afdc and illegitimacy ratios a vector autoregressive model the expansion of the government programme of aid to families of dependent children afdc plays a major role in theoretical explanations of the sharply rising trend in us illegitimacy ratios the proportion of births occurring to unwed mothers to date this role has not been supported by empirical evidence the present study uses a new approach time series data and granger causation a series of tests shows robust causal impacts of afdc on non white illegitimacy ratios a counterfactual simulation reveals that about half the increase in non white illegitimacy ratios over the past two decades can be attributed to an afdc effect

estimating permanent income and wealth of the us farm households farm households are unique in the way they derive income when compared to nonfarm households farm operators and spouses have dual income sources from farm and off farm activities further farm households on an average possess higher wealth than nonfarm households this article estimates permanent income for the us farm households using data from a large national farm level survey the estimated income is then used to identify the determinants of wealth accumulation by the us farm households results confirm that permanent income is closely related to age of the operator education occupation farm size location and number of earners in the household along with age permanent income is a significant determinant of household wealth it was also found that the wealth income curve is nonlinear upward sloping and convex hausman s specification test indicates that variations in farm household wealth is better explained by estimated permanent income than observed total household income off farm income

non monetary incentives and opportunistic behavior evidence from a laboratory public good game this study reports data from a laboratory experiment that investigates the incentive effect of three distinct social communication schemes on free riding behavior we use performance based approval and disapproval ratings and a linear public good game to address the above issues the treatments vary in terms of subjects opportunities to anonymously assign 1 only the approval ratings to other group members 2 only the disapproval ratings to other group members and 3 either the approval or the disapproval ratings to other group members but not both to the same group member after they play a standard linear public good game despite the nash prediction of zero individual contribution in all three treatments the data show that the disapproval points generate significantly higher contribution than the approval points the treatment in which subjects could communicate either the approval or the disapproval points produces the highest level of contribution we discuss the implications that these findings may have for efficient design of organizations jel d03 h41 c72 c92

a reanalyis of marital stability in the seattle denver income maintenance experiment this paper challenges the widely cited finding of groeneveld hannan and tuma that the seattle denver income maintenance experiment provides evidence that guaranteed income plans for poor husband wife families will increase marital dissolution relative to the existing program aid to families with dependent children the reanalysis of the experimental data distinguishes between the experimental treatment in the form of the pure negative income tax and the treatment plans that involved an experimental training program all the time periods of the experiment are used with allowance for the timing of the marital dissolution in the inferences and with allowance for attrition the conclusion of this paper is that the plans specifically the negative income tax plans in the experiment had no effect on the rate of marital dissolutions among the treatment couples relative to the control couples

peer pressure and partnerships partnerships and profit sharing are often claimed to motivate workers by giving them a share of the pie but in organizations of any significant size the free rider effects would seem to choke off

nonmonetary sanctions and rewards in an experimental coordination game abstract a growing body of experimental research documents that nonmonetary sanctions and rewards may be important instruments for enforcing efficient behavior this study contributes to this literature by reporting results from a laboratory experiment the experiment is designed to test whether nonmonetary sanctions or rewards alone can yield the optimal level of efficiency in a game with pareto ranked equilibria performance based disapproval and approval ratings assigned by group members are used as proxies for nonmonetary sanction and reward respectively although these ratings are costless and payoff neutral results show that expression of disapproval facilitates coordination on the most efficient equilibrium in contrast statement of approval induces subjects to converge towards the most inefficient outcome we conclude that induced approval and disapproval ratings have asymmetric behavioral effects on coordination

incomplete information strengthens the effectiveness of social approval we present a theoretical model of a public good game in which the expression of social approval induces pro social behavior using a laboratory experiment with earned heterogeneous endowments we test our model the main hypothesis is that the expression of social approval increases cooperative behavior even if reputation building is impossible we vary the information available and investigate how this affects the expression of social approval and individual contributions the expression of social approval significantly increases contributions however the increase is smaller if additional information is provided suggesting that social approval is more effective if subjects receive a noisy signal about others contributions jel c72 c91 d71 d83

