better schools less crime i estimate the impact of attending a first choice middle or high school on adult crime using data from public school choice lotteries in charlotte mecklenburg school district cms seven years after random assignment lottery winners had been arrested for fewer serious crimes and had spent fewer days incarcerated the gain in school quality as measured by peer and teacher inputs was equivalent to moving from one of the lowest ranked schools to one at the district average the reduction in crime comes largely from years after enrollment in the preferred school is complete the impacts are concentrated among high risk youth who commit about 50 less crime across several different outcome measures and scalings of crime by severity i find suggestive evidence that school quality explains more of the impact in high school whereas peer effects are more important in middle school copyright 2011 oxford university press

internal pricing and cost allocation in a model of multiproduct competition with finite capacity increments internal prices are used in practice to allocate central resources to a firms profit centers the fixed costs of capacity acquisitions are often included in these prices we examine the interaction between capacity acquisition and competition when capacity is available in fixed increments we find predictably that if the increments are small unit capacity cost is a good approximation for the internal price and if the increments are large the internal price is zero however the relationship between the internal price and the capacity increment for intermediate cases is quite irregular to the extent that it is not possible to approximate the internal price with accounting data the analysis also suggests that full cost allocation overcharges for the opportunity cost of capacity furthermore the right internal price does not act either as a way of recovering fixed costs or as a proxy for externalities such as congestion costs the conclusions are not materially altered in the case where variable costs increase at the margin and where these costs rather than hard capacity constraints are the reason to restrict output

equality efficiency and market fundamentals the dynamics of international medical care reform public opinion surveys uniformly show low support for medical care systems in developed countries the longstanding conflict between equal access to care and efficient service provision partly explains this dissatisfaction but the trade off is particularly acute in medical care as new technologies developed over time have increased the cost of care and made the equity commitment even more expensive countries first dealt with rising costs by maintaining equal access and restricting total spending efficiency suffered however as a result many countries are considering a move away from spending controls and toward incentive based medical care reform

household saving out of different types of income revisited the purpose of this paper is to test for two hypotheses about household consumption and saving behaviour namely the substitution hypothesis according to which changes in corporate retained earningshave an offsetting effect on household savingand the hypothesis that consumption and saving out of different types of income vary cross country evidence from 13 oecd countries over the period 1963 80 lies very well in accordance with both of these hypotheses moreover results are robust to alternative specifications of consumption function to additional variables and to estimation methods

inflation and savings testing deaton s hypothesis a money illusion savings function in which unanticipated inflation affects the savings ratio positively is tested this is strongly supported by finnish data goodness of fit statistics are quite high and the coefficient estimates are of the expected sign and are highly significant standard stability tests of both the brown durbin evans type and of the vpr type are generally rather favourable finally cross country evidence from ten oecd countries gives further support for the suggested specification

