banking costs generalized functional forms and estimation of economies of scale and scope recently researchers have claimed that the primitive cobb douglas production technology captures banking cost functions adequately these findings rule out scope economies and u shaped cost curves the rejection of the generalized flexible form postulated by the above authors is a necessary but not a sufficient condition to justify a cobb douglas specification using restricted generalized functional forms the authors find that the composite output cobb douglas specification is an inadequate description of banking cost technology translog specifications with multiple products capture the data best suggesting the presence of both scope and scale economies copyright 1989 by ohio state university press

education variation in earnings and nonmonetary compensation the nas nrc twin offspring data support the proposition that for those with low levels of education earnings may be an adequate proxy for compensation whereas the opposite holds for highly educated individuals the inclusion of variables that control for reasons monetary or nonmonetary individuals chose their occupation explains an additional 9 percent of the variation in earnings for those with 16 or more years of education and lowers the male female wage gap by almost 40 percent and only an additional 2 percent for those with 15 years or less no affect on male female wage gap

on the trail of china s phantom farmers abstract many studies of china s economy use standard yearbook data for china s farm labor force these data massively overestimate the number of chinese farm workers our calculations show that the number of phantom farmers actually working outside agriculture may easily surpass 100 million this paper reveals the implausible implications of the standard data uses information from cost surveys to derive new estimates of china s farm work force and investigates the implications of the new lower series for agricultural employment on the measurement and interpretation of recent chinese growth

how does land fragmentation affect off farm labor supply panel data evidence from china abstract this article provides a deeper theoretical understanding of the linkages between land fragmentation and off farm labor supply in china andinvestigates this relationship empirically in a more direct way than does the existing literature drawing upon a rural household panel data setcollected in zhejiang hubei and yunnan provinces from 1995 to 2002 we estimate the effects in two steps first we estimate the effect of landfragmentation on labor productivity second we estimate the effect of land fragmentation on off farm labor supply the production function resultsshow that land fragmentation indeed leads to lower agricultural labor productivity implying that land consolidation will make on farm work moreattractive and thus decrease off farm labor supply however the effect of land consolidation on off farm labor supply is not signi cant one likelyexplanation for this result may be the potentially imperfect labor markets jel classi cations j22 q15 q24 r23 keywords

does consumer sentiment forecast household spending if so why in the three months following the iraqi invasion of kuwait the university of michigan s index of consumer sentiment ics fell an unprecedented 24 3 index points to its lowest level since the 1981 1982 recession this collapse in household confidence became the focus of a great deal of economic commentary and indeed frequently was cited as an important if not the leading cause of the economic slowdown that ensued concern was fueled by the well known contemporaneous correlation between the ics and the growth of household spending figure 1 shows quarterly averages of the index 1978 1993 together with the quarterly growth in real personal consumption expenditures as measured in the national income accounts bureau of economic analysis the correlation is impressive of course it is not surprising that sentiment and the growth of spending are positively correlated this correlation may simply reflect that when economic prospects are poor households curtail their spending and also give gloomy responses to interviewers thus the contemporaneous correlation between sentiment and spending does not refute traditional life cycle or permanentincome models of consumption nor does it necessarily make the job of forecasting changes in consumption any easier from the point of view of an economic forecaster the questions of interest are first whether an index of consumer sentiment has any predictive power on its own for future changes in consumption spending and second whether it contains information about future changes in consumer spending aside from the information contained in other available indicators in section i we present evidence that the answer to the first question is a clear yes we find that lagged values of the ics taken on their own explain about 14 percent of the variation in the growth of total real personal consumption expenditures over the post1954 period further investigation shows that the answer to the second question is probably yes as well though here the margin is narrower and the evidence more murky the ics contributes about 3 percent to the r2 of a simple reduced form equation for total personal consumption expenditures in the longer of the two sample periods we examine but nothing in the shorter sample period though the latter result is heavily influenced by the observation for 1980 2 for the major subcategories of spending the contribution generally ranges between 1 percent and 8 percent overall we read the evidence as pointing toward at least some significant incremental explanatory power therefore we take as given for the remainder of the paper that sentiment forecasts spending and we turn to the issue of how that statistical relationship should be interpreted one possible interpretation is that sentiment is an independent driving factor in the economy and that changes in carroll division of research and statistics stop 80 federal reserve board washington dc 20551 fuhrer research department federal reserve bank of boston boston ma 02106 wilcox division of monetary affairs stop 71 federal reserve board washington dc 20551 we have benefited from the research assistance of stephen helwig and christopher geczy and the comments of an anonymous referee the views expressed in this paper are those of the authors and not of the federal reserve board the federal reserve bank of boston or the other members of the staff of either institution ithe conference board s consumer confidence index also plunged at the same time

