families and social security abstract the present paper quantifies the importance of family insurance for the analysis of social security we therefore augment the standard overlapping generations model with idiosyncratic labor productivity and longevity risk in that we account for gender and marital status we simulate the abolition of pay as you go pension payments calculate the resulting intergenerational welfare changes and isolate aggregate efficiency effects for singles and families by means of compensating transfers we find that abolishing social security creates significant efficiency losses which are substantially higher for singles compared to married couples a decomposition of the efficiency loss reveals that this difference can be almost exclusively attributed to the insurance role of the family with respect to longevity risk neglecting differences in family structure when studying the privatization of social security one overestimates the long run change in the capital stock by about 40 percent the decline in labor supply by about 30 percent and the aggregate efficiency loss by even 36 percent given rising divorce rates and less stable marriages in almost all western societies our results also indicate that social security should not be reduced but strengthened in the future

labor supply at the extensive and intensive margins the eitc welfare and hours worked some previous studies have emphasized differences between labor supply responses on the extensive margin participation and intensive margin hours worked e g james j heckman 1993 jean kimmel and thomas j kniesner 1998 recent tax and welfare policy changes provide a potentially more convincing way of identifying these responses than is available in other nonexperimental data the earned income tax credit eitc changes during the 1990 1996 period sharply altered the budget sets of single mothers over a short period of time these changes in incentives are likely to be unrelated to differences across individuals in the desire to work and thus are likely to be exogenous to labor supply decisions this lack of exogeneity is harder to claim for wage differences across people which are the main alternative source of identifying variation in addition to preference heterogeneity wages are driven by supply and demand factors that one must account for to obtain valid estimates using wage variation the eitc unequivocally encourages single parents to work at least some hours during a year because it shifts out the budget set at all positive hours points this first prediction is clearly confirmed by the data in addition theory implies that the eitc will decrease hours worked among those already working because most recipients are on the plateau or phase out portions of the credit schedule for these recipients the eitc reduces or does not affect the after tax wage while at the same time discouraging work through the income effect of the credit payment however recent hours worked patterns for eitc eligible individuals do not appear to fit this second prediction hours and weeks worked by likely recipient groups have not fallen this paper analyzes this puzzling finding building on earlier work by nada eissa and jeffrey liebman 1996 and meyer and dan t rosenbaum 1999 this study shows that nearly all of the laborsupply adjustment of single mothers occurs at the extensive margin not the intensive margin this finding raises the issue of what model features are needed to explain both participation and hours but leaves the answer to be provided in future work this finding also suggests that the large literature simulating alternative policies for low wage workers such as the eitc may be misleading because nearly all work has used models that imply similar responses on participation and hours margins

social security pensions and retirement behavior within the family this paper estimates a structural model of family retirement using us data from the health and retirement study hrs it provides further insight into household retirement decision making and the reasons for interdependence in the retirement decisions of each spouse improvements in hrs data and matched employer provided pension histories allow more precise identification of key parameters governing interdependent behaviour within the household in an earlier study we found that interdependence was due to preferences rather than coordination of retirement incentives in the budget and in particular that it is not a correlation in preferences but the appearance of the spouse s retirement status in the husband s and wife s utility function that is largely responsible for coordination of retirement between spouses we now find that a measure of how much each spouse values being able to spend time in retirement with the other accounts for a good portion of that apparent interdependence for the wife the husband s retirement status influences her retirement decision only if she values spending time in retirement with her husband for husbands the effect of having the wife already retired on his retirement decision is roughly doubled if he enjoys spending time in retirement with his wife but there is some effect even if he does not this is consistent with our earlier findings that the husband is more influenced by having a retired spouse than the wife is the increase in the extent of the dependence of the wife s labour supply on the husband s retirement from our past work probably is traceable to better measurement of the opportunity set facing the husband in hrs data once estimated we use the model to investigate the labour supply effects of alternative social security policies examining the effect of dividing credit for earnings evenly between spouses or of basing social security benefits on the amounts accumulated in private accounts both policies change the relative importance of spouse and survivor social security benefits within the household and both raise the relative reward to work later in the life cycle the incentives created are modest and retirement responds accordingly nevertheless at some ages such as 65 there may be as much as a 6 increase in the old age work force under privatized accounts copyright 2004 john wiley sons ltd

marriage stability taxation and aggregate labor supply in the u s vs europe americans work more than europeans using micro data from the united states and 17 european countries we document that women are typically the largest contributors to the cross country differences in work hours we also show that there is a negative relation between taxes and annual hours worked driven by men and a positive relation between divorce rates and annual hours worked driven by women in a calibrated life cycle model with heterogeneous agents marriage and divorce we find that the divorce and tax mechanisms together can explain 45 of the variation in labor supply between the united states and the european countries

on the theory of political competition comparative statics from a general allocative perspective it is a widely held belief that interest groups respond competitively to political challenges from other groups this view is found not only in the traditional theory of interest groups but also in the literature on policy typologies though it is not necessarily supposed that groups form in response to opposition it is believed that when groups exist they compete

time to build and aggregate fluctuations some new evidence this paper presents maximum likelihood estimates and tests of a model similar to one kydland and prescott 1982 suggested for this purpose it derives equilibrium laws of motion for a set of aggregate variables as functions of the model s parameters and the innovation to the technology shock the paper shows that a single unobservable index can explain the variability in the observed series but identifying the single index with the innovation to the technology shock implies that per capita hours is not well explained it also shows that time separable preferences with respect to leisure are consistent with the data copyright 1989 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