investing in health the long term impact of head start on smoking i introduction there is a strong evidence that early childhood socioeconomic conditions have long term economic consequences reinforcing and sustaining disparities over the lifecourse 1 this observation provides a compelling rationale for public investments targeted toward disadvantaged children to expand opportunities and break the cycle of poverty head start is the principal federally funded program through which the united states invests directly in the human capital of disadvantaged preschool children since its inception in 1965 as part of president lyndon johnson s war on poverty head start has provided services to more than 23 million preschool children in 2005 there were more than 900 000 children enrolled in the program at a total cost of 6 8 billion office of head start 2006a to achieve its overall goal of increasing the school readiness of participants head start provides a comprehensive set of services including education health nutritional and social services to participants and their families research has shown that head start has positive impacts on participants human capital both in childhood and in adulthood 2 in recent years questions have arisen about the relative effectiveness of head start and whether it should be continued in its present form u s department of health and human services 2003 much of the debate has centered on the magnitude and persistence of the cognitive achievements of head start participants however given the link between education and health 3 and the comprehensive nature of head start with substantial health components one could reasonably expect it to have a favorable impact on participants health as well as education if significant health effects were found to persist into adulthood this in itself could alter the evaluation of head start and have important implications for the associated policy debate smoking is the leading preventable cause of mortality in the united states mokdad et al 2004 it is linked to an extensive list of diseases chaloupka and warner 2000 and imposes large economic costs on society centers for disease control and prevention 2002 tobacco use generally begins before individuals graduate high school and as an addictive behavior youth smoking is linked to adult smoking u s department of health and human services 1994 adolescents from low socioeconomic status households with low academic achievement are more likely to use tobacco products u s department of health and human services 1994 thus comprehensive development programs targeted toward disadvantaged youths that are designed to improve child outcomes have the potential to influence smoking improve health over the lifecourse and reduce the social costs from smoking suggestive evidence that head start might influence the smoking behavior of participants comes from evaluations of other preschool programs that targeted low income children participants in both the carolina abecedarian preschool program and the high scope perry preschool program were much less likely to smoke as adults barnett and masse 2007 belfield et al 2006 in this article we assess the impact of head start participation on adult smoking behavior using data from the panel study of income dynamics psid and its supplements on early childhood education and health we examine the cohort of adults above age 21 in 1999 whose age is low enough to have potentially participated in a head start program following currie and thomas 1995 and garces thomas and currie 2002 we employ a sibling based model to control for unobservable family characteristics that may affect smoking or the decision to participate in head start our results show that head start participation significantly influences smoking related behavior we estimate that if head start participants had not enrolled in the program these individuals would be approximately 20 percentage points more likely to smoke cigarettes beyond age 25

the marginal cost of raising tax revenue and redistributing income we present analytic formulas for calculating marginal welfare costs when taxes are levied against the wages of a heterogeneous population of households and marginal tax revenue finances either the supply of a public good or lump sum transfers the formulas are applied to explain the wide discrepancy between estimates of marginal welfare costs for redistribution previously obtained through computer simulation procedures our calculations reveal that these procedures introduced lump sum transfers that were not specified as part of the reforms to be simulated but explain most of the differences between their estimates we also show that welfare cost estimates are quite sensitive to the elasticity of labor supply with respect to exhaustive public spending

the rate of return to the high scope perry preschool program abstract this paper estimates the rate of return to the highscope perry preschool program an early intervention program targeted toward disadvantaged african american youth estimates of the rate of return to the perry program are widely cited to support the claim of substantial economic benefits from preschool education programs previous studies of the rate of return to this program ignore the compromises that occurred in the randomization protocol they do not report standard errors the rates of return estimated in this paper account for these factors we conduct an extensive analysis of sensitivity to alternative plausible assumptions estimated annual social rates of return generally fall between 7 and 10 with most estimates substantially lower than those previously reported in the literature however returns are generally statistically significantly different from zero for both males and females and are above the historical return on equity estimated benefit to cost ratios support this conclusion

racial differences in patterns of wealth accumulation making use of psid data for 1984 1989 and 1994 we examine race differences in patterns of asset accumulation our results indicate as expected that inheritances raise the rate of wealth accumulation of whites relative to that of african americans but while whites devote a greater share of their income to saving racial differences in saving rates are not significant once we control for income though our results may be period specific we also do not find evidence that the rate of return to capital is greater for whites than for african americans simulations suggest that african americans would have gained significant ground relative to whites during the period if they had inherited similar amounts saved at the same rate had comparable income levels and more speculatively had portfolios closer in composition to those of whites

intergenerational income mobility in the united states social scientists and policy analysts have long expressed concern about the extent of intergenerational income mobility in the united states but remarkably little empirical evidence is available the few existing estimates of the intergenerational correlation in income have been biased downward by measurement error unrepresentative samples or both new estimates based on intergenerational data from the panel study of income dynamics imply that the intergenerational correlation in long run income is at least 0 4 indicating dramatically less mobility than suggested by earlier research copyright 1992 by american economic association

