the rotten kid theorem meets the samaritan s dilemma a familiar result in the economic theory of the family is becker s rotten kid theorem this theorem states that altruism by a family member will lead other selfish members to act efficiently from the family viewpoint we extend becker s one period model to two periods and show that parental altruism can result in an inefficiency known in other contexts as the samaritan s dilemma implications of this for transfer arrangements within the family and for the ricardian equivalence theorem are drawn

relative price determination in the medium run the influence of wages productivity and international prices this work explores three critical assumptions of the balassa samuelson productivity differential model for the short and medium run wage equalization competitive labor markets and purchasing power parity the data reveal violations in these assumptions for france germany japan the u k and the u s significant wage and unit labor cost differentials exist across industries and traded and nontraded sectors and these differentials do not diminish over time the findings are consistent with the presence of industry and or sectoral specific human capital

natural resources and sub national economic performance does sub national democracy matter abstract the differentiation in the impact of resources on economic growth is often explained by the specifics of institutional factors the aim of this paper is to investigate how sub national political differences influence the effect of natural resources on economic growth using a dataset of russian regions this paper demonstrates that sub national democratization influences the growth effects of resources and considers possible mechanisms for this influence the paper finds that in russia natural resources are only capable of promoting growth in the regions with non democratic political systems that at the same time have an efficient and non corrupt bureaucracy

intergenerational altruism dynastic equilibria and social welfare are three central findings first under relatively weak conditions welfare optima cannot be implemented as dynastic equilibria with positive levels of transfers second intergenerational altruism ordinarily renders the objectives of social planners dynamically inconsistent thereby making implementation of welfare optima problematic third if a planner successfully resolves dynamic inconsistency by committing himself to respect the preferences of deceased generations and if there are a sufficient number of prior generations then in a specific set of cases dynastic equilibria are approximately welfare optimal

capital flows and real exchange rate fluctuations following spain s entry into the european community abstract spain s 1986 entry into the european community was followed by a dismantling of restrictions on international capital flows initial trade deficits and real exchange rate appreciation were followed by trade surpluses and real exchange rate depreciation this paper analyzes spain s financial liberalization using a dynamic general equilibrium model with a traded and nontraded good where a capital poor country opens itself to its capital rich neighbors a carefully calibrated model has trouble accounting for the large changes in relative prices observed given the small changes in quantities variants of the model with frictions in factor mobility between sectors fare better

the hiring subsidy cum firing tax in a search model of unemployment abstract we study the macroeconomic and welfare effects of a tax subsidy scheme on labour in a model with search unemployment in a second best world welfare increases if unemployment is inefficiently high or if there are pre existing fiscal distortions

sectoral shocks and aggregate fluctuations abstract this paper presents a multisector dynamic general equilibrium model of business cycles with a distinctive feature aggregate fluctuations are driven by independent sectoral shocks the model hypothesizes that trade among sectors provides a strong synchronization mechanism for these shocks due to the limited but locally intense interaction that is characteristic of such input trade flows limited interaction characterized by a sparse intermediate input use matrix reduces substitution possibilities among intermediate inputs which strengthens comovement in sectoral value added and leads to a postponement of the law of large numbers in the variance of aggregate value added the chief virtue of this model is that reliance on implausible aggregate shocks is not necessary to capture the qualitative features of macroeconomic fluctuations building on horvath 1998 review of economic dynamics 1 781 808 which establishes the theoretical foundation for the relevance of limited interaction in the context of a stylized multisector model this paper specifies a more general multisector model calibrated to the us 2 digit standard industrial code economy simulations prove the model is able to match empirical reality as closely as standard one sector business cycle models without relying on aggregate shocks

tastes and technology in a two country model of the business cycle explaining international trade on international financial markets allows people to insure country specific risk and smooth consumption intertemporally equilibrium models of business cycles with trade on global financial markets typically yield international consumption correlations near one and excessive volatility of investment the authors incorporate nontraded goods in the model and find that the implications for aggregate consumption investment and the trade balance are consistent with business cycle properties of industrialized countries however the model driven by technology shocks alone yields counterfactual implications for comovements between consumption and prices at the sectoral level taste shocks produce price quantity relationships more consistent with the data copyright 1995 by american economic association