a time series analysis of representative agent models of consumption andleisure choice under uncertainty this paper investigates empirically a model of aggregate consumption and leisure decisions in which utility from goods and leisure is nontime separable the nonseparability of preferences accommodates intertemporal substitution or complementarity of leisure and thereby affects the comovements in aggregate compensation and hours worked these cross relations are examined empirically using postwar monthly u s data on quantities real wages and the real return on the one month treasury bill the estimated values of the parameters governing preferences differ significantly from the values assumed in several studies of real business models several possible explanations of these discrepancies are discussed

new evidence on labor supply employment versus hours elasticities by sex and marital status using the tri annual micro panel data of the survey of income and program participation we estimate fixed effects labor supply models separating the extensive and intensive margins the employment elasticity is 0 6 for single men versus 1 1 for married men the employment elasticity is 2 4 for single women versus 1 8 for married women the compensated hours worked elasticity is 0 4 for employed single and married men and 0 7 for employed single and married women the implied aggregate employment elasticity of 1 5 and hours per employee elasticity of 0 5 indicate employment fluctuations account for three fourths of wage induced variation in labor hours

an empirical model of labor supply in a life cycle setting this paper formulates and estimates a structural intertemporal model of labor supply using theoretical characterizations derived from an economic model of lifetime behavior a two step empirical analysis yields estimates of intertemporal and uncompensated substitution effects which provide the information needed to predict the response of hours of work to life cycle wage growth and shifts in the lifetime wage path

micro and macro elasticities in a life cycle model with taxes we build a life cycle model of labor supply that incorporates changes along both the intensive and extensive margin and use it to assess the consequences of changes in tax and transfer policies on equilibrium hours of work we find that changes in taxes have large aggregate effects on hours of work moreover we find that there is no inconsistency between this result and the empirical finding of small labor elasticities for prime age workers in our model micro and macro elasticities are effectively unrelated our model is also consistent with other cross country patterns

taxation and household labor supply we evaluate reforms to the u s tax system in a life cycle setup with heterogeneous married and single households and with an operative extensive margin in labor supply we restrict our model with observations on gender and skill premia labor force participation of married females across skill groups children and the structure of marital sorting we concentrate on two revenue neutral tax reforms a proportional income tax and a reform in which married individuals flle taxes separately separate flling our flndings indicate that tax reforms are accompanied by large increases in labor supply that difier across demographic groups with the bulk of the increase coming from married females under a proportional income tax reform married females account for more than 50 of the changes in hours across steady states while under separate flling reform married females account for all the change in hours

labor force dynamics of older married couples this article analyzes the dynamics of joint labor force behavior of older couples in the united states using the retirement history survey rhs i analyze the determinants of joint retirement and the effect of one spouse s labor force status on the labor force transitions of the other spouse the results reveal strong associations between the labor force transition probabilities of one spouse and the labor force status of the other spouse these result from structural differences in exit and entry behavior by the spouse s status several lagged endogenous variables have substantial effects on behavior even after controlling for unobserved heterogeneity

reputation and imperfect information abstract a common observation in the informal literature of economics and elsewhere is that is multistage games players may seek early in the game to acquire a reputation for being tough or benevolent or something else but this phenomenon is not observed in some formal game theoretic analyses of finite games such as selten s finitely repeated chain store game or in the finitely repeated prisoners dilemma we reexamine selten s model adding to it a small amount of imperfect or incomplete information about players payoffs and we find that this addition is sufficient to give rise to the reputation effect that one intuitively expects

how well does the u s social insurance system provide social insurance we analyze the insurance provided by the u s social security and income tax system within a model in which agents receive idiosyncratic wage rate shocks that are privately observed we consider two reforms a piecemeal reform that optimally chooses the social security benefit function and a radical reform that eliminates the entire social insurance system and replaces it with an optimal tax on lifetime earnings the radical reform outperforms the piecemeal reform and achieves nearly all of the maximum possible welfare gain when wages differ permanently over the lifetime when wage shocks match properties in u s data the piecemeal reform outperforms the radical reform

family labor supply and aggregate fluctuations abstract this paper considers an economy which is populated by a continuum of identical families consisting of two members the two members have different productivities and the family faces a fixed utility cost if both members supply labor simultaneously although both family members have the same preferences they display very different elasticities of labor supply a real business cycle model is calibrated and it is seen that this cross sectional heterogeneity results in interesting forms of aggregation bias

current real business cycle theories and aggregate labor market fluctuations hours worked and the return to working are weakly correlated traditionally the ability to account for this fact has been a litmus test for macroeconomic models existing real business cycle models fail this test dramatically we modify prototypical real business cycle models by allowing government consumption shocks to influence labor market dynamics this modification can in principle bring the models into closer conformity with the data our empirical results indicate that it does

towards a micro founded theory of aggregate labour supply we build a heterogeneous agents life cycle model that captures a large number of salient features of individual male labour supply over the life cycle by education both along the intensive and extensive margins the model provides an aggregation theory of individual labour supply firmly grounded on individual level micro evidence and is used to study the aggregate labour supply responses to changes in the economic environment we find that the aggregate labour supply elasticity to a transitory wage shock is 1 75 with the extensive margin accounting for 62 of the response furthermore we find that the aggregate labour supply elasticity to a permanent compensated wage change is 0 44

