on the equivalence of profit and revenue sharing abstract this paper shows that even in a unionised labour market net and gross profit sharing as well as revenue sharing are isomorphic neither the capital stock nor the wage employment combination depends on the deductibility of base wages and or capital costs from the share base

unintended consequences of price controls an application to allowance markets abstract price controls established in a cap and trade allowance market are intended to reduce cost uncertainty by constraining allowance prices between a ceiling and floor however they could provide opportunities for strategic actions by firms that would lower government revenue and increase emissions in particular when the ceiling price is supported by introducing new allowances into the market firms could choose to buy allowances at the ceiling price regardless of the prevailing market price in order to lower the equilibrium price of all allowances those purchases could either be transacted by firms intending to manipulate the market price or be induced through the introduction of inaccurate information about the cost of emissions abatement theory and simulations using allowance elasticity estimates for u s firms suggest that the manipulation could be profitable under the stylized setting and assumptions evaluated in the paper although in practice many other conditions will determine its use

economic mobility and poverty dynamics in developing countries this study provides an introduction to this special issue of the journal of development studies on economic mobility and poverty dynamics in developing countries in addition to providing a conceptual framework it outlines how the contributions fit into the extant literature a series of regularities emerge across these studies the poor consist of those who are always poor poor at all dates and those who move in and out of poverty with the latter group tending to be strikingly large such movements in and out of poverty are apparent when looking at poverty in either absolute or relative terms changes in returns to endowments can be a potent source of increased incomes finally seemingly transitory shocks can have long term consequences the study concludes by drawing out the policy implications of these regularities

credit market constraints consumption smoothing and the accumulation of durable production assets in low income countries investments in bullocks in india in this paper we formulate and estimate a finite horizon structural dynamic model of agricultural investment behavior that incorporates the major features of low income agricultural environments income uncertainty constraints on borrowing and rental markets and the use of investment assets to generate income and smooth consumption the model is fit to longitudinal indian household data on farm profits bullock stocks and pump sets the estimated structural parameters are used to assess the effects on the life cycle accumulation of bullocks agricultural profits and welfare associated with complete markets and bullock liquidity and with second best policies that provide assured sources of income to farmers and weather insurance

consumption vulnerability to risk in rural pakistan abstract as one of the dimensions of vulnerability this paper empirically investigates the inability of rural dwellers to cope with negative income shocks a variable coefficient regression model is applied to a two period household panel dataset collected in the north west frontier province pakistan an area with high incidence of income poverty and low human development the empirical model allows for a different ability to smooth consumption approximated by a linear function of households attributes and controls for the endogeneity of observed changes in income using qualitative information on subjective risk assessment estimation results show that the ability to cope with negative income shocks is lower for households that are aged landless and do not receive remittances regularly

profit sharing capital formation and the nairu this paper reconsiders the impact of different remuneration systems on aggregate employment contrary to common wisdom on this topic we show that the switch from a fixed wage economy to a share economy results in lower aggregate unemployment an additional innovation of this paper is the endogeneity of the capital stock decision of the firm which enables us to assess and reject the common disincentive to invest criticism of a share economy

testing the response of consumption to income changes with noisy panel data this paper tests the rational expectations lifecycle model of consumption against i a keynesian model and ii the rational expectations lifecycle model with imperfect capital markets the tests are based upon the relative responsiveness of consumption to income changes that can be predicted from past information and income changes that cannot he predicted the tests allow for measurement error in income the results reject the keynesian model and generally support the lifecycle model but the results are not sufficiently precise to rule out the possibility that some households are liquidity constrained measurement error has a strong influence on the relationship between consumption and income

estimation of vulnerability to poverty using a multilevel longitudinal model evidence from the philippines using the panel data for the philippines in 2003 2009 we estimate a three level random coefficient model to measure household vulnerability and to decompose it into idiosyncratic and covariate com

target zones and exchange rate dynamics this paper develops a simple model of exchange rate behavior under a target zone regime it shows that the expectation that monetary policy will be adjusted to limit exchange rate variation affects exchange rate behavior even when the exchange rate lies inside the zone and is thus not being defended actively somewhat surprisingly the analysis of target zones turns out to have a strong formal similarity to problems in option pricing and investment under uncertainty

globalization and rural poverty as is common in most contentious public debates different people mean different things by globalization some interpret it to mean the global reach of new technology and capital movements some refer to outsourcing by domestic companies in rich countries others protest against the tentacles of corporate capitalism or us hegemony economic military or cultural in this chapter i shall limit myself to interpreting globalization simply as openness to foreign trade and long term capital flows i shall ignore here the important issues arising from the devastation caused to fragile economies by billions of dollars of volatile short term capital stampeding around the globe in herd like movements or the substantial poverty reducing potential of international unskilled labour flows from poor to rich countries even if allowed in temporary and regulated doses