intergenerational inequality a sociological perspective when economists are concerned with the inheritance of inequality they typically focus on the intergenerational transmission of income or wealth in contrast sociologists are more likely to analyze intergenerational mobility between and immobility in different class positions

differential mortality and wealth accumulation the issue of asset accumulation and decumulation is central to the life cycle theory of consumer behavior and to many policy questions one of the main implications of the life cycle model is that assets are decumulated in the last part of life most empirical studies in this area use cross sectional data of estimate mean or median wealth age profiles the use of cross sections to estimate the age profile of assets is full of pitfalls for example if wealth and mortality are related in that poorer individuals die younger one overestimates the last part of the wealth age profile when using cross sectional data because means or other measures of location are taken over a population which becomes richer as it ages this paper examines the effect of differential mortality on cross sectional estimates of wealth age profiles our approach is to quantify the dependence of mortality rates on wealth and use these estimates to correct wealth age profiles for sample selection due to differential mortality we estimate mortality rates as a function of wealth and age for a sample of married couples drawn from the survey of income and program participation sipp our results show that accounting for differential mortality produces wealth profiles with significantly more dissaving among the elderly

giving children a better start preschool attendance and school age profiles this brief summarizes the giving children a better start preschool attendance and school age profiles in uruguay for the period 1995 the author study the effect of pre primary education on children s subsequent school outcomes by exploiting a unique feature of the uruguayan household survey ech that collects retrospective information on preschool attendance in the context of a rapid expansion in the supply of pre primary places using a within household estimator we find small gains from preschool attendance at early ages that get magnified as children grow up by age 15 treated children have accumulated 0 8 extra years of education and are 27 percentage points more likely to be in school compared to their untreated siblings instrumental variables estimates that attempt to control for non random selection of siblings into preschool lead to similar results pre primary education appears as a successful and cost effective policy to prevent early grade failure and its long lasting consequences in low income countries

measuring the well being of the poor using income and consumption we examine the relative merits of consumption and income as measures of the material well being of the poor consumption offers several advantages over income because consumption is a more direct measure of well being than income and is less subject to underreporting bias measurement problems with income are problematic for analyses of changes in well being of the poor because the biases appear to have changed over time and are correlated with government policies on the other hand income is often easier to report and is available for much larger samples providing greater power to test hypotheses we begin by considering the conceptual and pragmatic reasons why consumption might be better or worse than income then we employ several empirical strategies to examine the quality of income and consumption data first we compare income and consumption reports for those with few resources as well as their assets and liabilities to examine measurement errors and under reporting second we examine other evidence on the internal consistency of reports of low income or consumption third we compare how well micro data in standard datasets weight up to match aggregates for classes of income and consumption that are especially important for low resource families fourth we validate income and consumption measures by comparing them to other measures of hardship or material well being although the evidence tends to favor consumption measures our analyses suggest that both measures should be used to assess the material well being of the poor

galton versus the human capital approach to inheritance a century ago francis galton proposed a simple yet powerful model of inheritance gary backer s human capital model is often used to analyze important empirical and policy questions but does it dominate galton s from a positive point of view i derive nine implicatiions of the human capital approach that are distinct from galton s evidence from the pis scf and nlsy micro data sets as well as results reported in previous literatures suggest that four of the unique implications are refuted two implications are verified and mixed results are obtained for three others some extensions of economics recently developed by becker and others when applied to inheritance may improve economics predictions