returns to scale market power and the nature of price rigidity in new keynesian models with self fulfilling expectations increasing returns to scale and firms market power are two potential sources of sunspot expectations in neoclassical models we show that in new keynesian models returns to scale and market power can have fundamentally different implications for broad macroeconomic issues including self fulfilling expectations depending on the nature of price rigidity our findings suggest that the design of stabilization monetary policy can depend on precise knowledge about the economy s real and nominal features therefore a clear understanding of the specific economic environment and its relevance to monetary policymaking for ensuring macroeconomic stability can be an integrated part of monetary policy practice

efficient energy saving targets for apec economies abstract energy saving target ratios estr for 17 apec economies during 1991 2000 are computed in a total factor framework all nominal variables are transformed into real variables by the purchasing power parity ppp at the 1995 price level the data envelopment analysis dea approach is used to find the energy saving target est for apec economies without reducing their maximum potential gross domestic productions gdps in each year energy labor and capital are the three inputs while gdp is the single output our major findings are as follows 1 china has the largest est up to almost half of its current usage 2 hong kong the philippines and the united states have the highest energy efficiency 3 the energy efficiency generally increases for apec economies except for canada and new zealand 4 chile mexico and taiwan have significantly improved their energy efficiency in the last 5 years 5 an inverted u shape relation exists between per capita est and per capita gdp 6 estr has a positive relation with the value added percentage of gdp of the industry sector and a negative relation with that of the service sector

intertemporal substitution and λ constant comparative statics abstract this paper characterizes intertemporal substitution along intertemporal consumption profiles a precise definition of the intertemporal elasticity of substitution is presented and compared to intertemporal analogs of the hicks allen and direct elasticities of substitution and the marginal utility of wealth or constant own price elasticity of demand in a model with perfect foresight i establish that constant comparative statics accurately characterizes intertemporal substitution if and only if lifetime utility is intertemporally additive i also demonstrate the usefulness of constant comparative statics in characterizing intertemporal substitution in models without time separability or perfect foresight

comparing structural decomposition analysis and index to analyze and understand historical changes in economic environmental employment or other socio economic indicators it is useful to assess the driving forces or determinants that underlie these changes two techniques for decomposing indicator changes at the sector level are structural decomposition analysis sda and index decomposition analysis ida for example sda and ida have been used to analyze changes in indicators such as energy use co2 emissions labor demand and value added the changes in these variables are decomposed into determinants such as technological demand and structural effects sda uses information from input output tables while ida uses aggregate data at the sector level the two methods have developed quite independently which has resulted in each method being characterized by specific unique techniques and approaches this paper has three aims first the similarities and differences between the two approaches are summarized second the possibility of transferring specific techniques and indices is explored finally a numerical example is used to illustrate differences between the two approaches

the optimal taxation of unskilled labor with job search and social assistance abstract in order to explore the optimal taxation of low skilled labor we extend the standard model of optimal nonlinear income taxation in the presence of quasi linear preferences in leisure by allowing for involuntary unemployment job search and an exogenous welfare benefit in trading off low skilled employment against work effort of higher skilled workers the government balances distortions on the search margin with those on work effort higher welfare benefits typically reduce taxes paid by low skilled workers and raise marginal tax rates throughout the skill distribution

decomposing the change of co2 emissions a joint production theoretical approach this paper presents an alternative decomposition method to explore the driving forces of change in carbon emissions by using distance functions estimated by data envelopment analysis the proposed approach can isolate the effects of changes in gdp composition and energy supply composition on the change of carbon emissions in addition it is capable of identifying the effects of changes in different input ratios which may be very important if there are substitution effects among different inputs moreover the proposed model can measure the effects of changes in good and bad output technical efficiencies consequently this decomposition technique allows a change of carbon emissions to be decomposed into contributions from ten factors which provides more insights for policy makers we apply this model to decompose carbon emissions in 25 oecd counties and china for the sample countries as a whole the empirical results indicate that the economic growth is the crucial driver to carbon emissions increase while the changes in gdp composition and capital energy ratio are two main drivers to carbon emissions reduction in particular we discuss in detail the driving forces of china s carbon emissions change in order to propose some valuable policy implications for china from an international perspective

the effects of progressive taxation on labor supply when hours and wages are jointly determined this paper extends a standard intertemporal labor supply model to account for progressive taxation as well as the joint determination of hourly wages and hours worked we show that these two factors can have implications for both estimating labor supply elasticities as well as for using these elasticities in tax analysis failure to account for wage hours ties and progressive taxation may cause the hours response to marginal tax rate changes to be understated by 5 to 30 percent for men

social security and individual welfare precautionary saving borrowing constraints and the payroll tax this paper examines the impact of social security on national saving and individual welfare in the presence of realistic capital market imperfections market failure in the private provision of annuities and restrictions on borrowing against anticipated future wages the introduction of social security increases lifetime welfare and reduces national saving if borrowing restrictions are absent however the increase in individual welfare is reduced and in some cases eliminated when borrowing constraints are taken into consideration the substantial difference suggests the importance of reexamining the proportional payroll tax finance of social security copyright 1987 by american economic association

a welfare analysis of social security in a dynastic framework in this article we study the welfare effects of unfunded social security in a general equilibrium model populated with overlapping generations of altruistic individuals that differ in lifetime expectancy and earnings ability contrary to previous research our results indicate that steady state welfare increases with social security for most households although by very different amounts this result is mainly due to two factors first the presence of two sided altruism significantly mitigates the crowding out effect of unfunded social security second ability shocks and uncertain lifetimes generate significant heterogeneity among households to yield different induced preferences for social security