deregulation shock in product market and unemployment in a dynamic general equilibrium model with endogenous markups and labor market frictions we investigate the effects of increased product market competition unlike most macroeconomic models of search we endogenize the labor supply along the extensive margin we find numerically that a model with endogenous labor force participation decision produces a decline in the unemployment rate which is almost three times larger than that in a model with fixed labor force for a calibration capturing alternatively the european and the us labor markets a deregulation episode which lowers the markup by 3 percentage points results in a fall in the unemployment rate by 0 17 and 0 05 percentage point respectively while the labor share is almost unaffected in the long run the sensitivity analysis reveals that product market deregulation is more effective in countries where product and labor market regulations are high unemployment benefits are small and labor force is more responsive

how hurricanes affect wages and employment in local labor markets currently a growing literature is emerging on estimating the impact of exogenous shocks using the difference in difference dd tech nique essentially this technique compares the impact of an unexpected event in a particu lar locale called the treatment experimental group to a location or set of locations called a control group similar to the experimental group in all respects except for the shock itself one challenge many dd studies face is how to choose the control group and there is now a growing literature on this joshua a angrist and alan b krueger 1999 jeffrey d kubik and john r moran 2003 and alberto abadie alexis diamond and jens hainmueller 2007 another challenge is whether one can general ize one s results based on a single experimental group as is typical for most dd analysis this paper adopts a generalized difference in dif ference gdd technique outlined in ariel r belasen and solomon w polachek forthcom ing to examine the impact of hurricanes on the labor market this technique incorporates many experimental as well as many control groups and as such this approach addresses a number of shortcomings in current dd analyses we find that earnings of the average worker in a florida county rise over 4 percent within the first quarter of being hit by a major category four or five hur ricane relative to counties not hit and rise about wa percent for workers in florida counties hit by less major category one to three hurricanes concomitantly employment falls between wi and 5 percent depending on hurricane strength on the other hand the effects of hurricanes on neighboring counties have the opposite effects moving earnings down between 3 and 4 percent in the quarter the hurricane struck to better examine the specific shocks we also observe sectoral employment shifts finally we conduct a time series analysis and find that over time there is somewhat of a cobweb with earnings and employment rising and falling each quarter over a two year time period

the carnegie conjecture some empirical evidence this paper examines tax return generated data on the labor force behavior of people before and after they receive inheritances the results are consistent with andrew carnegie s century old assertion that large inheritances decrease a person s labor force participation for example a single person who receives an inheritance of about 150 000 is roughly four times more likely to leave the labor force than a person with an inheritance below 25 000 additional albeit weaker evidence suggests that large inheritances depress labor supply even when participation is unaltered warren kendall heir to an insurance company fortune says he s worth about 5 million and has an income of about oh 300 and some thousand a year h e has never held a job or wanted to going down to sea in cruise ships is his full time pursuit he estimates that he has taken about 250 cruises over the past couple of decades spending at least 50 percent to 70 percent of the year afloat morgenthaler 1991 p al

storms and jobs the effect of hurricanes on individuals employment and earnings over the long term hurricanes katrina and rita devastated the us gulf coast in 2005 we use job level data to compare the evolution of earnings for affected workers in four states with workers from matched control co

the strategic bequest motive although recent research suggests that intergenerational transfers play an important role in aggregate capital accumulation our understanding of bequest motives remains incomplete we develop a simple model of strategic bequests in which a testator influences the decisions of his beneficiaries by holding wealth in bequeathable forms and by conditioning the division of bequests on the beneficiaries actions the model generates falsifiable empirical predictions that are inconsistent with other theories of intergenerational transfers we present econometric and other evidence that strongly suggests that bequests are often used as compensation for services rendered by beneficiaries

imperfect mobility of labor across sectors a reappraisal of the balassa samuelson effect this paper investigates the relative price and relative wage effects of a higher productivity in the traded sector compared with the non traded sector in a two sector open economy model with imperfect substitutability in hours worked across sectors the balassa samuelson 1964 model predicts that a rise in the sectoral productivity ratio by 1 raises the relative price of non tradables by 1 while leaving the non traded wage traded wage ratio unchanged applying cointegration methods to a panel of fourteen oecd countries over the period 1970 2007 our estimates show that the relative price rises by only 0 78 and the relative wage falls by 0 27 while our first set of empirical findings cast doubt on the quantitative predictions of the balassa samuelson model our second set of evidence highlights the role of imperfect labor mobility the relative price responds more to a productivity differential between tradables and non tradables while the reaction of the relative wage is more muted in countries with higher intersectoral reallocation of labor we show that the ability of the two sector model to account for our evidence quantitatively relies upon two ingredients i imperfect mobility of labor across sectors and ii physical capital accumulation finally our numerical results reveal that the model predicts the relative price response fairly well and to a lesser extent the relative wage response

