option value empirical evidence from a case study of recreation and water quality a procedure for measuring option value and other preservation values of water quality is developed and applied to a case study area in the south platte river basin colorado benefits from water based recreation activities are the focus of the study the results provide an empirical test and confirmation of weisbrod s proposal that option value and other preservation values represent important social benefits and should be added to the aggregate consumer surplus of recreation activities to determine the total benefit of environmental amenities to society in the absence of such an estimate insufficient resources would be allocated by society to preservation of unique environments such as pristine mountain streams where mineral and energy development may irreversibly degrade water quality

rural nonfarm employment and incomes in latin america overview and policy implications abstract rural nonfarm employment rnfe and incomes rnfi are crucial to latin american rural households the 11 rural household income studies in this volume reviewed in this paper use 1990s data and show that rnfi averages 40 of rural incomes rnfi and rnfe have grown quickly over the past three decades the review of evidence provided some surprising departures from traditional images of nonfarm activities of latin american rural households in terms of shares of rural incomes 1 nonfarm wage incomes exceed self employment incomes 2 rnfi far exceeds farm wage incomes 3 local rnfi far exceeds migration incomes 4 service sector rnfi far exceeds manufactures rnfi these findings suggest the need for more development program attention to wage employment in the service sector versus the traditional focus on small enterprise manufactures moreover poor households and zones tend to have higher shares in their incomes but lower absolute levels of rnfi as compared to richer households and zones the rnfe of the poor tend to be the low paid nonfarm equivalent of semi subsistence farming raising the capacity of the poor to participate in the better paid types of rnfe is crucial via employment skills training education infrastructure credit finally rnfe has grown fastest and been most poverty alleviating where there are dynamic growth motors in particular in the agricultural sector but also in tourism links to urban areas mining and forestry this means that developing rnf jobs cannot be done at the expense of programs promoting agricultural development

inflation corporate income taxation and the demand for capital assets the demand for capital is not systematically related to either the level or the rate of change of effective income tax rates on corporate capital assets rising inflation during the last 10 years has raised the user cost of capital for durable assets relative to that for short lived assets even though this inflation has raised effective tax rates for more durable capital less than for short lived assets even with replacement cost depreciation allowances the level and pattern of investment incentives probably will continue to vary with the inflation rate

accelerated depreciation and the efficacy of temporary fiscal policy implications for an inflationary economy abstract the effect on investment of temporary tax rate changes depends on the age profile of depreciation deductions if the depreciation allowance schedule is accelerated then temporary cuts in the corporate tax rate could reduce investment inflation causes the age profile of real depreciation deductions to become accelerated and thus could make temporary tax cuts have a contractionary effect on investment two currently proposed reforms are shown to exacerbate this effect under each of these proposals temporary tax cuts are likely to have opposite effects on investment in short lived and long lived capital thereby complicating the conduct of countercyclical fiscal policy

urbanization and growth in a simple urban economics framework we aim at highlighting how the trade off between optimal and equilibrium city size behaves when introducing dynamic human capital externalities beside the classical congestion externalities our purpose is to show that there are dynamic gains from oversized cities to this end we assume that productivity depends on human capital which is solely accumulated in cities such that urbanization is the engine of growth in an empirical illustration we highlight the link between urbanization and human capital accumulation by focusing on cross country panel data

poverty transition in rural vietnam the role of migration and remittances abstractthis study combines insights of the new economics of labour migration with the asset based approach to welfare dynamics using panel household data from vietnam this method allows us to determine whether poverty transitions induced by remittances are actually structural that is based on asset growth and therefore long term or stochastic that is based only on short term increases in income which implies a risk of falling back into poverty to control for endogeneity of remittances we use household fixed effects and instrumental variables estimation the paper shows that remittances have a positive impact on asset growth and that the impact differs with welfare status and ethnicity

valuation and management of wetland ecosystems we recently completed a study of wetland values in coastal louisiana that employed both willingness to pay and energy analysis based methodologies and were able to bracket a range of values within which we feel fairly confident the true value lies however a large amount of uncertainty remains our current estimates of the total prsent value of an average acre of natural wetlands in louisiana are us 2429 6400 per acre assuming an 8 discount rate to 8977 17000 per acre assuming a 3 discount rate at the lowest value the current annual rate of loss of louisiana wetlands 50 sq miles per year is worth about 77 million at the largest value it is worth about 544 million in this paper we a discuss the fundamental theoretical and practical problems underlying natural resources valuation b summarize our methods and findings for louisiana wetlands and c elaborate on some of the more recalcitrant problems attending applied natural resource valuation including discounting and dealing with uncertainty and imprecision the discount rate makes more difference in the final result than any other one factor and yet there is much disagreement about the appropriate approach to discounting natural resources we discuss the discounting problem as applied to natural resources and argue for lower discount rates for valuing renewable natural resources than apply for other aspects of the economy it now seems clear that no reasonable amount of effort will produce very precise estimates of wetland values and we suspect this is also the case for several other classes of natural resources we elaborate a wetlands asurance bonding system to address these problems