urban biased policies and rising income inequality in china since the start of economic reforms in 1978 china has experienced the largest increase in income inequality of all countries for which comparable data are available according to the world bank 1997 china s gini coefficient increased from 28 2 in 1981 to 38 8 in 1995 based on official survey data another study that used internationally standard definitions for incomes estimated china s gini ratio at 38 2 in 1988 and 45 2 in 1995 a level that already surpassed many developing economies in asia azizur khan and carl riskin 1998 are these income inequality changes the consequence of institutional reforms that replaced egalitarian rewards with work incentives employment contracts and labor mobility this paper uses household survey data collected by china s state statistical bureau ssb to investigate the sources and causes of this rising inequality by analyzing gini ratios and generalized entropy measures i decompose the overall inequality into three sectoral components i inequality within rural areas ii inequality within urban areas and iii sectoral disparity the data indicate that increases in rural urban income differentials have been the driving factor behind the rising overall inequality in china i argue that urbanbiased policies and institutions including labor mobility restrictions welfare systems and financial policies of inflation subsidies and investment credits to the urban sector are responsible for the long term rural urban divide and the recent increases in disparity

on measuring child costs with applications to poor countries the theoretical basis for measuring child costs is discussed and detailed consideration is given to two straightforward procedures for calculation engel s food share method and rothbarth s adult good method each of these methods embodies different definitions of child costs so that the same empirical evidence can generate quite different estimates depending on the method used it is shown that true costs are generally overstated by engel s method and understated by rothbarth s procedure although the latter unlike the former can provide a sensible starting point for cost measurement our estimates from sri lankan and indonesian data suggest that children cost their parents about 30 40 percent of what they spend on themselves

climate policy design with correlated uncertainties in offset supply and abatement cost emission offsets within cap and trade systems are widely believed to contain system costs and stabilize allowance prices however trends in offsets supply are uncertain may be persistent and may be correlated with other sources of uncertainty in a dynamic stochastic model we find total costs increase as does variability in allowance prices and emissions as uncertainty in offsets becomes more persistent and to a lesser extent becomes negatively correlated with uncertainty in abatement costs these results are amplified with risk sensitivity larger annual offset limits and competitive offset purchasing imposing an allowance price collar can mitigate cost increases and price variability jel q54 q58

earnings mobility and measurement error a pseudo panel approach the degree of mobility in incomes is often seen as an important measure of the equality of opportunity in a society and of the flexibility and freedom of its labor market but estimation of mobility using panel data is biased by the presence of measurement error and non random attrition from the panel this paper shows that dynamic pseudo panel methods can be used to consistently estimate measures of absolute and conditional mobility in the presence of non classical measurement errors these methods are applied to data on earnings from a mexican quarterly rotating panel absolute mobility in earnings is found to be very low in mexico suggesting that the high level of inequality found in the cross section will persist over time however the paper finds conditional mobility to be high so that households are able to recover quickly from earnings shocks these findings suggest a role for policies which address underlying inequalities in earnings opportunities

economic relationship between access to land and rural poverty in nepal in the present socio economic structure of nepal land is the main source of income and consumption for the majority of nepalese this study analyses the economic relationship between access to land and poverty in nepal by establishing the link between land and consumption as well as land and income a generalised additive model gam and ordinary least squares ols demonstrate that greater access to land increases income and consumption of the household and thereby reduces poverty the significant marginal value of land for both consumption and income implies that an effective land reform policy could well be an effective approach to alleviate rural poverty however land reform must come as part of a larger overhaul cluster analysis shows that land reform should target appropriate subgroups within the community in order to differentiate those who would make use of the extra land from those who would not and apply appropriate strategies to each subgroup it reveals the importance of subgroups in determining an appropriate strategy for tackling poverty

combining quantitative and qualitative methods in assessing chronic poverty the case of rwanda this paper addresses the issue of chronic poverty in rwanda an issue which has not been addressed specifically in the policy debate despite the fact that it is likely to be widespread in part this has reflected lack of available evidence in that the conventional sources used to analyze chronic poverty are not available we argue in this paper that by judicious combination of existing qualitative a high quality nationwide participatory poverty assessment and quantitative sources a household survey it is possible to identify and characterize a clearly distinct group of chronically poor households whose characteristics are different from the poor as a whole

price effects inefficient environmental policy and windfall profits we examine conditions under which a new or tighter restriction on emissions from a competitive polluting industry creates price effects in adjacent markets price effects may arise when a quantity restriction on emissions causes output to fall and therefore output price to rise they may also arise when the required reduction in output causes the price of a polluting input to fall we model emissions as a fixed proportion of output limiting the possibilities for input substitutions the possibility of price effects exists whenever the set of regulated firms is large relative to its input or output markets a possibility that is expressly ruled out in montgomery s j econ theory 5 395 418 1972 paper two potential implications of price effects are explored one is an efficiency concern a welfare maximizing regulator who neglects price effects will require more than the optimal level of abatement the other is a distributional concern an emissions restriction might create windfall profits for the polluting industry