international evidence on tradables and nontradables inflation abstract using 1970 1985 sectoral data for the oecd we find that inflation in nontradable goods exceeds inflation in tradables we identify a demand shift towards nontradables and faster growth of total factor productivity in the tradable goods sector as the prime causes of the differential inflation in addition disinflation attempts and the exchange rate regime appear to have exerted significant influence on the relative inflation rate

the relative price of nontraded goods and sectoral total factor productivity an empirical investigation this paper examines the relationship between the relative price of nontraded goods and sectoral total factor productivities tfps in the context of the balassa samuelson model with perfect capita

geographic dispersion of economic shocks evidence from the fracking revolution abstract we track the geographic and temporal propagation of local economic shocks from new oil and gas production generated by hydrofracturing each million dollars of new production produces 80 000 in wage income and 132 000 in royalty and business income within a county within 100 miles one million dollars of new production generates 257 000 in wages and 286 000 in royalty and business income roughly two thirds of the wage income increase persists for two years assuming no general equilibrium effects new extraction increased aggregate us employment by as many as 640 000 and decreased the unemployment rate by 0 43 during the great recession jel d86 l14 l81 l82

charitable contributions and intergenerational transfers abstract this paper investigates the effects of bequest taxes and the income of children on the lifetime charitable contributions of parents using matched income tax records for parents and children the results show a positive elasticity of 0 6 for contributions with respect to the tax price of bequests the paper also finds that the income of children affects the amount that parents contribute to charity the results show a positive elasticity of up to 0 14 for contributions by parents with respect to the income of children implying that when children are better off parents are likely to increase charitable giving

sectoral adjustment costs and real exchange rate dynamics in a two sector dependent economy abstract this paper develops a two sector model in which intersectoral capital movements involve adjustment costs expressed as capital lost in the transformation process these costs have important consequences for the dynamics of capital accumulation and particularly for real exchange rate dynamics persistent deviations of the real exchange rate from its equilibrium are derived and for plausible values of the adjustment cost parameters are consistent with the observed degree of real exchange rate persistence for low adjustment costs the dynamics are qualitatively similar to those of the standard heckscher ohlin technology for high adjustment costs the model converges to the specific factors model thus our framework includes these two standard models as polar extremes

local high tech job multipliers in europe examining employment growth in local labor markets across europe this article finds that each worker in a high skilled occupation creates up to five extra jobs in local less skilled intensive services in the same region however it is also shown that there exist persistent differences in the size of this local high tech job multiplier across regions in particular we find that the multiplier is larger in regions with higher immigration an abundance of less skilled workers and lower gross output per capita at the country level we also show that this results in local high tech job multipliers that are larger in southern european countries than in the rest of europe

the saving of the elderly in micro and macro data examination of household micro data on the elderly has generally concluded that they do not dissave significantly whereas estimates using aggregate macro data have shown that the presence of a large elderly population leads to a lower saving rate this paper shows that if interactions between generations are important one would not expect these estimates to be the same the paper presents new evidence that bequests are plausibly the source of this discrepancy examination of data from young households that have received or expect bequests confirms that bequests are indeed an important factor determining the saving of the young

do changes in oil prices affect welfare programs evidence from kern county abstract in this paper the intertemporal causal relationship between oil prices and welfare programs in kern county is studied using monthly data between 1999 7 and 2016 8 results from the autoregressive distributed lag ardl bounds testing approach show that there is stable long run equilibrium relationship between calfresh caseloads oil prices and unemployment they also show that adjustment in calfresh participation due to changes in oil prices and unemployment is slow and a 10 increase in unemployment led to a 3 3 increase in calfresh enrollment results from a modified granger causality method indicated causality running from unemployment to calworks and no causality from oil prices to calworks participation the girf confirmed that calworks is more responsive to changes in unemployment than to oil price shocks the fevdc results demonstrated that contributions of the oil price shocks in explaining variations in calworks were negligible

regional convergence evidence from a new state by state capital stock series this paper seeks to reconcile the growth empirics technique of mankiw romer and weil 1992 with the empirical results of barro and sala i martin 1991 through the development of a new database covering the 1977 96 period we create state by state capital stock and gross investment estimates by apportioning the national capital stock among the states using these estimates along with gross state product and employment data we find evidence that the solow growth model explains state wide growth during this period we consistently find a rate of convergence of around 2 our results as a consequence suggest that the empirical results of barro and sala i martin are driven by the neoclassical growth process of solow