the impact of budget deficits on national saving in the usa this paper analyses the effect of government budget deficits on national saving in the usa utilizing annual time series data from 1967 to 1996 a model that includes budget deficits money supply real exchange rate real interest rate and the proportion of working age population to total population to explain national saving is developed after examining the time series properties of the data an error correction model is estimated the overall results suggest that an increase in government budget deficits tend to reduce national saving the working age population coming out of the baby boom generation has positively contributed to an increase in national saving

do non strategic sanctions obey the law of demand the demand for punishment in the voluntary contribution mechanism abstract the prospect of receiving a monetary sanction for free riding has been shown to increase contributions to public goods we ask whether the impulse to punish is unresponsive to the cost to the punisher or whether like other preferences it interacts with prices to generate a conventional demand curve in a series of experiments we randomly vary the cost of reducing the earnings of other group members following voluntary contribution decisions in our design new groups are formed after each interaction and no subject faces any other more than once so there is no strategic reason to punish we nonetheless find significant levels of punishment and we learn that both price and the extent to which the recipient s contribution is below the group mean are significant determinants of the quantity of punishment demanded moreover punishment is mainly directed at free riders even when it costs nothing to the punisher

pay equality and industrial politics personnel managers often argue that equitable pay treatment manifested as wage compression is useful because it reduces disharmony among workers but it is far from obvious that a compressed salary structure is morale improving since better workers may feel disenchanted by this scheme however when workers rewards are based on relative comparisons salary compression reduces uncooperative behavior that is detrimental to the firm relative comparisons imply that some reference group must be selected the major result is that within the relevant groups some wage compression is efficient

the provision of incentives in firms i ncentives are the essence of economics despite many wide ranging claims about their supposed importance there has been little empirical assessment of incentive provision for workers the purpose of this paper is to critically overview existing work on the provision of incentives since the interests of workers and their employers are not always aligned a large theoretical literature has emphasized how firms design compensation contracts to induce employees to operate in the firm s interest this literature has reached into many areas of compensation and has pointed to a multitude of different mechanisms that can be used to induce workers to act in the interests of their employers these include piece rates options discretionary bonuses promotions profit sharing efficiency wages deferred compensation and so on my objective here is to evaluate this literature in the light of a growing empirical literature on compensation where possible i will address the literature from two perspectives first an underlying assumption of this literature is that individuals respond to contracts that reward performance accordingly i consider whether agents behave in this way and whether these responses are always in the firm s interest second i address whether firms write contracts with these responses in mind in other words do contracts look like the predictions of the theory incentives are provided to workers

fiscal policy and national saving this paper uses structural vector autoregressions along with structural measures of fiscal policy to measure the dynamic impact of fiscal policy shocks on the output gap and national saving positive shocks to government purchases and negative shocks to real net taxes are found to increase the output gap positive shocks to the government s structural surplus increases national saving although the effects are small positive shocks to government purchases are found to substantially reduce national saving negative shocks to real net tax revenues as a share of potential gdp have a small negative impact on national saving

national saving and budget deficits it has been widely argued that government budget deficits reduce national saving estimated relations indicate otherwise both for the traditional or conventional official measure of national saving and a broader more relevant measure encompassing government and household as well as private business investment in tangible capital greater price adjusted high employment deficits increases in the real monetary base and declines in real exchange rates have all been associated with more subsequent national saving these relations manifest in ar 1 regressions over the 1972 91 period were confirmed in vector autoregressions copyright 1994 by mit press

social learning and voluntary cooperation among like minded people many people contribute to public goods but stop doing so once they experience free riding we test the hypothesis that groups whose members know that they are composed only of likeminded cooperators are able to maintain a higher cooperation level than the most cooperative randomly composed groups our experiments confirm this hypothesis we also predict that groups of like minded free riders do not cooperate yet we find a high level of strategic cooperation that eventually col lapses our results underscore the importance of group composition and social learning by heterogeneously motivated agents to understand the dynamics of cooperation and free riding