determinants of income mobility and household poverty dynamics in south africa this article analyses household income mobility among africans in south africa s most populous province kwazulu natal between 1993 and 1998 compared to industrialised and most developing countries mobility has been quite high as might have been expected after the transition in south africa this finding is robust when measurement error is controlled for when disaggregating the sources of mobility it is found that demographic changes and employment changes account for most of the mobility observed which is related to rapidly shifting household boundaries and a very volatile labour market in an environment of high unemployment using a multivariate analysis it can be seen that transitory incomes play a large role four types of poverty traps are found associated with large initial household size poor initial education poor initial asset endowment and poor initial employment access that dominate the otherwise observed regression towards the mean

poverty and household size the widely held view that larger families tend to be poorer in developing countries has influenced research and policy the scope for size economies in consumption cautions against this view we find that the correlation between poverty and size vanishes in pakistan when the size elasticity of the cost of living is about 0 6 this turns out to be the elasticity implied by a modified version of the food share method of setting scales by contrast some measures of child nutritional status indicate an elasticity of unity consideration of the weight attached to child versus adult welfare may help resolve the non robustness of demographic profiles of poverty excerpt

simulating the impact of policy upon chronic and transitory poverty in rural pakistan anti poverty programmes often seek to improve their impact by targeting households for assistance according to welfare measures in a single time period however a growing literature shows the importance to poor households of fluctuations in their welfare from month to month and year to year this study uses a five year panel of 686 households from rural pakistan to investigate the magnitude of chronic or transitory poverty making an explicit adjustment for measurement error the impact of two types of policies those designed to smooth incomes and those designed to promote income growth on the severity of chronic and transitory poverty is examined since the largest part of the squared poverty gap in our sample is transitory large reductions in poverty can be achieved by interventions designed to smooth incomes but reducing chronic poverty in the long term requires large and sustained growth in household incomes the level and variability of incomes is then modelled as a function of household char

cap and trade programs under delayed compliance consequences of interim injections of permits virtually every analysis of cap and trade programs assumes that rms must surrender permits as they pollute however no program existing or proposed requires such continual compliance some e g the acid rain program limiting so2 emissions require compliance once a year others e g the regional greenhouse gas initiative limiting co2 emissions require compliance every three years the paths of emissions and permit prices would be invariant to compliance timing holland moore 2013 if the government never injected additional permits between successive compliance dates however virtually all emissions trading programs require such injections through either 1 interim permit auctions or 2 sales from cost containment reserves intended to cap permit prices in such cases analyses which abstract from delayed compliance may mislead policy makers for example a cost containment reserve judged sucient to cap prices at a ceiling over a year may sell out in a single day

environmental policy incentives to adopt advanced abatement technology abstract we investigate incentives through environmental policy instruments to adopt advanced abatement technology first we study the case where the regulator makes long term commitments to policy levels and does not anticipate arrival of new technology we show that taxes provide stronger incentives than permits auctioned and free permits offer identical incentives and standards may give stronger incentives than permits second we investigate scenarios where the regulator anticipates new technologies we show that with taxes and permits the regulator can induce first best outcomes if he moves after firms have invested whereas this does not always hold if he moves first

price controls and the behavior of auction markets an experimental examination price ceilings and price floors are common in all market systems the ancient greeks and hellenistic era egyptians are known to have utilized price controls see h michele p 272 and j p levy p 41 and numerous public policy questions today involve them apparently for as long as price controls have existed their effects have been debated for example diocletion s favorable view of his price ceilings was disputed by the religious philosopher lactantius who charged that the policy led to scarcity and low grade articles p 145

trade liberalisation and poverty what are the links this paper asks whether a developing country s own trade liberalisation could translate into increased poverty and what information would be required to identify whether it will do so it plots the channels through which such effects might operate identifying the static effects via four broad groups of institutions households distribution channels factor markets and government and the dynamic issues of volatility long term economic growth and short term adjustment stresses an increase in the price of something a household sells labour good service increases its welfare thus the paper first explores the likely effects of trade liberalisation on the prices of goods and services taking into account the distribution sector also critical is whether trade reform creates or destroys markets trade reform is also likely to affects factor prices of which the wages of the unskilled is the most important for poverty purposes if reform boosts the demand for labour intensive products it boosts the demand for labour and wages and or employment will increase however not all developing countries are relatively abundant in unskilled labour and trade can boost demand for semi skilled rather than unskilled labour hence poverty alleviation is not guaranteed trade reform can affect tariff revenue but much less frequently and adversely than is popularly imagined even if it does it is a political decision not a law of nature that the poor should suffer the resulting new taxes or cuts in government expenditure opening up the economy can reduce risk and variability because world markets are usually more stable than domestic ones but sometimes it will increase them because stabilisation schemes are undermined or because residents switch to riskier activities the non poor can generally tide themselves over adjustment shocks from a liberalisation so public policy should focus on whether the initially poor and near temporary setbacks the key to sustained poverty alleviation is economic growth there is little reason to fear that growth will not boost the incomes of the poor similarly while the argument that openness stimulates long run growth has still not been completely proven there is every presumption that it will