durable goods inter sectoral linkages and monetary policy barsky house and kimball 2007 show that introducing durable goods into a sticky price model leads to negative sectoral comovement of production following a monetary policy shock and under certain conditions to aggregate neutrality these results appear to undermine sticky price models in this paper we show that these results are not robust to two prominent and realistic features of the data namely input output interactions and limited mobility of productive inputs when extended to allow for both features the sticky price model with durable goods delivers implications in line with var evidence on the effects of monetary policy shocks

the economic impact of the coal boom and bust in this paper we examine the impact of the coal boom in the 1970s and the subsequent coal bust in the 1980s on local labour markets in kentucky ohio pennsylvania and west virginia we address two main questions in our analysis how were non mining sectors affected by the shocks to the mining sector how did these effects differ between sectors producing local goods and those producing traded goods we find evidence of modest employment spillovers into sectors with locally traded goods but not into sectors with nationally traded goods

imperfect mobility of labor across sectors and fiscal transmission abstract our paper investigates the sectoral effects of government spending shocks and highlights the role of labor mobility our var evidence for sixteen oecd countries reveals that a shock to government consumption by 1 of gdp increases non traded value added by 0 7 of gdp and generates a decline in traded value added the value added share of non tradables rises by 0 35 of gdp thus implying that the reallocation of resources accounts for 50 of the sectoral fiscal multiplier consistently our estimates show that the non traded sector is highly intensive in the government spending shock and experiences a labor inflow the shift of hours worked toward the non traded sector is however subject to mobility costs which vary across countries when we explore quantitatively the sectoral effects of a shock to government consumption that is highly intensive in non traded goods we find that the model can replicate the magnitude of the rise in the share of non tradables we document empirically once we allow for both labor mobility and capital installation costs financial openness also matters as it further biases the demand shock toward non tradables to account for the cross country dispersion in the responses of sectoral shares we estimate empirically we have to let the degree of labor mobility vary across countries

the economic impact of shale gas extraction a review of existing studies abstract recent advances in drilling technology have allowed for the profitable extraction of natural gas from deep underground shale rock formations several reports sponsored by the gas industry have estimated the economic effects of the shale gas extraction on incomes employment and tax revenues none of these reports has been published in an economics journal and therefore have not been subjected to the peer review process yet these reports may be influential to the formation of public policy this commentary provides written reviews of several studies purporting to estimate the economic impact of gas extraction from shale beds due to questionable assumptions the economic impacts estimated in these reports are very likely overstated

the alaskan labor market during the pipeline era built between 1974 and 1977 the trans alaska pipeline was the largest privately financed construction project in world history the alaskan labor market during the pipeline era provides an ideal opportunity to view labor market responses to a large anticipated and temporary shock to labor demand the paper presents several theoretical models of market responses to temporary demand shocks and then assesses the ability of each model to explain the alaskan data among the findings are that alaskan wages were very flexible labor supply was quite elastic on both the intensive hours per worker and extensive number of workers margins and even a major short run demand shock need not have a long run impact

the transmission of monetary policy in a multisector economy this article constructs and estimates a sticky price dynamic stochastic general equilibrium model with heterogeneous production sectors firms in different sectors vary in their price rigidity production technology and the combination of material and investment inputs in particular firms buy inputs from all sectors using the actual input output matrix and capital flow table of the u s economy by relaxing the standard assumption of symmetry this model allows idiosyncratic sectoral dynamics in response to monetary policy shocks the model is estimated by the generalized method of moments using sectoral and aggregate u s time series

what goes up must come down the recent economic cycles of the four most oil and gas dominated states in the us abstract the recent boom and bust in the us oil and natural gas sector provide a unique opportunity to assess whether the impacts of energy development are symmetric across the differing phases of the energy cycle this study uses the synthetic control method to examine the boom and bust effects for the four most oil and gas dominated states louisiana north dakota oklahoma and wyoming the four states are chosen as case studies because of their status as top oil and gas producers and the stronger influence of the oil and gas sector on their overall economies the results reveal differing employment impacts across the four states in both the short and long run and asymmetry during the boom and bust phases variation in the overall impacts and asymmetry of impacts across the boom bust cycle are suggested to be at least in part connected to state and local government expenditures