the returns from schooling in a diversified rural economy controlling for the endogeneity of activity choice and considering both household head and family schooling we findevid ence of high returns from schooling in both crop andnoncrop activities as schooling levels increase the returns from schooling shift away from crop production failure to control for activity selection andfamily schooling is likely to result in biasedestimates of the returns from schooling in individual activities copyright 2000 oxford university press

measuring sustainable welfare a new approach to the isew abstract sustainability and welfare assessment is a contemporary theme of major scientific and policy relevance requiring the consideration of multiple dimensions and diverse perspectives the economic approach to sustainability and welfare assessment has frequently relied on alternatives or adjustments to gdp widely used as an indicator of macroeconomic performance several authors have proposed alternative indicators such as the isew which intend to measure sustainability and economic welfare in a way that avoids the limitations of gdp namely accounting for the value of externalities the distribution of income and natural resources depletion since daly and cobb 1989 there have been proposed improvements to the isew however its aptitude to represent a sound alternative to gdp is still the subject of scientific debate this paper presents a new approach to the isew named modified isew including new components and methodological changes for the estimation of the index these have the purpose of avoiding some of the index shortcomings and allow for a direct comparison with the gdp which are advantages over previous studies an application is developed for the us case taking advantage of wide data availability and the possibility of comparing the results with previous works the results obtained provide a clearer picture of the success or failure of environmental and social policies namely by avoiding the tampering effect resulting from the cumulative accounting of environmental externalities this work also emphasizes the inadequacy of gdp as a welfare indicator as well as the need to develop and adopt alternative indicators

why do the young and educated in ldcs concentrate in large cities evidence from migration data do the young and educated in ldcs have a greater preference to locate in big cities if so this may help to explain how cities spatially concentrate the educated and young and why the rising share of these workers in many ldcs may contribute to city growth this paper explores migration flows into and out of egypt s three largest cities we study whether the higher shares of such workers in cities arise because these workers perceive relatively greater benefits from living in cities given relative urban rural wage rates or because the relative demand for these workers rises with city size

do focus groups and individual interviews reveal the same information for natural resource valuation abstract focus groups and individual interviews have become accepted methods used in the initial stages of valuation research whether focus groups and individual interviews reveal similar valuation information has not been thoroughly studied the research tests the hypothesis that focus groups yield the same ecosystem service information as do individual interviews the research also explores how the focus group and individual interview data might differ the analysis shows that focus groups and individual interviews are not substitutes they yield different information about ecosystem services and resource uses

combining revealed and stated preference methods to value environmental amenities at residential locations this paper combines an established revealed preference method discrete choice he donic analysis and a relatively new stated refer ence method choice based conjoint analysis in order to estimate more accurately the aesthetic benefits generated by the presence and quality of environmental amenities associated with residen tial locations it applies the combined approach to the housing market of fairfield connecticut which contains several environmental amenities and is experiencing an improvement in the quality of its coastal wetlands due to active restoration efforts jel q26

rural to urban migration human capital and agglomeration a new general equilibrium model that links together rural to urban migration the externality effect of the average level of human capital and agglomeration economies shows that in developing countries unrestricted rural to urban migration reduces the average income of both rural and urban dwellers in equilibrium various measures aimed at curtailing rural to urban migration by unskilled workers can lead to a pareto improvement for both the urban and rural dwellers in addition the government can raise social welfare by reducing the migration of skilled workers to the city moreover without a restriction on rural to urban migration a government s efforts to increase educational expenditure and thereby the number of skilled workers may not increase wage rates in the rural or urban areas

how migration restrictions limit agglomeration and productivity in china china strongly restricts rural urban migration resulting in a well acknowledged surplus of labor in agriculture but migration is also restricted within sectors this paper argues that these intra sector restrictions lead to insufficient agglomeration of economic activity in both the rural industrial and urban sectors with resulting first order losses in gdp for urban areas the paper estimates a city productivity relationship based on city gdp numbers the effects of access educational attainment fdi and public infrastructure on productivity are estimated given these worker productivity is shown to be an inverted u shape function of city employment with the peak point shifting out as industrial composition moves from manufacturing to services as predicted by urban theory as far as we know this is the first paper to actually estimate the relationship between output per worker and city scale for any country the majority of chinese cities are shown to be potentially undersized below the lower bound on the 95 confidence interval about the size where their output per worker peaks the paper calculates the large gains from increased agglomeration in both the rural industrial and urban sectors