economic growth income inequality and poverty in china under economic reforms china s gross domestic product gdp more than quadrupled between 1978 and 1996 under economic reforms per capita disposable incomes more than tripled in the cities and almost quadrupled in the rural areas however rapid economic growth brought about large income inequality which slowed down poverty reduction in 1995 there were still 70 170 million people living in poverty this article aims to assess the relationship between economic growth income inequality and poverty using both secondary and household survey data the main findings are 1 urban rural divide and spatial inequality are two major factors accounting for overall income inequality 2 non wage and non farm incomes are more unequally distributed than wage and farm incomes and 3 the incidence of poverty is very sensitive to the changes in per capita income and inequality

an empirical test of the inequality trap concept abstract the paper uses a gmm estimation to prove the impact of equity on inequality persistence which suggests the presence of inequality trap and underline the significant influence of the credit market wealth and education access initial levels

saving and economic shocks in rural pakistan abstract this paper adapts the recent methodology of paxson to study saving rates in rural pakistan particular attention is paid to differences in marginal rates of financial and physical saving and how these vary across income groups and by direction of income shocks households exhibit more difficulty in smoothing consumption after successive shocks than with a single shock the study also observes marginal rates of saving out of international remittances and lump sum pensions unlike domestic remittances international remittances appear to be treated much as transitory income shocks

assessing the extent and nature of chronic poverty in low income countries issues and evidence discussions of chronic poverty have mostly considered its monetary dimensions with current evidence suggesting that such poverty is much more transient than chronic but chronic poverty is a real and important phenomenon potentially more important quantitatively than it first appears once account is taken of different methodological approaches and inevitable measurement difficulties the chronic poor have distinctive characteristics such as lack of assets or high dependency rates which may account for their persistent poverty the paper argues that it is also necessary to develop concepts of chronic poverty further covering relevant nonmonetary dimensions and not just relying on panel data

irreversible abatement investment under cost uncertainties tradable emission permits and emissions charges abstract a major concern with tradable emission permits is that stochastic permit prices may reduce a firm s incentive to invest in abatement capital or technologies relative to other policies such as a fixed emissions charge however under efficient permit trading the permit price uncertainty is caused by abatement cost uncertainties which affect investment under both permit and charge policies we develop a rational expectations general equilibrium model of permit trading and irreversible abatement investment to show how cost uncertainties affect investment under permits we compare the resulting investment incentive with that under charges after controlling for the assumption that random shocks affect the abatement cost linearly we find that firms investment incentive decreases in cost uncertainties but more so under emissions charges than under permits therefore tradable permits in fact may help maintain firms investment incentive under uncertainty

data gaps data incomparability and data imputation a review of poverty measurement methods for data scarce environments this paper reviews methods that have been employed to estimate poverty in contexts where household consumption data are unavailable or missing these contexts range from completely missing and partially missing consumption data in cross sectional household surveys to missing panel household data the paper focuses on methods that aim to compare trends and dynamic patterns of poverty outcomes over time it presents the various methods under a common framework with pedagogical discussion on the intuition empirical illustrations are provided using several rounds of household survey data from vietnam furthermore the paper provides a practical guide with detailed instructions on computer programs that can be used to implement the reviewed techniques

nonmarket institutions for credit and risk sharing in low income countries the design credit and risk institutions in low income countries provides one of the most exciting testing grounds for theories of contracting with imperfect information and limited enforcement this paper reviews some of the recent literature with a special focus on nonmarket institutions that cope with risk and provide credit this literature attempts to bring together insights from economic theory especially information economics contract theory and mechanism design theory however it is also applied being motivated by the circumstance of the poor countries that their authors have visited and studied

microeconomic determinants of income inequality in rural pakistan abstract inequality matters for poverty reduction however it is often unclear what policy could do to change the distribution of income as to date there is little quantitative evidence about the household characteristics that determine the level of income inequality and its changes over time this paper sets out to identify these determinants by adapting a regression based inequality decomposition technique and applying it to panel data from rural pakistan land ownership is key to explaining the level of inequality but not its changes in contrast higher education drives changes but not the level of inequality household location affects both reflecting growing differences in market access across regions