what do fishermen tell us that taxi drivers do not an empirical investigation of labor supply recent empirical findings have cast doubt on the neoclassical model of labor supply however estimation issues and not workers behavior may be responsible for these findings this paper investigates this possibility by examining the daily labor supply of florida lobster fishermen i invariably find that fishermen work more when earnings are temporarily high behavior that is consistent with a neoclassical model of labor supply furthermore methods that do not control for measurement error and endogeneity of the wage not only produce downward biased estimates of labor supply elasticities but also generate a spurious negative and significant elasticity of daily hours

on testing the intertemporal substitution theory of labor supply many empirical tests of the intertemporal substitution theory of labor market fluctuations have assumed that shocks to the labor demand curve are the sole source of variance in hours and wages we show that conclusions based on these tests are very sensitive to small deviations from this extreme case using data generated by a standard real business cycle model we show that standard methods incorrectly reject the intertemporal substitution theory even when demand curve shocks account for over 90 of the variance in wages and hours

comparison of technology efficiency for co2 emissions reduction among european countries based on dea with decomposed factors abstract for consistent and effective co 2 reduction many countries need to improve not only the technical efficiency of co 2 mitigation but also environmental responsibility in this study we examine both the technical efficiency and voluntary environmental consciousness vec of 12 european countries using a two stage data envelopment analysis dea in the first stage we measured the technical efficiency of green energy technologies get associated with fossil fuels renewable energy and storage technologies of each country for energy generation with regard to co 2 emissions by surveying get related patents using the logarithmic mean divisia index lmdi we decomposed co 2 emissions into the following technological factors energy intensity fuel mix and co 2 emission coefficient in the second stage we quantified the vec in each country by investigating get patent changes via research and development r d investment at given changes in co 2 emissions the results show different aspects for each country in terms of technical efficiency and vec suggesting potential levels of both efficient co 2 reductions and desirable get development by using reference countries as a benchmark our study methodology and results can contribute to establishing effective national technology policy and aid in calls for common responsibility and the active participation of nations in addressing climate change

employment and hours over the business cycle abstract approximately one quarter of the adjustment in total hours of employment over the business cycle represents adjustments in hours while the remainder is explained by changes in employment real business cycle models characterize agents as either continuously adjusting their hours or making only labor force participation decisions about jobs with indivisible hours in this paper we extend the representative agent framework to allow for decisions on both participation and hours we calibrate and simulate a dynamic version of the model and show that it is better able to mimic some features of the aggregate data

child related transfers household labour supply and welfare what are the macroeconomic effects of transfers to households with children how do alternative policies fare in welfare terms we answer these questions in an equilibrium life cycle model with household labour supply decisions skill losses of females associated to non participation and heterogeneity in terms of fertility childcare expenditures and access to informal care calibrating our model to the u s economy we first provide a roadmap for policy evaluation by contrasting transfers that are conditional on market work childcare subsidies and childcare credits with those that are not child credits when both types can be means tested or universal we then evaluate expansions of current arrangements for the u s and find that expansions of conditional transfers have substantial positive effects on female labour supply that are largest at the bottom of the skill distribution expanding childcare credits leads to long run increases in the participation of married females of 10 6 while an equivalent expansion of child credits leads to the opposite 2 4 expanding existing programs generates substantial welfare gains for newborn households which are largest for less skilled households expanding childcare credits leads to the largest welfare gains for newborns and achieves majority support

what proportion of renewable energy supplies is needed to initially mitigate co2 emissions in oecd member countries in spite of increasing numbers of countries having established renewable energy development mechanisms for carbon dioxide co2 emissions reduction the co2 emissions problem continues to worsen along with the growth of the world economy this leads us to examine the threshold effect of the proportion of renewable energy supply for co2 emissions reduction by means of the panel threshold regression model ptr economic growth and the price of energy are also both taken into account in the model in measuring the specific influence that each of them has on co2 emissions the empirical panel data encompass all 30 member countries of the oecd and cover a period of about a decade in length from 1996 to 2005 our empirical results provide clear evidence of the existence of a single threshold effect that may be divided into lower and higher regimes based on the specific estimates of the slope coefficients in each regime distinguished we find that a renewable energy supply accounting for at least 8 3889 of total energy supply would mean that co2 emissions would start to be mitigated furthermore real gdp and the cpi of energy are significantly and positively and insignificantly and negatively correlated with co2 emissions respectively these findings lead us to conclude that the authorities ought to enhance the proportion of renewable energy supply to more than 8 3889 of all energy supplied which might help resolve the dilemma between economic growth and co2 emissions realizing the effects of co2 emissions reduction via energy price reforms or the levying of a carbon tax levy may however still remain a puzzle

structural estimation of family labor supply with taxes estimating a continuous hours model using a direct utility specification this paper proposes a new method for estimating family labor supply in the presence of taxes this method accounts for continuous hours choices measurement error unobserved heterogeneity in tastes for work the nonlinear form of the tax code and fixed costs of work in one comprehensive specification estimated on data from the 2001 psid the resulting elasticities for married males are consistent with those found elsewhere in the literature but female wage elasticities are substantially smaller than those found in most of the literature simulations of recent tax acts predict small effects on the labor supply of married couples

effects of permanent and transitory tax changes in a life cycle labor supply model with human capital i examine effects of labor income taxation in life cycle models with human capital accumulation in this case the opportunity cost of time equals the wage plus returns to work experience this has several interesting consequences first the data appear consistent with larger labor supply elasticities than prior work suggests second contrary to conventional wisdom permanent tax changes can have larger effects on current labor supply than temporary changes third human capital dampens responses of young workers to transitory tax changes fourth labor supply elasticities increase with age fifth human capital amplifies the effect of permanent tax changes in the long run