labor market impacts of u s tight oil development the case of the bakken abstract there has been a recent boom in natural gas and oil production in the us due to high energy prices and technological advances in hydraulic fracturing and horizontal drilling while north dakota oil production has increased significantly since 2005 with the development of bakken formation the impact on the rest of the economy including agriculture historically the largest industry in north dakota has received little attention we employ a variant of the corden neary resource development model to test the impact of the oil boom in north dakota caused by technical change on employment and wages in two tradable sectors of the state economy agriculture and energy alongside the rest of the state s economy using a vector error correction vec model marking the very first use of the dynamic vector autoregression var analysis in this theoretical framework it was determined that the oil boom as represented by the number of rigs in the state led to an increase in employment and wages in energy sector as expected but also in the rest of the economy oil development activity had no significant impact on agricultural wages both energy sector equations employment and wage suggest relative independence of these variables from the movements in agriculture and the rest of the economy and being impacted mostly by the changes in energy sector itself seasonality does not play significant role in energy sector employment and wages unlike in agriculture and the rest of the economy

exchange rates and monetary policy in emerging market economies this paper investigates the effects of exchange rate regimes and alternative monetary policy rules for an emerging market economy that is subject to a volatile external environment in the form of shocks to world interest rates and the terms of trade in particular we highlight the impact of financial frictions and the degree of exchange rate pass through in determining the relative performance of alternative regimes in stabilizing the economy in the face of external shocks our results are quite sharp when exchange rate pass through is high a policy of non traded goods inflation targeting does best in stabilizing the economy and is better in welfare terms when exchange rate pass through is low however a policy of strict cpi inflation targeting is better in all cases a fixed exchange rate is undesirable in addition financial frictions have no implications for the ranking of alternative policy rules

savings of the elderly and desired bequests cross section data often show that the wealth of the elderly increases with age even at advanced ages these and other results suggest that the life cycle hypothesis of consumption should be augmented to include a bequest motive for saving in this paper the author proposes a model of bequests and a test for a bequ est motive using panel data he finds that over a ten year period the elderly in the data set dissaved in contradiction to most cross section results the test offers no support for a bequest motive copyright 1987 by american economic association

policy watch death watch for the estate tax the idea of making death a taxable event infuriates some people winston churchill called estate taxes an attempt to tax dead people rather than the living steve forbes campaigned in favor of no taxation without respiration bruce bartlett 1997 points out that a key plank in the communist manifesto was the abolition of inheritance rights opponents deride the death tax as inefficient inequitable and complex violating every norm of good tax policy supporters counter that the criticisms are overstated or wrong and argue that a highly progressive tax that patches loopholes helps provide equality of opportunity breaks up concentrations of wealth and encourages charitable giving can t be all bad these debates raise a number of research questions for economists in policy circles the death watch for the u s estate and gift tax is on in 1999 in a vote split almost completely along partisan lines the republican majority in

local labor market impacts of energy boom bust boom in western canada abstract the impacts of energy price boom and bust are analyzed through the differential growth in employment and earnings between local labor markets with and without energy resources in western canada the estimated differentials attributed to the boom induced labor demand shocks show significant direct and indirect impacts on the earnings and employment within the energy extraction and other non energy local sectors respectively the local job multipliers indicate that job creation within the energy extraction sector leads to modest job creation within the non energy local sectors during boom periods for every ten energy extraction jobs created during a boom period approximately three construction jobs two retail jobs and four and a half service jobs are created

the effects of a natural gas boom on employment and income in colorado texas and wyoming improvements in technology have made it profitable to tap unconventional gas reservoirs in relatively impermeable shale and sandstone deposits which are spread throughout the u s mostly in rural areas proponents of gas drilling point to the activity s local economic benefits yet no empirical studies have systematically documented the magnitude or distribution of economic gains i estimate these gains for counties in colorado texas and wyoming three states where natural gas production expanded substantially since the late 1990s i find that a large increase in the value of gas production caused modest increases in employment wage and salary income and median household income the results suggest that each million dollars in gas production created 2 35 jobs in the county of production which led to an annualized increase in employment that was 1 5 of the pre boom level for the average gas boom county comparisons show that ex ante estimates of the number of jobs created by developing the fayetteville and marcellus shale gas formations may have been too large