a theory of urban growth in an economy experiencing endogenous economic growth and exogenous population growth we explore two main themes how urbanization affects efficiency of the growth process and how growth affects patterns of urbanization localized information spillovers promote agglomeration and human capital accumulation fosters endogenous growth individual city sizes grow with local human capital accumulation and knowledge spillovers and city numbers generally increase which we demonstrate is consistent with empirical evidence we analyze whether local governments can successfully internalize local dynamic externalities in addition we explore how growth involves real income differences across city types and how urbanization can foster income inequality most nonagricultural production in developed countries occurs in metropolitan areas the underlying reasons why economic activity agglomerates into cities localized information and knowledge spillover also make cities the engines of economic growth in an we gratefully acknowledge support of the national science foundation grants sbr 9422440 and sbr9730142 for this research the work has benefited from conversations with harl ryder on the dynamics of the model and from comments by gilles duranton and participants in seminars at brown colorado and texas austin and a presentation at an isit seminar sponsored by the centre for economic policy research and the national bureau of economic research

spatial evolution of population and industry in the united states what features characterize the evolution of the u s urban system in this past century to what extent has the 500 percent increase in national urban population during 1900 1990 been accommodated by growth in numbers versus sizes of cities given the radical changes in the u s economic geography has the relative size distribution of city sizes changed significantly with say strong increases in urban concentration and primacy a popular notion as urbanization slowed after world war ii did fluctuations in city sizes and upward downward mobility of cities dampen as an arthur scale economy framework would predict brian arthur 1990 finally what natural geographic features of a city promote growth how important are climate location neighbor cities and the like an interrelated set of questions concerns the agglomeration and mobility of industrial activity within the set of cities are industries that are subject to greater scale economies both more agglomerated and less mobile for industries that are not subject to scale economies why does agglomeration occur central to answering these questions is measuring the nature and extent of scale economies this paper reports results on these two sets of issues using population census data for 1900 1990 and manufacturers census data for 1963 1992 for a selection of machinery and high tech industries

tax neutrality and the social discount rate a suggested framework abstract there are few problems in tax analysis which have generated as much study and discussion among economist as the question of how to formulate neutral tax incentives for investment yet no consensus has been reached concerning the proper approach to take when adjusting taxes comparing the two fundamental notions of neutrality found in the literature referred to here as present value rules and internal rate of return rules we argue that to the extent that neutrality is a useful concept only the latter of these approaches makes sense in terms of achievement of production efficiency

cities workers and wages a structural analysis of the urban wage premium workers earn higher wages in cities vs rural areas this gap could arise because cities make workers more productive or it could be the result of a non random selection of workers into cities based on their ability and their endogenous history of career choices to untangle these issues this paper estimates a dynamic programming model which embeds the choice of residing in a city or rural area within a model of career choices over time after controlling for all the sources of selection and endogeneity the estimates indicate that a given worker does earn more in the city for white collar work but not for blue collar work in addition city work experience is found to be worth more than rural work experience in the rural area for white collar work but not for blue collar work these results support the interpretation that cities make white collar workers more productive and suggest that workers may consider moving to the city not only in terms of locational choice but also as a form of human capital investment copyright 2007 wiley blackwell

the rural non farm sector issues and evidence from developing countries abstract the rural non farm sector has traditionally been viewed as a low productivity sector which produces low quality goods it is often expected to wither away as a country develops recent years have seen a shift away from this position towards recognition that the rural non farm sector can and often does contribute to economic growth rural employment poverty reduction and a more spatially balanced population distribution this paper reviews the literature on the conceptual and empirical underpinnings of this more recent perspective focussing on the experience in developing countries the paper documents the size and heterogeneity of the sector pointing to evidence that in many countries the sector is expanding rather than declining the issues associated with measuring the sector s economic contribution are discussed followed by empirical assessments for several countries and regions the distributional impact of non farm earnings is examined and it is found that a pro poor impact while by no means inevitable can be considerable the sector s trajectory over time in different settings is reviewed and the scope for and experience of various policy interventions is discussed