transient poverty poverty dynamics and vulnerability to poverty an empirical analysis using a balanced panel from rural china china s economic reforms starting in the late 1970s have resulted in rapid economic growth with annual growth in gross domestic product averaging greater than 10 percent per year for more than thirty years accompanying this rapid growth in national accounts have been rapid and widespread reductions in poverty with these reductions in poverty however there has often been observed an increase in income inequality both between as well as within rural and urban sectors this rising income gap challenges the notion that economic reforms in china have been as successful as the poverty statistics would suggest in this paper we suggest that an alternative view would be to consider the effects of these reforms on changing the chronic nature of poverty and reducing household vulnerability to poverty using a balanced panel from rural china from 1991 through 2006 we find that most poverty among our sample has shifted from being chronic in nature to being transient with households either shifting into a state of being non poor moving in and out of poverty among our sample vulnerability to poverty has been declining over time but the declines are not uniform over time or space we decompose household vulnerability status into two proximate causes low expected income and high income variability finding vulnerability increasingly due to income variability additionally we demonstrate that vulnerable households have very different characteristics than non vulnerable households

profit sharing and optimal labour contracts this paper examines the effect of introducing profit sharing arrangements into union firm contracts it is shown that if bargaining is efficient using the generalized nash bargain profit sharing has no effect on the bargaining outcome this is true both when the profit sharing restriction is exogenously imposed by legislation and when profit sharing is part of the optimal contract however if the initial bargaining process is inefficient because direct negotiation on total employment is precluded an optimal contract can use profit sharing to establish the efficient bargaining outcome both types of bargaining models have been employed in the literature

income smoothing and consumption smoothing one way that risk averse households protect consumption levels is to borrow and use insurance mechanisms another way common in low income economies is to diversify economic activities and make conservative production and employment choices households thus tend toward limiting exposure only to shocks that can be handled with available credit and insurance typically both types of mechanisms are studied independently but much more can be learned by studying them together first we obtain a more complete picture of risks costs and insurance possibilities second it opens the way to considering biases in standard tests of credit and insurance

agricultural trade liberalization and poverty dynamics in three developing countries many developing countries implemented sweeping agricultural reforms over the last decade reforms have included the removal of quotas and price controls changes in international trade barriers and the commercialization and privatization of state marketing boards for key crops these reforms have often generated intense criticism from groups claiming that they hurt poor farmers and poor households this concern has generated an extensive literature on the economics of agricultural trade reform in developing countries much of which has focused on explaining the large variations in supply response across countries regions and households e g key sadoulet and de janvry in addition anumber of papers have attempted to simulate the impact on poverty using household survey data and actual or predicted price changes e g chen and ravallion however in many cases the true impact of agricultural reform is difficult to determine in part this is because the analysis is based upon household surveys at a single point in time so that the final post adjustment consequences upon individual households are unknown also even where observations are available over time it has so far proved difficult to disentangle the effects of trade and agricultural liberalization from other contemporary shocks this abstract was borrowed from another version of this item

consumption insurance an evaluation of risk bearing systems in low income economies the hypothesis of full risk sharing can be taken to data from low income countries and evaluate formal and informal financial systems in many contexts idiosyncratic risks are high so credit insurance arrangements could be beneficial statistical tests reveal that households in southern india take advantage of these possibilities villages in cote d ivoire and countries in thailand do not do as well the paper includes an empirical description of the devices used to smooth consumption and a theoretical discussion of private information and incentives on ideal operating systems the full information and mechanism design frameworks provide benchmarks for policy analysis

recessions and the vulnerable abstract this study evaluates the impact of recessions on households vulnerable to poverty the results indicate that recessions impact vulnerable households asymmetrically in comparison to the impact of growth on poor households we also demonstrate that this outcome is significantly influenced by a country s extent of development we argue that a direct consequence of the foregoing is that the efficacy of growth in poverty reduction tends to be under stated by conventional measures of poor households responses to economic growth and that safety nets need to be constructed to incorporate vulnerability to recessions

regional poverty targeting in china we evaluate the effectiveness of regional targeting in china s large scale poverty alleviation program begun in 1986 by analyzing a panel data set of all counties in china for the period 1981 1995 estimates of models of poor county designation and poverty fund allocation and newly defined targeting gap and targeting error measures show that political factors have affected targeting and that leakage has increased while coverage has improved only one of the three main programs is progressive growth model estimates find that poor county designation increased incomes per capita by 2 28 per year during 1985 1992 and 0 91 during 1992 1995 these results are relatively robust to redefining control groups using propensity score matching methods

transactions costs and agricultural household supply response we develop and estimate a model of supply response when transactions costs create a situation where some producers buy others sell and others do not participate in markets we present two rationales for why producing households may have different relationships to the market proportional and fixed transactions costs using data on mexican corn producers we estimate an empirical model that allows for separate tests of the significance of both types of transactions costs revealing that both fixed and proportional transactions costs matter for the estimation the results provide consistent estimates of supply elasticity and measures of the relative importance of factors determining both proportional and fixed transactions costs

commodity agreements and commodity markets lessons from tin in what follows we study the history of the tin market over the period i982 5 important questions this exercise will help to answer are was the collapse of the tin market a failure of the buffer stock operation and was it inevitable was the activity of the buffer stock a commodity market manipulation was there a deficiency in the drafting of the tin agreement was there a failure of commodity market regulation more generally while it has long been recognised that stabilisation schemes are vulnerable to speculative attacks the interconection between buffer stock managements and futures markets has not been explored in this sense our historical analysis will