economics of modern energy boomtowns do oil and gas shocks differ from shocks in the rest of the economy abstract the us shale boom has intensified interest in how the expanding oil and gas sector affects local economic performance research has produced mixed results and has not compared how energy shocks differ from equal sized shocks elsewhere in the economy what emerges is that the estimated impacts of energy development vary by region empirical methodology as well as the time horizon that is considered this paper captures these dimensions to present a more complete picture of energy boomtowns utilizing us county data we estimate the effects of changes in oil and gas extraction employment on total employment growth as well as growth by sector we compare this to the effects of equal sized shocks in the rest of the economy to assess whether energy booms are inherently different the analysis is performed separately for nonmetropolitan and metropolitan counties using instrumental variables we difference over 1 3 6 and 10 year time periods to account for county fixed effects and to assess responses across different time horizons the results show that in nonmetro counties energy sector multiplier effects on total county employment first increase up to 6 year horizons and then decline for 10 year horizons we also observe positive spillovers to the non traded goods sector while spillovers are small or negative for traded goods in metro counties there are no significant effects on total employment although positive spillovers are present in some sectors yet equal sized shocks in the rest of the economy produce more jobs on average than oil and gas shocks suggesting that policymakers should seek more diversified development

costs benefits and the malleability of public support for fracking abstract public opinion plays an important role in shaping the policy debate over hydraulic fracturing at both the state and national level however most americans report having little to no information about this controversial practice that has transformed the u s energy market employing an experiment embedded on a nationally representative survey we examine how citizens respond to arguments concerning the costs and benefits of fracking and incorporate them into their policy preferences arguments emphasizing the economic benefits of fracking bolster support for the technique however these gains are completely canceled if paired with a discussion of fracking s environmental costs additionally we find mixed evidence of partisan motivated reasoning in how this information is processed individuals whose partisan attachments and preexisting beliefs about global climate change conflict are particularly responsive to arguments about the benefits and costs of fracking our results have important implications for scholars and policymakers concerned with partisan polarization in public opinion toward energy and environmental policy

motives for private income transfers private income transfers are becoming increasingly recognized as a key aspect of the u s economy the majority of private income transfers occur inter vivos i e between living persons but very little is known about this type of transfer behavior this paper tests alternative hypotheses concerning motivation for inter vivos transfers two motives are considered altruism and exchange evidence presented here casts doubt on the altruistic model of transfer behavior observed patterns for inter vivos transfers are more consistent with exchange related motives this finding has important implications for the effects of public transfer programs on the distribution of economic well being

the terms of trade the real exchange rate and economic fluctuations this paper examines the relationship between terms of trade and business cycles using a three sector intertemporal equilibrium model and a large multicountry database results show that terms of trade shocks account for nearly one half of actual gdp variability the model explains weak correlations between net exports and terms of trade the harberger laursen and metzler effect and produces large and weakly correlated deviations from purchasing power parity and real interest rate parity terms of trade shocks cause real appreciations and positive interest differentials although productivity shocks have opposite effects the puzzle that welfare gains of international asset trading are negligible is left unresolved copyright 1995 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

business cycles and labor market search the quantitative implications of labor market search for economic fluctuations are evaluated in the context of a real business cycle model incorporating labor market search into the model is found to improve its empirical performance along several dimensions in particular hours now fluctuate substantially more than wages and the contemporaneous correlation between hours and productivity falls in addition the model replicates the observation that output growth displays positive autocorrelation at short horizons overall the empirical results suggest that the labor market search environment embodies a quantitatively important propagation mechanism copyright 1996 by american economic association

how disasters affect local labor markets the effects of hurricanes in florida this study improves upon the difference in difference approach by examining exogenous shocks using a generalized difference in difference gdd technique that identifies economic effects of hurricanes based on the quarterly census of employment and wages data worker earnings in florida counties hit by a hurricane increase up to 4 percent whereas earnings in neighboring counties decrease over time workers experience faster earnings and slower employment growth than workers in unaffected counties hurricanes have a greater impact in coastal and panhandle counties and powerful hurricanes have greater economic effects than weaker ones further the gdd technique is applicable to analyze a wider range of exogenous shocks than hurricanes

occupational mobility and wage inequality in this article we argue that wage inequality and occupational mobility are intimately related we are motivated by our empirical findings that human capital is occupation specific and that the fraction of workers switching occupations in the u s was as high as 16 a year in the early 1970 s and had increased to 21 by the mid 1990 s we develop a general equilibrium model with occupation specific human capital and heterogeneous experience levels within occupations we find that the model calibrated to match the level of occupational mobility in the 1970 s accounts quite well for the level of within group wage inequality in that period next we find that the model calibrated to match the increase in occupational mobility accounts for over 90 of the increase in wage inequality between the 1970 s and the 1990 s the theory is also quantitatively consistent with the level and increase in the short term variability of earnings copyright wiley blackwell