product line selection production decisions and allocation of common fixed costs abstract product costs are determined in practice for the purpose of pricing make buy and product line decisions while many costs are directly assignable to individual products common costs have historically presented a difficult conundrum a variety of cost allocation methods are used in practice or have been suggested in the literature to attach these costs to individual products while such procedures are theoretically unsupported they may be able to mimic the correct decisions adequately in this paper we investigate the efficacy of certain cost allocation schemes in a competitive environment the schemes are evaluated with reference to a scenario in which there is a single fixed cost incurred in manufacturing any subset of a set of products under idealized conditions a cournot nash model is developed that describes the number of entering firms and the equilibrium price and production levels using this as a point of reference it is shown that by using gross contribution as an allocation basis optimal product line decisions are achieved without distorting the selection of production levels moreover competitive pressure sufficient to drive total net profits close to zero is sufficient to require that any allocation rule supporting optimal product line decisions yields allocations nearly proportional to gross contributions an analogy is drawn with the allocation of joint costs to coproducts in a competitive environment and the corresponding allocation in proportion to net realizable value

opec behavior a test of alternative hypotheses since interpretations of past and future oil price patterns depends on the model chosen the author tests and compares alternative theories of opec as a first step in validating the choice on any one model the results show that among opec countries the partial market sharing cartel model is the only model not rejected by at least some of the 11 members and gives the best explanation of production in comparison with 11 non opec countries the competitive model could not be rejected for 10 of the 11 non opec producers this raises the question of why if opec is a cartel friedman s predictions have not come true and introduces new questions for future research 19 references 3 tables

the intergenerational transmission of welfare receipt a nonparametric bounds analysis using a nonparametric bounding method and data from the panel study of income dynamics i examine the effect that growing up in a household that receives aid to families with dependent children af

aggregate production planning for process industries under oligopolistic competition abstract we consider a competitive version of the traditional aggregate production planning model with capacity constraints in the general case multiple products are produced by a few competing producers oligopoly with limited capacities production quantities prices and consequently profits depend on production and allocation decisions of each producer in addition there is competition for the raw material whose supplies are limited and where prices reflect these limitations such situations have recently occurred in several process industry settings including petro refining petrochemicals basic chemicals cement fertilizers pharmaceuticals rubber paper food processing and metals we use a successive bertrand cournot framework to address this problem and to determine optimal production quantities prices and profits at the producers and at the raw material supplier our analysis allows a new way to understand and evaluate the marginal value of additional capacity when there is competition for the market and raw materials

tightening a welfare system the effects of benefit denial on future welfare receipt abstract we derive local average treatment effect estimates of the impact of welfare benefit denial on future receipt using a unique experiment involving reassessment of some applicants who were originally slated to receive benefits we find evidence of considerable heterogeneity among applicants our results support a model with a peripheral group who exhibit scarring effects from being granted benefits and a core group who do not the core group moves quickly back onto welfare when they are denied benefits even for the peripheral group benefit denial has intermediate term but not permanent impacts

vertical integration variable proportions and successive oligopolies this paper investigates the problem of how the effect of vertical integration upon the final product price is related to the production and or market structures some ambiguous results of the previous models are shown to involve the compound effect of vertical an d horizontal merger this model considers purely vertical integration and shows that the lerner index of monopoly remains unaffected before and after merger vertical integration is shown accordingly to yield an unambiguous decrease in the final product price an increase in consumer welfare implications for antitrust laws are also discussed copyright 1988 by blackwell publishing ltd

capacity and competition empirical evidence on uk panel data following d kreps and j scheinkman 1983 it is common to view the difference between cournot and bertrand competition as depending on production capacity bertrand undercutting is only feasible if firms have capacity to serve the market gained if firms are capacity constrained the cournot model is more appropriate this paper tests the capacity and competition idea by looking at the relationship between profits and capacity constraints if capacity constrained firms become more cournot like it should be positive using survey data on capacity constraints merged into a panel industry data set for the united kingdom the authors find a robust positive relationship copyright 1994 by blackwell publishing ltd

testing the stability of the hall consumption function specification abstract this paper contains stability tests of hall s consumption specification by using cross country data from 11 oecd countries taken as a whole results are in favour of hall s hypothesis even though there is some conflicting evidence

