidity and foreign exchange risk management are based on such forecasts surprisingly to our knowledge there is no previous empirical work on the identification statistical correction and interpretation of prediction biases in large enterprise financial forecast data in general and cash flow forecasting in particular employing a unique set of empirical forecasts delivered by 34 legal entities of a multinational corporation over a multi year period we compare different forecast correction techniques such as theil s method and approaches employing robust regression both with various discount factors our findings indicate that rectifiable mean as well as regression biases exist for all business divisions of the company and that statistical correction increases forecast accuracy significantly we show that the parameters estimated by the models for different business divisions can also be related to the characteristics of the business environment and provide valuable insights for corporate financial controllers to better understand quantify and feedback the biases to the forecasters aiming to systematically improve predictive accuracy over time

is all domestic water consumption sensitive to price control this paper presents a model of residential water demand based on the stone geary utility function which explicitly considers a threshold of water that is insensitive to price and a quantity that can adapt instantaneously to price changes first the threshold is assumed constant being then allowed to vary according to past levels of consumption a proxy for households water using equipment and habits a measure of the depreciation rate of habits is derived and the effectiveness of price and non price conservation measures are compared the results provide useful policy recommendations for the studied case of seville spain

the econometrics of nonlinear budget sets traditional empirical analysis of consumer demand has usually made the assumption of linear budget sets that is the consumer is assumed to purchase any desired quantity at a constant price subject to a budget constraint the major exception to this framework is the analysis of demand when some goods are rationed 2 in the rationed case the price is constant up to a quantity limit in contrast to the rationed case here i consider the situation where the price varies with the amount of the good purchased empirical situations with nonconstant prices come readily to mind and of course they have received much recent attention from theorists since mirrlees 44 paper on optimal nonlinear taxation the following examples are meant to give a partial listing of cases when nonlinear budget sets occur i electricity prices many electric utilities engage in declining block pricing that is the marginal price of successive kwh s of electricity decrease at a given number of points determined by total demand thus the budget set is piecewise linear houthakker 36 was the first to propose an approach to this problem taylor 51 analyzes the problem at length and hausman kinnucin and mcfadden 31 use an instrumental variables estimator to provide consistent estimates of the demand function

selection criteria for a microeconometric model of labour supply the wide variety of observed behaviour that is displayed in survey data suggests that microeconometric models should allow a reasonable degree of flexibility in specification however since these models are generally used for policy analysis they are required to satisfy some degree of theoretical consistency this requirement has generally led to the adoption of rather simple inflexible models based on additive preferences or linear labour supply responses we estimate and test a sequence of models for the labour supply of married working women emphasizing the importance of testing both the thecretical and statistical assumptions underlying the models

the persistence of taiwan s output fluctuations an empirical study using innovation regime switching model in this article we examine the persistence nature of taiwan s aggregate output fluctuations by using the innovation regime switching irs model in which the effect of an innovation may be permanent or transitory depending on an unobservable state variable that follows a first order markov chain by applying the irs model to taiwan s real gdp data we find that during the 1961 to 2000 period 61 39 of the real output shocks are likely to have permanent transitory effects moreover the innovations in the officially identified expansion contraction are more likely to have a permanent transitory effect these results are similar to those found in many studies of us real output fluctuations e g beaudry and koop 1993 kim and nelson 1999 and kuan et al 2005 however we also find that taiwan s output dynamics have changed drastically ever since year 2000 in particular the shocks to real gdp have become more likely to have only transitory effect even during the period of post 2001 iv ex

work incentives and in work benefit reforms a review in work benefit reforms seek to reduce poverty and promote employment among low income families using evidence from similar policies in the usa and canada this paper reviews the likely impact of recent uk reforms the focus is on employment and hours in particular the paper examines the effectiveness of the new working families tax credit in the uk in increasing employment among low income families it presents evidence suggesting modest increases in employment for single parents and workerless married couples with children but with some offsetting reductions in employment in two earner couples with young children

nonparametric panel estimation of labor supply in this article we estimate structural labor supply with piecewise linear budgets and nonseparable endogenous unobserved heterogeneity we propose a two stage method to address the endogeneity iss

taxation in empirical labour supply models lone mothers in the uk taxation has become an integral part of the empirical specification of labour supply models the opportunity set available to workers is made significantly non linear by the workings of the tax and benefit system and this in turn complicates an individual s optimal choice of labour supply in such a framework the relationship between hours of work gross wages and other income is necessarily non linear moreover the marginal wage and virtual income at any chosen hours of work are an implicit function of the hours choice itself to guarantee a unique solution to this choice problem consumer theory places integrability conditions on the form of wage and income derivatives of labour supply similarly once the problem is made stochastic and econometric methods are utilised to recover unknown parameters a coherency condition is required to define a well behaved econometric model see heckman i 978 and gourieroux et al i980 in the labour supply and taxation framework these two conditions are quite naturally closely related they do however have implications for labour supply specification and the reliability of tax reform simulations based on empirical labour supply models for the case of the linear labour supply model macurdy et al i990 document the potential for misleading results that may occur once a linear model is utilised in a framework with non linear taxation such a specification all but guarantees a global forward sloping labour supply function which is not a requirement of economic theory and is empirically often too restrictive in this paper we focus on two issues the first relates to the specification of a flexible model allowing backward bending labour supply the second issue relates to the statistical coherency of such a model in the presence of non linear taxation the empirical application in this paper concerns the labour supply behaviour of lone mothers in the uk this group face a highly non linear budget constraint the analysis of their labour supply responses is crucial for the design of effective policy reforms we use a labour supply specification suggested by