psychological pressure in competitive environments evidence from a randomized natural experiment much like cognitive abilities emotional skills can have major eects on performance and economic outcomes this paper studies the behavior of professional subjects involved in a dynamic competition in their own natural environment the setting is a penalty shoot out in soccer where two teams compete in a tournament framework taking turns in a sequence of ve penalty kicks each as the kicking order is determined by the random outcome of a coin ip the treatment and control

the impact of fracking activities on oklahoma s housing prices a panel cointegration analysis abstract fracking drilling has opened a discussion on the role of technological developments in economies engaged in shale oil and gas formations oil and natural gas production opened new possibilities for employment benefits and housing prices decreases this paper explores for the first time the impact of fracking on housing prices across oklahoma s counties spanning the period 2000 2015 through panel methods the findings show a positive effect on housing prices while this positive effect gains statistical significance only over the period after the 2006 fracking boom the results survive a robustness check that explicitly considers distance and groundwater dependency issues

cluster sample methods in applied econometrics inference methods that recognize the clustering of individual observations have been available for more than 25 years brent moulton 1990 caught the attention of economists when he demonstrated the serious biases that can result in estimating the effects of aggregate explanatory variables on individual specific response variables the source of the downward bias in the usual ordinary least squares ols standard errors is the presence of an unobserved state level effect in the error term more recently john pepper 2002 showed how accounting for multi level clustering can have dramatic effects on t statistics while adjusting for clustering is much more common than it was 10 years ago inference methods robust to cluster correlation are not used routinely across all relevant settings in this paper i provide an overview of applications of cluster sample methods both to cluster samples and to panel data sets

intersectoral labor mobility and the growth of the service sector one of the most striking changes in the u s economy over the past 50 years has been the growth in the service sector between 1950 and 2000 service sector employment grew from 57 to 75 percent of total employment however over this time the real hourly wage in the service sector grew only slightly faster than in the goods sector in this paper we assess whether or not the essential constancy of the relative wage implies that individuals face small costs of switching sectors and we quantify the relative importance of labor supply and demand factors in the growth of the service sector we specify and estimate a two sector labor market equilibrium model that allows us to address these empirical issues in a unified framework our estimates imply that there are large mobility costs output in both sectors would have been double their current levels if these mobility costs had been zero in addition we find that demand side factors that is technological change and movements in product and capital prices were responsible for the growth of the service sector

external wealth the trade balance and the real exchange rate abstract we examine the link between the net foreign asset position the trade balance and the real exchange rate in particular we decompose the impact of a country s net foreign asset position external wealth on its long run real exchange rate into two mechanisms the relation between external wealth and the trade balance and holding fixed other determinants a negative relation between the trade balance and the real exchange rate we also provide additional evidence that the relative price of nontradables is an important channel linking the trade balance and the real exchange rate

precautionary saving and accidental bequests this paper presents a simple general equilibrium model of precautionary saving and accidental bequests this model is used to analyze the implications of individual lifetime uncertainty for aggregate consumption and capital accumulation a precautionary demand for saving arises because an individual consumer does not know in advance the date at which he will die and he wants to avoid low levels of consumption in the event that he lives longer than expected an implication of this precautionary saving is that when death does occur the consumer is generally holding some wealth which is then passed on to his heirs in the form of an accidental bequest even if all consumers have the same ex ante mortality probabilities there will be some intracohort variation in the date of death consequently there will be a nondegenerate distribution of bequests left by consumers in a cohort this nondegenerate distribution of bequests left by one generation induces variation in the distributions of wealth consumption and bequests of subsequent generations the importance of bequests in aggregate saving has been established by laurence kotlikoff and lawrence summers 1981 who reported that 80 percent of u s household wealth is inherited wealth one interpretation of this finding is that the simple life cycle model without bequest motives is an inadequate description of saving behavior in the united states but the model i present demonstrates that accidental bequests by selfish consumers can account for a potentially sizeable fraction of aggregate wealth although some part of bequests especially by the wealthy undoubtedly results from an explicit bequest motive accidental bequests also play a role in the intergenerational transfer of wealth as well as in the intragenerational variation in wealth in order to focus on the role of accidental bequests i purposely exclude a bequest motive from the specification of the utility function the effects of lifetime uncertainty on individual consumption behavior were first examined formally in a seminal paper by menachem yaari 1965 yaari s model provided the basic framework for virtually all subsequent work on uncertain lifetimes including well known papers by nils hakansson 1969 stanley fischer 1973 robert barro and james friedman 1977 david levhari and leonard mirman 1977 and kotlikoff and avia spivak 1981 however all of these papers focused on the consumption decision of an individual and ignored the effect of accidental bequests on the behavior of the recipients of these accidental bequests 2 as will be shown at various points in this paper changes in the economic environment can have effects on aggregate behavior which differ sharply from the effects on individual behavior because of the endogenous adjustment of bequests the effects of department of economics harvard university cambridge ma 02138 this paper is a revised version of bequests and social security with uncertain lifetimes nber working paper no 1372 june 1984 i thank olivier blanchard john burbidge christopher cavanagh robert clower stanley fischer benjamin friedman elhanan helpman mervyn king nobuhiro kiyotaki laurence kotlikoff robert mcdonald james pesando julio rotemberg lawrence summers lars svensson mark watson and jeffrey wolcowitz for valuable conversations and correspondence i also thank the participants in seminars at boston university columbia university cornell university federal reserve board harvard university university of iowa mit university of minnesota university of montreal national bureau of economic research north carolina state university the wharton school and yale university and two anonymous referees for their helpful comments i also thank the national science foundation for financial support 1 in the presence of perfect annuity and life insurance markets there may or may not be bequests depending on the presence or absence of a bequest motive but there would be no accidental bequests 2 kotlikoff and spivak focus on the role of the family in providing an incomplete annuities market but stop short of a full scale overlapping generations model in which the distribution of bequests is determined endogenously