an econometric analysis of fluctuations in aggregate labor supply and demand the paper contains a simple equilibrium model of the labor market the supply function allows for intertemporal substitution in response to real wage fluctuations and the demand function allows for adjustment costs on employment the supply and demand functions both solve quadratic partial adjustment problems driven by rational expectations about future real wages the market equilibrium also solves a partial adjustment problem driven by rational expectations about future preference and technology shocks two related issues are emphasized the identification of dynamic labor supply and demand functions and the theoretical interpretation of serial correlation in employment and real wages when the supply and demand shocks are assumed to be ar 1 processes which are not causally related the model delivers a simple structure for the equilibrium process for employment and real wages which is a restricted var 2 this simple structure facilitates the interpretation of summary statistics on the time series properties of observed employment and real wage series the supply and demand functions can both be locally identified using only employment and real wage data an illustrative application is presented using u s manufacturing data for the period 1948 1971

does urbanization drive economic growth decoupled from energy consumption in china s logistics abstract logistics has gradually become a major energy consumer in china along with urbanization and e commerce a better understanding of economic growth decoupled from energy consumption in logistics could relieve the pressure of energy supply and environmental pollution a combined model based on the tapio decoupling model kaya identity and log mean divisia index was proposed to decompose the impact of urbanization into 4 related factors comparative analysis was applied to investigate the similarities of and differences in the urbanization related factors affecting the decoupling state of provinces the main results were as follows 1 weak decoupling was the dominant state of logistics in china during 2007 2016 there were weak decoupling and strong decoupling in most of the observation period in the eastern region while there was no strong decoupling in the central and western regions 2 from the national perspective urbanization related factors had very significant but different impacts population quantity spatial structure and spatial expansion were the key inhibitors while population density was the main contributor 3 from the regional perspective the patterns of urbanization related factors in the three regions were similar population density had a positive but decreasing effect on decoupling in the three regions especially the western region population quantity had an increasing negative effect on decoupling in the three regions especially the central and western regions spatial expansion had an increasing negative effect on decoupling in the eastern and western regions but a decreasing negative effect in the central region and spatial structure had a stable negative effect on the three regions finally some policy implications were proposed

increasing returns and unsynchronized wage adjustment in sunspot models of the business cycle a challenge to models of equilibrium indeterminacy based on increasing returns is that required increasing returns for generating indeterminacy can be implausibly large and rise quickly with the relative risk aversion in labor we show that unsynchronized wage adjustment via a relative wage effect can both lower the required degree of increasing returns for indeterminacy to a plausible level and make it invariant to the relative risk aversion in labor consequently indeterminacy and sunspot driven fluctuations can emerge for plausible increasing returns regardless of the relative risk aversion in labor our model generates reasonable dynamics in terms of matching the business cycle and sunspot shocks become more important with labor market friction

intertemporal substitution in labor supply evidence from micro data the sensitivity of the supply of labor to intertemporal variation in the wage is an important issue in macroeconomics the analysis of social security and pensions and the study of life cycle patterns of work this paper explores two approaches to the measurement of intertemporal substitution that have appeared in the literature the first approach is to use consumption to control for wealth and unobserved expectations about future wages in the labor supply equation the second approach is to estimate a first difference equation for hours in which labor supply from the previous period serves as a control for wealth and wage expectations the results indicate that intertemporal substitution elasticity for married men is positive but small

testing intertemporal substitution implicit contracts and hours restriction models of the labor market using micro data we present new tests of three theories of the labor market intertemporal substitution hours restrictions and implicit contracts the intertemporal substitution test we implement is an exclusion test robust to many specification errors and we consistently reject this model we model hours restrictions as part of an endogenous switching model we compare the implicit probit equation to an unrestricted probit equation for unemployment and reject the hours restriction model for the implicit contracts model we estimate non separable within period labor supply and consumption equations we test a cross equation restriction of the model and cannot reject the implicit contracts model jel e30 j22 j60

life cycle labour supply with human capital econometric and behavioural implications i examine econometric and behavioural implications of including human capital in the life cycle labour supply model with human capital the wage is no longer the price of time which is instead the wage plus returns to work experience this has important implications first labour supply elasticities become functions of both preference and wage process parameters one cannot estimate them separately second the data appear consistent with larger elasticities than prior work suggests third contrary to conventional wisdom permanent tax changes can have larger effects on current labour supply than temporary changes fourth effects of permanent tax changes grow over time

does social security privatization produce efficiency gains while privatizing social security can improve labor supply incentives it can also reduce risk sharing we analyze a 50 privatization using an overlapping generations model where heterogeneous agents with elastic labor supply face idiosyncratic earnings shocks and longevity uncertainty when wage shocks are insurable privatization produces about 18 100 of extra resources for each future household after all transitional losses have been compensated for with lump sum taxes when wages are not insurable privatization reduces efficiency by about 2 400 per future household we check the robustness of these results to different model specifications as well as policy reforms and arrive at several surprising conclusions first privatization performs better in a closed economy where interest rates decline with capital accumulation than in an open economy second privatization also performs better when an actuarially fair private annuity market does not exist third government matching of private contributions on a progressive basis is not very effective at restoring efficiency and can actually cause harm