vertical separation and horizontal mergers the author considers a duopoly setting consisting of two manufacturer retailer pairs in which the observable contract between each manufacturer retailer pair specifies a two part tariff without intraband competition the author shows that an upstream merger is anticompetitive under very general demand and cost conditions downstream merger is analyzed using linear demand and constant marginal cost and is shown not to be anticompetitive both with and without intraband competition and for both price and output competition between retailers in the premerger regime copyright 1995 by blackwell publishing ltd

competition in multiechelon assembly supply chains in this paper we study competition in multiechelon supply chains with an assembly structure firms in the supply chain are grouped into homogenous sectors nodes that contain identical firms with identical production capabilities that all produce exactly one undifferentiated product that may itself be a kit of components each sector may use several inputs to produce its product and these inputs are supplied by different sectors the production process within any sector is taken to be pure assembly in fixed proportions the number of firms in each sector is known the demand curve for the final product is assumed to be linear as are production costs in all sectors competition is modeled via a coordinated successive cournot model in which firms choose production quantities for their downstream market so as to maximize profits given prices for all inputs and all complementary products production quantities for sectors supplying the same successor are coordinated through pricing mechanisms so that complementary products are produced in the right proportions under these assumptions equilibrium prices for any multiechelon assembly network are characterized by a system of linear equations we derive closed form expressions for equilibrium quantities and prices in any two stage system i e a system with multiple input sectors and a single assembly sector we show that any assembly structure can be converted to an equivalent larger structure in which no more than two components are assembled at any node finally large structures can be solved either by direct solution of the characteristic linear equations or through an iterative reduction compression to smaller structures

competition and structure in serial supply chains with deterministic demand supply chains often consist of several tiers with different numbers of firms competing at each tier a major determinant of the structure of supply chains is the cost structure associated with the underlying manufacturing process in this paper we examine the impact of fixed and variable costs on the structure and competitiveness of supply chains with a serial structure and price sensitive linear deterministic demand the entry stage is modeled as a simultaneous game where the players take the outcomes of the subsequent post entry cournot competition into account in making their entry decisions we derive expressions for prices and production quantities as functions of the number of entrants at each tier of a multitier chain we characterize viability and stability of supply chain structures and show using lattice arguments that there is always an equilibrium structure in pure strategies in the entry game finally we examine the effects of vertical integration in the two tier case altogether the paper provides a framework for comparing a variety of supply chain structures and for studying how they are affected by cost structures and by the number of entrants throughout the chain

the high scope perry preschool program cost benefit analysis using data from the age 40 followup this paper presents an updated cost benefit analysis of the high scope perry preschool program using data on individuals aged 40 children were randomly assigned to a treatment or control group program costs are compared against treatment impacts on educational resources earnings criminal activity and welfare receipt net present values are calculated for participants the general public and society the treatment group obtains significantly higher earnings for the general public higher tax revenues lower criminal justice system expenditures and lower welfare payments easily outweigh program costs they repay 12 90 for every 1 invested however program gains come mainly from reduced crime by males

on some estimates of an asian savings function abstract recent empirical studies have led many economists to argue that a number of countries in asia could stimulate savings if they permitted higher rates of interest and accepted less foreign aid this paper critically examines the econometric basis of these claims for this purpose the model specifications found in past work are encompassed within a more general model so that they may be replicated and tested as restricted forms

consumer choice and cournot behavior in capacity constrained duopoly competition in a two stage model of duopolistic capacity choice and subsequent price competition consumer switching costs can deter some consumers from seeking service at a low price firm that lacks sufficient capacity to serve the entire market in this setting firms residual demand functions are aggregatedfrom thefirm selection decisions of individual consumers based on firms prices and their induced degrees of service reliability if consumers are approximately risk neutral with respect to service reliability then capacity constrained duopoly competition has a unique subgame perfect equilibrium in which firms choose cournot capacities and prices the equilibrium robustness of cournot behavior extends to duopoly markets in which consumer switching costs are induced by subscription pricing