soft and hard price collars in a cap and trade system a comparative analysis we use a stochastic dynamic framework to compare price collars price ceilings and floors in a cap and trade system with uncertainty in the level of baseline emissions and costs we consider soft collars which provide limited volume of additional emission allowances a reserve at the price ceiling and hard collars which provide an unlimited supply of additional allowances thereby preventing allowance prices from exceeding the price ceiling conversely allowances are removed from the market if prices fall to the floor we find that increasing the size of the reserve strictly lowers expected net present values of compliance costs however there is a diminishing effect as the allowance reserve is expanded most of the expected cost savings are achieved with a modest reserve consequently a rather limited soft price collar could provide considerable assurance about cost while preventing the possibility that emissions could spiral out of control

assessing the effect of microfinance on vulnerability and poverty among low income households we empirically investigate whether participation in the indian self help group shg microfinance programme has helped reduced poverty and household vulnerability using cross sectional shg rural household survey data the potential selection bias is eliminated by propensity score matching to estimate the average treatment on treated effect using nearest neighbour matching and a local linear regression algorithm we find that vulnerability in shg members is not significantly higher than in non shg members even though the shg members have a high incidence of poverty however vulnerability declines significantly for those that have been shg members for more than one year these results are found to be robust using sensitivity analysis and the rosenbaum bounds method

the fixed wage puzzle why profit sharing is so hard to implement abstract profit sharing arrangements pareto dominate fixed wage contracts but are far less than ubiquitous we account for this fixed wage puzzle by adopting a perspective of bounded rationality specifically plausible share arrangements are not generally acceptable to both firms and unions

expected poverty under risk induced welfare variability two of the most widely accepted stylised facts about agriculture in south asia sub saharan africa and elsewhere are that income is highly uncertain from one year to another and that deep and widespread poverty exists and yet there has been very little analysis of the joint problems of poverty and risk this paper offers a methodological approach to the issue of how risk affects poverty and applies it to household level data for dry areas of rural india the following questions are addressed under what conditions can one expect an increase in the riskiness of an income or consumption stream to increase poverty how should one measure the contribution of risk to poverty and what long term benefits in terms of reduced poverty can be expected from policies aimed at stabilising incomes of the poor such policies have been widely discussed in the indian subcontinent of late and their effect on rural

is transient poverty different evidence for rural china we define transient poverty as the component of time mean consumption poverty at household level that is directly attributable to variability in consumption this can be thought of as a measure of vulnerability to falling consumption the non transient component then depends solely on mean consumption over time and we call this chronic poverty using robust semi parametric methods and household panel data for rural china we test whether transient poverty is determined by a process that is similar to chronic poverty commonly identified causes of poverty in this setting have weak explanatory power for transient poverty and some of the factors determining transient poverty do not matter to chronic poverty or even have the opposite effect successful policy responses to chronic poverty may still leave considerable transient poverty

how robust is a poverty profile comparison of poverty such as when poverty is greatest typically matter far more for policy choices than do aggregate measures of poverty such as how many people are deemed poor the authors examine alternative methods for constructing poverty profiles focusing on their internal consistency and appropriateness for guiding policy none is perfect but some methods appear to be preferable to others when the aim is to inform policies for fighting absolute consumption poverty a case study on indonesia reveals that the country s regional and sectoral poverty profile is highly sensitive to some aspects of measurement but quite robust to others

implications of non farm work to vulnerability to food poverty recent evidence from northern ghana summary using survey data from northern ghana this study seeks to establish the impact of participation in non farm work on the vulnerability of resource poor households to food poverty vulnerability to food poverty is assessed based on expected future food expenditure of households the potential endogeneity problem associated with participation in non farm work by households is overcome using a novel instrumental variable approach analysis of the determinants of expected future food expenditure is done using a standard feasible generalized least squares fgls method demographic and socioeconomic variables location variables and household facilities are included in the model as control variables our study finds that participation in non farm work significantly increased the future expected food consumption thereby alleviating the vulnerability of households to food poverty our study also confirms that current food poverty and future food poverty i e vulnerability to food poverty are not independent from each other non farm work plays a crucial role in providing the means to overcome the risk of food poverty in these resource poor households policies that promote off farm income generating activities such as small businesses and self employment as well as the creation and support of businesses that absorb extra labor from the farm should be encouraged in the study region because households in the study region are exposed to above average levels of hunger and food poverty the study recommends the government of ghana and development partners to take measures that enhance the resilience of these resource poor households

the definition and measurement of poverty both poverty research and social policy employ a variety of poverty definitions the choice of one specific definition has major consequences for the resulting poverty population this paper uses eight different definitions of poverty to determine who is poor using a 1983 dutch sample of more than 12 000 households poverty according to each of these definitions is compared over different subgroups the relevance of the choice between definitions for social policy is shown by the presentation of poverty percentages according to the various definitions which vary widely