a comparative study on decoupling relationship and influence factors between china s regional economic development and industrial energy related carbon emissions abstract to study the relationship between china s regional economic development and industrial carbon emission reveal the major influencing factors and mechanism of carbon emission change in all regions and provide theoretical evidence for governments to formulate emission reduction strategies and policies big data analysis and the tapio extended model were adopted to quantitatively analyse the decoupling relationship between carbon emission and economic growth in eight major regions of china between 1996 and 2012 logarithmic mean divisia index lmdi was also applied to decompose the main factors affecting carbon emission change in all regions the results show that 1 the proportions of industrial energy related to carbon emissions in central china and the beijing tianjin region decreased year by year while the opposite was the case in coastal areas of northern china furthermore the proportions in other regions basically remained unchanged 2 a weak decoupling relation between industry energy carbon emission and economic growth was found in most regions except in northwest china during the period 1996 2000 southwest china south and north coastal regions during the period 2001 2005 beijing and tianjin during the period 2010 2012 energy consumption decoupling factors exerted a consistent positive effect on industry energy carbon emission decoupling with decoupling impact greater than emission factors 3 the overall level of carbon emission reduction technology in china was low and backwards and limited contributions have been made to economic growth and industry energy carbon emission decoupling development emphases of decoupling should be put on energy saving technology promotion industry structure upgrading and energy structure improvement in the future 4 economic intensity effect has exerted the most powerful positive influence on carbon emissions except in developed areas and the positive effect was weaker than that in other regions

taxing women a macroeconomic analysis based on well known evidence on labor supply elasticities several authors have concluded that women should be taxed at lower rates than men we evaluate the quantitative implications and merits of this proposition relative to the current system of taxation setting a proportional tax rate on married females equal to 4 8 increases output and married female labor force participation by about 3 9 3 4 and 6 9 4 0 respectively gender based taxes improve welfare and are preferred by a majority of households nevertheless welfare gains are higher when the u s tax system is replaced by a proportional gender neutral income tax 2011 published by elsevier b v

estimating life cycle labor supply tax effects we present an econometrically tractable life cycle labor supply model for panel data including intertemporally progressive taxes on uncertai wage and nonwge incomes our two stage fixedeffects generalized method of moments approach first extimates intretemporal and then intertemporal preferences specification testing domonstrates the value of incorporating joint progressive taxation of labor and nonlabor incomes results for prime age men emphasize the roles played by hourly wage endogeneity worker specific effects the measure of the rate of pay and intemporal budget constaint nonseparability simulations indicate that recent tax reform while not self financing stimulated made labor supplied by about 3 percent and reduced deadweight loss about 16 percent

the wage elasticity of informal care supply evidence from the health and retirement study author affiliation olena nizalova nizalova kse org ua acknowledgment i gratefully acknowledge steven haider jeff biddle john strauss and john goddeeris for their helpful comments throughout the process of working on the project and important comments from the anonymous referees i am also greatly indebted to michael nolte and his colleagues from the isr data enclave for making possible the revision of this article 1 introductionfor the past two decades the policy debate on issues related to the aging population has been growing at unprecedented rates throughout the world on one hand policy measures suggested in the debate include removal of the disincentives for labor force participation for the near elderly u s dhhs 1997 apfel 2004 cbo 2004 this would have effectively raised the wage rate faced by the targeted group as in the case of the elimination of the social security earnings test for those older than 65 in the united states friedberg 2000 on the other hand the role of informal caregiving is emphasized as a means to keep many individuals at home who would otherwise require expensive institutional care u s dhhs 1997 p 6 policies targeting these two objectives may turn out to conflict with each other higher wages may decrease hours devoted to informal care for elderly parents while policies encouraging informal care may lead to fewer working hours research on the effects of the social security earnings test mostly focuses on labor supply and claiming behavior of the affected group burtless and moffitt 1984 baker and benjamin 1999 gruber and orszag 1999 friedberg 2000 haider and loughran 2008 with little attention being paid to the potential interaction between incentives for paid employment and caregiving choices this interaction may have adverse implications for the well being of the oldest old given that the prevalence of caregiving is highest among individuals in their late midlife central to the analysis of this interaction is the concept of the wage elasticity the labor supply literature suggests a positive wage elasticity of labor supply smaller for males larger for females therefore if the wage elasticity of informal care supply is close to zero as has been found in earlier studies higher wages would lead to more labor supplied with negligible effects on the provision of informal care in this case one might hope that benefits from increased labor supply will not be offset along other dimensions if on the contrary the wage elasticity of informal care supply is relatively large and negative one should be more cautious when evaluating the effects of fiscal policies on labor supply among individuals in their late midlife a substantial negative wage elasticity of informal care supply would mean that along with increasing labor supply the near elderly would cut back on the hours of informal care they provide to their elderly parents this may potentially lead to more people turning to the government in their quest for help with covering formal long term care costs the goal of this article is to study the wage elasticity of informal care supply and contribute to the literature by directly addressing the issue of omitted variables in the time allocation and monetary transfer equations informal care supply is defined as annual time spent helping elderly parents with basic personal needs as well as household chores errands and transportation this article uses a unique opportunity of access to the restricted geographic identifiers for the health and retirement study hrs respondents to instrument hourly wages with the industry structure in the state of residence allowing for differential impact by education 1the primary finding of the article suggests that the wage elasticity of informal care supply is negative and substantially larger in magnitude than previously estimated due to the weakness of the instruments there is still a significant remaining bias in the estimates of the wage elasticity