the external returns to education evidence from chinese cities abstract following rauch s seminal study there has been a growing interest among economists in estimating human capital externalities at the individual level j rauch productivity gains from geographic concentration of human capital evidence from the cities journal of urban economics 34 1993 380 400 in this paper we provide a first set of estimates of the external returns to education in chinese cities we find that the external returns are at least as high as the private returns to education ols estimates of the external returns range from a low of 4 9 to a high of 6 7 two stage least squares estimates indicate that a one year increase in city average education could increase individual earnings by between 11 and 13 we also examine the impact of economic reforms on the external returns to education and find suggestive evidence that economic reforms have raised the external returns to education in chinese cities

a flexible assurance bonding system for improved environmental management abstract current methods of regulating activities that are known or suspected to be environmentally danaging are not working well they induce legal confrontation obfuscation and government intrusion into the inner workings of firms they tend to suppress technical and social innovation aimed at long term solutions they do not mesh well with the market signals that firms use to make decisions this paper discusses some of the underlying reasons for this problem and outlines a flexible environmental assurance bonding system designed to incorporate environmental criteria and uncertainty into the market system and to induce positive environmental technological innovation in addition to direct charges for known environmental damages an assurance bond equal to the current best estimate of the largest potential future environmental damages would be levied and kept in an interest bearing escrow account the bond plus a portion of the interest would be returned if and only if the firm could prove that the suspected damages had not occured or would not occur if damages did occur the bond would be used to rehabilitate or repair the environment and to compensate injured parties by requiring the users of environmental resources to post a bond adequate to cover potential future environmental damages with the possibility for refunds the burden of proof is shifted from the public to the resource user and a strong economic incentive is provided to research the true costs of environmentally innovative activities and to develop innovative cost effective pollution control technologies

ecosystems contingent valuation and ethics the case of wetland re creation this paper addresses a current issue in environmental valuation namely the extent to which environmental preferences depart from the usual economic paradigm to incorporate some lexicographic elements after a theoretical discussion the paper reviews attempts to explore this question empirically by supplementing contingent valuation analyses with an exploration of the motives behind willingness to pay responses including zero bids and refusals to answer this is followed by the presentation of new evidence investigating respondents willingness to pay for the creation of a wetland taken from 713 personal interviews of the british public 2000 elsevier science b v all rights reserved

human capital entrepreneurship and farm household earnings abstract the allocation of resources between agriculture and non agriculture is a central decision of the farm household in this paper we formulate a profit maximization model in which human capital enhances efficiency through both within sector effects and across sector allocation of quasi fixed inputs the model is estimated using chinese household data that contain detailed information on production activities we find that schooling and experience improve the sectoral uses of household supplied inputs accounting for 27 of their total contribution to earnings the evidence suggests that conventional estimates of human capital returns obtained within sectors would undervalue the role of human capital in development

option value an exposition and extension this article examines the role of the discount rate in making decisions that will have significant implications for the environment the authors begin by providing a rationale for discounting in general and by describing the main factors that determine

policy comparisons with an agglomeration effects augmented dual economy model abstract in this paper we incorporate urban agglomeration economies as a labor pull factor in an analysis of dual labor markets in ldcs in particular the equilibrium city size approach to urban growth and the expected income approach to rural to urban migration are synthesized making it possible to generalize results that hitherto were approach specific with the aid of a simulation based on a well specified model we exploit this synthesis to rank subsidy policies our results highlight the constructive role played by urbanization in economic development and structural change

education and allocative efficiency household income growth during rural reforms in china this paper studies the contribution of schooling to rural income in china during factor market liberalization between 1986 and 1995 the relaxation of controls permitted farm households to reallocate productive inputs from agriculture to nonagricultural activities it is hypothesized that education facilitates this adjustment panel data from sichuan province suggest that schooling enhanced the ability of farmers to devote labor and capital to nonfarm production given the evidence that less than optimum levels of these inputs were allocated to nonagricultural uses during the transition the expansion of nonfarm activities contributed significantly to household income growth

ecological economic modeling and valuation of ecosystems abstract we are attempting to integrate ecological and economic modeling and analysis in order to improve our understanding of regional systems assess potential future impacts of various land use development and agricultural policy options and to better assess the value of ecological systems starting with an existing spatially articulated ecosystem model of the patuxent river drainage basin in maryland we are adding modules to endogenize the agricultural components of the system especially the impacts of agricultural practices and crop choice and the process of land use decision making the integrated model will allow us to evaluate the indirect effects over long time horizons of current policy options these effects are almost always ignored in partial analyses although they may be very significant and may reverse many long held assumptions and policy predictions this paper is a progress report on this modeling effort indicating our motivations ideas and plans for completion