welfare and the family the canadian experience canada has a universal social assistance program that is almost completely administered through the federal canada assistance program however provinces determine the levels of assistance for various groups eligible for welfare this article exploits the variation in payments and uses microdata to estimate the effect of changes in welfare benefits on welfare participation single parenthood births out of wedlock divorce and labor force participation among low income women in canada it would appear that welfare benefits influence these decisions

the savings growth nexus for the malaysian economy a view through rolling sub samples the purpose of this study is to re investigate the savings growth nexus for the malaysian economy using bounds testing approach to cointegration and toda and yamamoto 1995 and dolado and lutkepohl 1996 tydl granger causality test this study covered the sample period from 1971 q1 to 2008 q4 the cointegration results suggest that the variables are moving together in the long run and the tydl granger causality results indicate that the relationship between savings and economic growth is bilateral in addition the rolling sub samples tydl granger causality test exhibited a relatively stable causal relationship running from savings to economic growth in malaysia particularly before the onset of asian financial crisis in 1997 1998

welfare and the family the u s experience after describing the development and dimensions of the american welfare system this paper explores the relationship of illegitimacy to welfare alternative measures of illegitimacy are discussed the relationship of the welfare package and the illegitimacy ratio is examined over time and across states by race a bivariate relationship of welfare and illegitimacy exists among whites but not among blacks among blacks a strong cross state relationship exists between density of the black population and the illegitimacy ratio the relationship is robust persisting after controlling for a variety of demographic and economic variables and persisting across time

rational choice round robin and rebellion an institutional solution to the problems of revolution abstract two collective action problems plague successful revolution on the one hand would be revolutionaries confront a participation problem whereby no rationally self interested individual has an incentive to participate in rebellion on the other hand individuals face a first mover problem whereby no rationally self interested individual has an incentive to lead rebellion this paper argues that 18th century merchant sailors who confronted these problems devised a novel institution to facilitate maritime revolution and assist them in overthrowing abusive captains this institution was called a round robin round robins helped overcome both the participation and first mover problems by aligning the interests of individual sailors desiring mutiny and restructuring the payoffs of leading versus following maritime rebellion

a reassessment of the effect of income maintenance on marital dissolution in the seattle denver experiment cain and wissoker claim that income maintenance treatment had no effect on marital dissolution in the seattle denver income maintenance experiment yet parametric and nonparametric analyses reveal that there was a significant increase in the dissolution rate for blacks and whites but not chicanos this conclusion holds for many different specifications including a number that allow free form time variation in response while cain and wissoker s analyses and results differ in many ways from that of groeneveld hannan and tuma consideration of the full set of estimates including both main effects and interaction effects and analyses of the complete samples reveal that their analyses agree that the income maintenance treatment increased rates of marital dissolution for blacks and whites

a neoclassical perspective on budget deficits i n the 1988 presidential campaign virtually every serious candidate spoke of the urgent need to trim government budget deficits public opinion polls have identified federal deficits as a key economic issue second only to unemployment while many economists are relieved by what they perceive to be a long overdue political response to a critical economic problem others regard the fuss as much ado about nothing it is indeed remarkable that economists can disagree so severely over an issue which commands such a uniform reaction from laymen of widely different ideologies and political affiliations generally speaking there are three schools of thought concerning the economic effects of budget deficits neoclassical keynesian and ricardian before proceeding further it is useful to review the basic structure and implications of each paradigm the neoclassical paradigm envisions farsighted individuals planning consumption over their own life cycles budget deficits raise total lifetime consumption by shifting taxes to subsequent generations if economic resources are fully employed increased consumption necessarily implies decreased saving interest rates must then rise to bring capital markets into balance thus persistent deficits crowd out private capital accumulation in the current economic environment most economists would agree that these consequences would be highly detrimental