the sensitivity of labor supply parameter estimates to unobserved individual effects fixed and random effects estimates in a nonlinear model using panel data life cycle models of labor supply predict the presence of an unobserved individual effect in the labor supply equation that is correlated with observed explanatory variables leading to an omitted variables bias in the cross section i examine the sensitivity of parameter estimates to the presence of these effects using fixed and random effect tobit models the estimated effects of children are too large in the cross section the estimated intertemporal substitution elasticity ranges from 1 1 to 1 7 the results are similar for fixed and random effects models and for models using different specifications of the dependent variable

redistribution of individual pension wealth to survivor pensions evidence from a stated preferences analysis abstract pension schemes in the netherlands allow workers to redistribute their own pension wealth to increase the survivor pension of their partner however due to lacking communication and knowledge of survivor pensions among workers and also due to the lack of transparent products and choice architecture redistribution remains limited this paper uses a stated preferences experiment that is explicitly designed for workers with a partner in the age group of 55 to 65 years to elicit their pension redistribution preferences we find that on average the preferred pension wealth redistribution amounts to 50 35 of all individuals have such a preference 33 of all individuals would prefer less redistribution and 32 percent prefers to redistribute more pension income to the partner upon one s death we further show that total family income during working life does not affect the redistribution to survivor pensions however the distribution of the contribution to total family income before retirement across partners as well as the survival likelihood of the partner and the number of years the partner is expected to survive have a significant causal impact on the preferred pension redistribution decision the preference for redistribution to survivor pensions also depends significantly on personal characteristics preferences and social attitude males have a significantly stronger preference for redistribution compared to females moreover forward looking more risk averse and more altruistic individuals have a stronger preference to redistribute part of their pension wealth to a survivor pension finally in particular when employees have the perception that their partner is more forward looking they are willing to invest more in a survivor pension

driving forces of residential co2 emissions in urban and rural china an index decomposition analysis abstract there exist many differences between urban and rural china among which residential co 2 emissions arising from energy consumption is a major one in this paper we estimate and compare the energy related co 2 emissions from urban and rural residential energy consumption from 1991 to 2004 the logarithmic mean divisia index decomposition analysis is then applied to investigate the factors that may affect the changes of the co 2 emissions it is found that energy intensity and the income effects respectively contributed most to the decline and the increase of residential co 2 emissions for both urban and rural china in urban china the population effect was found to contribute to the increase of residential co 2 emissions with a rising tendency however in rural china the population effect for residential co 2 emissions kept decreasing since 1998

economic analysis of social security survivors insurance this paper develops a heterogeneous agents model to analyze the effects of social security survivors insurance the model features a negative mortality income gradient asymmetric information of individual mortality rates and a warm glow bequest motive that varies by age and family structure the model matches lifecycle changes in life insurance coverage and generates advantageous selection in the insurance market for male agents reducing survivors benefits for dependent children generates welfare losses while reducing survivors benefits for aged spouses produces welfare gains the opposing welfare results are explained by differences in the timing of benefits and in the funding cost

simultaneous equations bias in disaggregated econometric models with the language of econometrics agents may be said to take prices as exogenously given which suggests that prices are econometrically exogenous in individual behavioural equations this involves semantic confusion between different meanings of the word exogenous simultaneity problems cannot generally be dispelled by working with disaggregated data in particular nothing is gained by disaggregating the dependent variable in a regression equation if the micro and macro equations use the same regressors however there may be substantial gains from disaggregation of the regressors in the theory of competitive markets agents act as if they do not affect equilibrium market prices by analogy with the language of econometrics agents may be said to take prices as exogenously given having thus stated the price taking assumption it may seem that prices are econometrically exogenous in behavioural equations for individual agents such as labour demand curves this involves semantic confusion between two different meanings of the word exogenous for example even if each buyer has a negligible influence on the market price there may still be an important correlation between the price and the disturbance in an individual demand equation so that treating price as econometrically exogenous gives biased coefficient estimates the price taking assumption has been used to justify ols estimates of import demand functions for small countries leamer and stern 1970 pointed out that the estimated slope in an import demand function is generally an average of the slopes of the demand and supply functions for imports but

wage inequality and family labor supply using the march current population surveys and the 1960 census this article describes earnings and employment changes for married couples in different types of households stratified by the husband s hourly wage while declines in male employment and earnings have been greatest for low wage men employment and earnings gains have been largest for wives of middle and high wage men these findings cast doubt on the notion that married women have increased their labor supply in the recent decades to compensate for the disappointing earnings growth of their husbands

wages youth employment and school enrollment recent evidence from increases in world oil prices we exploit variation in wage growth induced by increases in world oil prices to estimate the elasticity of young men s labor market participation and school enrollment with respect to after tax wages our main finding is that in the aggregate increased wages have a dual impact they tend to reduce at least temporarily young men s full time university enrollment rates but bring back into the labor market some young men who were neither enrolled in school nor employed contrary to previous research we find little evidence that young men with no high school diploma now leave school in response to increased wages

single women s labor supply elasticities trends and policy implications this paper uses cps data to examine changes in single women s labor supply elas ticities in recent decades specifically the authors investigate trends in how single women s hours of work and labor force participation rates responded to both wages and income over the years 1979 2003 results from the base specification suggest that over the observation period hours wage elasticities decreased by 82 participation wage elasticities by 36 and participation income elasticities by 57 these results imply that changes in tax policy had a much larger effect on the labor supply and labor force participation behavior of women in this subpopulation in the early 1980s than in recent years i t is well documented that over the past few decades female labor force behavior has undergone substantial changes women s labor force participation rates have increased markedly as have their annual hours of work at the same time the marital composition of women has undergone a substantial change as well with the proportion of married women falling steadily over time as a result single women comprise a greater share of the labor force than in earlier years and hence their behavioral responses to changes in wages and incomes carry even greater importance for the effects of changes in tax and transfer policies despite the large increase in the number of single women over the past decades single women s labor supply behavior has received