profit sharing and relative consumption mandatory profit sharing can represent a pareto improvement if labour supply is excessive due to relative consumption effects profit sharing reduces wages if the rise in profit income keeps total income constant there will only be a pareto improving substitution effect

market power and transferable property rights the appeal of using markets as a means of allocating scarce resources stems in large part from the assumption that a market will approximate the competitive ideal when competition is not a foregone conclusion the question naturally arises as to how a firm might manipulate the market to its own advantage this paper analyzes the issue of market power in the context of markets for transferable property rights first a model is developed that explains how a single firm with market power might exercise its influence this is followed by an examination of the model in the context of a particular policy problem the control of particulate sulfates in the los angeles region

profit sharing unions and investments the pay parameters in a profit sharing system are likely to be determined by collective bargaining between unions and employers in this case employment will not necessarily be higher under profit sharing than under a fixed wage system for a fixed capital stock the most likely case is that profit sharing is better for unions and worse for employers than a fixed wage system with endogenous investments both parties may be worse off under profit sharing than under a fixed wage system this might be one of the reasons why we in fact do not observe much profit sharing under collective bargaining

issues in measuring and modeling poverty economists have relied heavily on household incomes or expenditures normalized for differences in household specific prices and demographics in their research and policy advice related to poverty and inequality recognizing the conceptual and empirical problems that confound such measures does not mean that they should be ignored instead it indicates the need for supplementary measures to capture the missing items implementing a genuinely multidimensional approach will often make the welfare rankings of social states more difficult but that fact points to the nonrobustness of low dimensional rankings this may have its own policy ramifications with the possibility of correspondence between policy instruments and welfare objectives the model types used to understand the poverty and inequity determination processes will be affected not only will there be more dependent variables to consider but variables will have potentially complex relationships these relationships will often be hard to empirically disentangle despite richer integrated and longitudinal data sets such data open rich and relevant agenda for research into the dynamics of poverty along multiple dimensions a simultaneous attack on these issues from all three fronts measurement modeling and data offers hope of establishing a credible empirical foundation for public action in fighting poverty

vulnerability and chronic poverty in rural sichuan abstract chinese anti poverty policy stresses the long term structural nature of rural poverty this paper shows that poverty in rural sichuan during 1991 95 was both dynamic and persistent a new measure of chronic poverty is defined as a high vulnerability to being poor and compared with traditional interpretations of chronic poverty as low mean consumption households are highly vulnerable to falling into poverty even when their average consumption is some distance above the poverty line the determinants of low mean consumption and high vulnerability appear however to be similar suggesting that policies to increase mean consumption will also reduce vulnerability

the simple macroeconomics of profit sharing this paper is in the spirit of the temporary equilibrium approach to macroeconomics it basically extends that framework to cover a profit sharing system and then compares the macroeconomic characteristics with those of the more familiar wage system a first preliminary step is to demonstrate how a microeconomic model of monopolistic competition can be built up into a junior member of the keynesian macro family the methodology is to create from first principles including a careful formulation of a monopolistically competitive product market structurea natural underpinning for the standard aggregate demand specification the primary goal of the paper is to apply the integrated monopolistic competitionkeynesian type apparatus described above to investigate the macroeconomic properties of a profit sharing economy the existence of a consistent general framework covering both cases invites meaningful comparisons that indicate clearly why an economy based on profit sharing principles possesses natural immunity to stagflation by contrast the wage economya system we have largely accepted without critically examining its macroeconomic consequences is more prone to suffer from unemployment and inflation the policy implications for aggregate demand management in wage and share systems are analyzed and contrasted in writing this paper my philosophy has been to not shirk from using those reasonable parameterizations and functional forms which yield nice crisp results and permit me to focus sharply on the essential logic of basic issues it is certainly possible to present the main results in a somewhat more general formulation as the astute reader will appreciate but i fear only at some cost of distracting attention from those central features i wish to highlight

asset based poverty transition and persistence in rural china this article tests empirically for transition and persistence of poverty in rural china based on the theory of asset based poverty traps it proposes an analytical framework mitigating the problem of endogenous switching between accumulation regimes and disentangling the true state dependence of poverty specifically a dynamic asset threshold separating households into downward and upward mobility regimes is identified after taking households unobserved characteristics and observed regime differentiated accumulation strategies into account the static analysis identifies causality running from settling into a downward mobility regime to the probability of poverty measured by consumption furthermore allowing for endogenous initial poverty status the dynamic analysis finds strong true state dependence in poverty households with the same characteristics are nearly twice as likely to be poor as if they had not previously switched to the accumulation regime assets below the dynamic threshold serve as a conduit through which poverty propagates itself factors that help to break this vicious circle are identified