geographic proximity to coal plants and u s public support for extending the production tax credit abstract the production tax credit ptc is an important policy instrument through which the federal government promotes renewable energy development in the united states however the efficacy of the ptc is hampered by repeated expirations and short term extensions and by the general uncertainty surrounding its future status we examine the factors driving variation in public support for the extension of the ptc using a nationally representative internet based survey americans living near a coal fired power plant are significantly more likely to support extending the ptc than are their peers who are more insulated from the externalities of burning coal the evidence for this dynamic was strongest and most statistically significant among subjects experimentally primed to think about the adverse health effects of burning coal raising awareness of the public health ramifications of generating electricity from fossil fuels holds the potential to increase support for renewable energy policies among those living in proximity to coal plants even in a highly politicized policy debate

uncertain lifetime consumption and dissaving in retirement this paper asks whether the continued accumulation or mild dissaving observed among the retired can be explained by uncertain lifetime in the absence of annuities after an initial period influenced by borrowing constraints under constant relative risk aversion uncertain lifetime depresses consumption by a proportion increasing with age if the elasticity of intertemporal substitution in consumption is small illustrative computations based on actual income and survival data show that plausible elasticities are sufficiently small to give this effect the reduction in consumption is large enough to explain much of the lack of decumulation by the elderly

oil abundance and income inequality the paper empirically investigates the impact of natural resource abundance in particular oil on income disparities it employs common correlated effects pooled mean group methodology for estimation to account for the cross country heterogeneity and cross section dependence in the oil inequality nexus in a sample of developed and developing countries we find that oil abundance as well as oil dependence reduce income inequality this inequality reducing effect is highly likely to operate from better education attainments and improved health status due to oil booms

public opinion on energy development the interplay of issue framing top of mind associations and political ideology in this article we examine framing effects regarding unconventional oil and gas extraction using hydraulic fracturing or fracking an issue involving considerable controversy over potential impacts as well as terminology used to describe it specifically we explore how two commonly used terms to describe this issue fracking or shale oil or gas development serve as issue frames and influence public opinion extending existing research we suggest that these frames elicit different top of mind associations that reflect positive or negative connotations and resonate with people s political ideology these associations in turn help explain direct and indirect framing effects on support opposition as well as whether these effects differ by political ideology results of a split ballot national u s survey n 1000 reveal that people are more supportive of the energy extraction process when it is referred to as shale oil or gas development versus fracking and this relationship is mediated by greater perceptions of benefit versus risk political ideology did not moderate these effects further analysis suggests that these findings are partly explained by the tendency to associate fracking more with negative thoughts and impacts and shale oil or gas development more with positive thoughts and impacts however these associations also did not vary by political ideology we discuss implications for communicating risk regarding energy development

the economic aftermath of resource booms evidence from boomtowns in the american west the current us oil and gas boom is injecting labour capital and revenue into communities near reserves will these communities be cursed with lower long run incomes in the wake of the boom we study the oil boom and bust cycle of the 1970s and 1980s to gain insights using annual data on drilling to identify western boom and bust counties we find substantial positive local employment and income effects during the boom in the aftermath of the bust however we find that incomes per capita decreased and unemployment compensation payments increased relative to what they would have been if the boom had not occurred