a theory of competition among pressure groups for political influence this paper presents a theory of competition among pressure groups for political influence political equilibrium depends on the efficiency of each group in producing pressure the effect of additional pressure on their influence the number of persons in different groups and the deadweight cost of taxes and subsidies an increase in deadweight costs discourages pressure by subsidized groups and encourages pressure by taxpayers this analysis unifies the view that governments correct market failures with the view that they favor the politically powerful both are produced by the competition for political favors

a cure for discrimination affirmative action and the case of california s proposition 209 proposition 209 enacted in california in 1996 and made effective the following year ended state affirmative action programs not only in education but also for public employment and government contracting this paper uses cps data and triple difference techniques to take advantage of the natural experiment presented by this change in state law to gauge the labor market impacts of ending affirmative action programs employment among women and minorities dropped sharply a change that was nearly completely explained by a decline in participation rather than by increases in unemployment this decline suggests that either affirmative action programs in california had been inefficient or that they failed to create lasting change in prejudicial attitudes

analysis of co2 emissions in apec countries a time series and a cross sectional decomposition using the log mean divisia method abstract we decompose the changes of co2 emissions in apec countries over time as well as the differences of co2 emissions among three income groups of apec countries at a given period of time based on the logarithmic mean divisia decomposition approach among the major findings of the paper the growth in per capita gdp and population are the two dominant contributors to the increase in co2 emissions in most cases furthermore energy efficiency and fuel switching are found to be the two most promising fields for possible cooperation between apec member countries

social security and two earner households in the past decades elimination of the pay as you go system in u s has been extensively discussed and studied such an elimination would also eliminate the intra cohort redistribution done by the following policies of social security due to spousal and survivor s beneflt provisions the system redistributes mostly to single earner married households not necessarily progressive retirement beneflts are a concave function of past mean earnings hence the system redistributes from high earners to low earners finally the existence of a cap on social security taxable earnings makes the system regressive this is the flrst paper that quantifles redistributive labor supply and welfare implications of these policies using a general equilibrium life cycle model agents start out as permanently married or single and with education levels and wage proflles where the latter depend both on education and gender the household is the decision maker and decides on the labor supply of its member s and saving the aggregate production function has as inputs capital and labor aggregated by e ciency elimination of these policies results in a 6 1 increase in married female labor force participation rate the middle income single earner married households experience the largest welfare losses whereas the high income two earner households together with high income single households experience the largest welfare gains

productivity growth technical progress and efficiency change in industrialized countries this paper analyzes productivity growth in 17 oecd countries over the period 1979 1988 a nonparametric programming method activity analysis is used to compute malmquist productivity indexes these are decomposed into two component measures namely technical change and efficiency change we find that u s productivity growth is slightly higher than average all of which is due to technical change japan s productivity growth is the highest in the sample with almost half due to efficiency change jel c43 d24 in this paper we apply recently developed

do labour supply and demand curves exist the objective of this paper is to show that circumstantial and empirical evidence for the existence of labour supply and demand curves is at best inconclusive and at worst casts doubt on their existence because virtually all orthodox models of labour markets simple and complex are built upon the foundation stones of labour supply and demand curves these models lack empirically supported foundations orthodox labour economists must therefore either provide stronger evidence or stop using labour supply and demand curves as the foundation stones of their models the conclusion discusses implications for future orthodox and heterodox labour economics

labour supply the roles of human capital and the extensive margin we specify and estimate a life cycle labour supply model that expands on earlier work by simultaneously including human capital accumulation saving and bequests an active extensive margin a realistic specification of the progressive tax structure and the social security system and an accounting for private pensions and health expenditures by incorporating all these features we develop new insights into how taxes affect life cycle labour supply for instance we find that labour supply elasticities vary in important ways with age education and the tax structure itself we also show how human capital affects elasticities differently on the intensive versus extensive margins

homework in labor economics household production and intertemporal substitution abstract we argue that estimates of intertemporal substitution elasticities obtained from standard life cycle models are subject to a downward bias because they neglect changes in work done at home over the life cycle we extend the standard life cycle model to include home production and estimate it using data from three time use surveys we find that the downward bias is large

corrigendum on a life cycle model of female labour supply in the empirical work in our article on the intertemporal substitution of leisure time for married women heckman and macurdy 1980 we inadvertently constrained the estimated intertemporal substitution elasticity to be too high since this parameter plays a prominent role in discussions of equilibrium models of the business cycle and since our empirical work has been cited in discussions on this topic e g hall 1980 we would like to present a corrected set of empirical results for our model the period t utility function adopted in this note is in the notation of our original paper equation 15

nit picking the macroeconomic effects of a negative income tax i study a revenue neutral reform of the u s income tax and welfare system that involves the adoption of a negative income tax nit the reform is undertaken in a life cycle economy with individual heterogeneity and uninsurable idiosyncratic labor risk the optimal nit consists of a 22 rate and a transfer equivalent to 11 of per capita gdp the ex ante average welfare gain is a 2 1 annual increase of individual consumption i show that a nit outperforms a flat tax reform income tax plus deduction by a considerable margin the key consequence of the reform is that high productivity agents increase their relative importance in the labor supply at the expense of low productivity agents