identifying vulnerability to poverty a critical survey in the economic literature on poverty various methods have been proposed for measuring a phenomenon known as vulnerability however after more than a quarter century of research no consensus has been reached on how to identify such vulnerable individuals within a given population some misunderstandings have also arisen from the overlapping of other closely related concepts such as the expectation of being poor expected poverty multi period poverty and risk exposure this paper offers a detailed conceptual discussion on vulnerability to poverty and its related elements reviewing a wide range of identifying criteria provided in the literature it is found that according to the state of the art in this field of research two key elements stand out in identifying vulnerable individuals an expected well being below the poverty line and a relevant risk of falling into poverty due to downside deviation from a reference level of well being the traditional classification of vulnerability approaches has been updated into four groups i those that stress the element of exposure to risk ii those that emphasize the element of expected poverty iii those that define vulnerability through a utility gap and iv those that are supported by a mean risk dominance criterion

steady state unemployment under profit sharing this paper demonstrates how asymmetric treatment of high seniority insider workers and non tenured outsiders gives rise to bad macroeconomic st eady states in a wage economy the framework uses a nash bargaining solution where workers may bargain over pay but firms control hiring profit sharing is then considered as an alternative payment mechanism having the automatically corrective incentive property that employers want to hire more outsiders given the assumptions of the model it is shown that widespread profit sharing results in lower unemployment and more output even though it is individually rational for insiders to prefer wages over profit shares copyright 1987 by royal economic society

alternative approaches to cost containment in a cap and trade system we compare several emissions reduction instruments including quantity policies with banking and borrowing price policies and hybrid policies safety valve and price collar using a dynamic model with stochastic baseline emissions the instruments are compared under the design goal of obtaining the same expected cumulative emissions across all options based on simulation analysis with the model parameterized to values relevant to proposed us climate mitigation policies we find that restrictions on banking and borrowing including the provision of interest rates on the borrowings can severely limit the value of the policy depending on the regulator chosen allowance issuance path although emissions taxes generally provide the lowest expected abatement costs a cap and trade system combined with either a safety valve or a price collar can be designed to provide expected abatement costs near those of a tax but with lower emissions variance than a tax consistently a price collar is more cost effective than a safety valve for a given expected cumulative emissions outcome because it encourages inexpensive abatement when abatement costs decline

saving in developing countries theory and review in the literature on economic development much of the interest in saving has been focused on the relation between saving and growth but saving is not only about accumulation it is about smoothing consumption in the face of volatile and unpredictable income and helping to ensure the living standards of poor people whose lives are difficult and uncertain this paper develops a model of households which cannot borrow but which accumulate assets as a buffer stock to protect consumption when incomes are low such households dissave as often as they save do not accumulate assets over the long term and have on average very small asset holdings but their consumption is markedly smoother than their income much of the evidence is as consistent with this view of saving as it is incosistent with standard views of smoothing over the life cycle and with explanations of the link between saving and growth in terms of life cycle saving behavior consumption smoothing is also a useful way of thinking about government policy where volatility in the world prices of taxed commodities can generate sharp fluctuations in government revenues as well as reallocations of revenue between the private and public sectors many important policy issues in developing countries hinge on issues of consumption and smoothing and research on these issues is currently likely to be more productive than work on the relation between saving and growth

permit market auctions with allowance reserves this article investigates pollution permit auctions that incorporate allowance reserves in these auctions the sale of a fixed quantity of permits is supplemented by an additional permit reserve this reserve automatically releases permits if a sufficiently high price is triggered the main justifications for implementing an allowance reserve are to reduce price volatility as well as assisting in cost containment we show paradoxically that incorporating an allowance reserve into a permit auction can decrease firms payoffs increase the clearing price and increase compliance costs this has implications for all major cap and trade markets including the us regional greenhouse gas initiative

manipulation of the commodity futures market delivery process an analysis of the futures market delivery end game specifies necessary and sufficient conditions for long and short traders to manipulate futures prices at contract expiration the empirical and welfare implications of manipulation are derived as well manipulation is most likely to occur in markets where economic frictions such as transportation and transactions costs make it inefficient to return excessive deliveries to their original owners these consumption distortions induce price changes that favor manipulators manipulation may also occur in markets where such costs are unimportant but the necessary conditions for the manipulation of a frictionless market are very restrictive copyright 1993 by university of chicago press

optimal trading ratios for pollution permit markets abstract we demonstrate a novel method for improving the efficiency of pollution permit markets by optimizing the exchange of emissions through trade under full information it is optimal for emissions to exchange according to the ratio of marginal damages under asymmetric information we derive necessary conditions for the marginal damage trading ratios to be optimal illustrate that the marginal damage trading ratios are generally not optimal and show how to improve efficiency using optimal trading ratios we calculate the optimal trading ratios for a global carbon market the gains from using optimal trading ratios rather than marginal damage trading ratios range from substantial to trivial which suggests the need for careful consideration of asymmetric information when designing permit markets