land tenure arrangements and rural urban migration in china summary obstacles to internal migration in china contribute to inefficiency inequality and land degradation academic and policy debate has primarily focused on discrimination against rural migrants on arrival in urban areas meanwhile barriers to migration out of rural areas have received less attention this paper examines the role of incomplete rural property rights in the migration decisions of rural households we examine the relationship between tenure insecurity and restrictions on land rentals and participation in outside labor markets the results indicate that tenure insecurity reduces migration this relationship is particularly pronounced on forest land which has implications for the conservation of recently replanted forest areas

socioeconomic status and learning from financial information abstract the majority of lower socioeconomic status ses households in the u s and europe do not have stock investments which is detrimental to wealth accumulation here we examine one explanation for this puzzling fact namely that economic adversity may influence how people learn from financial information using experimental and survey data from the u s and romania we find that lower ses individuals form more pessimistic beliefs about the distribution of stock returns and are less likely to invest in stocks when these investments are likely to have good outcomes ses related differences in pessimism may help explain variation in investments across households

agricultural household models extensions applications and policy this book presents the basic model of an agricultural household that underlies most of the case studies undertaken so far the model assumes that households are price takers and is therefore recursive the decisions modeled include those affecting production and the demand for inputs and those affecting consumption and the supply of labor comparative results on selected elasticities are presented for a number of economies the empirical significance of the approach is demonstrated in a comparison of models that treat production and consumption decisions separately and those in which the decisionmaking process is recursive the book summarizes the implications of agricultural pricing policy for the welfare of farm households marketed surplus the demand for nonagricultural goods and services the rural labor market budget revenues and foreign exchange earnings in addition it is shown that the basic model can be extended in order to explore the effects of government policy on crop composition nutritional status health saving and investment and to provide a more comprehensive analysis of the effects on budget revenues and foreign exchange earnings methodological topics primarily the data requirements of the basic model and its extensions along with aggregation market interaction uncertainty and market imperfections are discussed the most important methodological issues the question of the recursive property of these models is also discussed

moving off the farm and intensifying agricultural production in shandong a case study of rural labor market linkages in china this study examines linkages between off farm labor markets and the labor allocated by farmers to on farm production of fruit crops using a stratified random sample of rural households in shandong province we find that young and educated members of the labor force tend to work more frequently in the off farm labor market and that off farm employment reduces the likelihood and intensity of fruit production fruit production is associated with lower levels of off farm employment households and individuals who are less likely or able to find off farm employment can benefit from shifting into fruit production although off farm employment is an important avenue out of poverty fruit production provides ways for the less educated and older households to raise their income

labor market participation of chinese agricultural households empirical evidence from zhejiang province abstract this work is devoted to the analysis of the different labor market participation regimes of chinese farm households over the reform process in the 1980s and 1990s using household data over the period 1986 2002 from the province zhejiang we apply a multinomial logit model to empirically examine household farm and regional characteristics affecting the probability that farmers participate in one of four alternative labor market regimes as generally accepted off farm participation is the dominant form of farm households labor market participation but rural households show additionally a significant impact on rural employment mainly linked with non agricultural household business results suggest that labor market decisions are significantly related to several family farm and village characteristics in particular we find education to be a key determinant of participation furthermore results point to a higher probability of female household members to take up off farm work

measuring investment in education historic debates about the measurement of capital are even more complicated in the case of education and human capital as extensive research demonstrates education resources are not consistently related to student performance in existing elementary and secondary schools this inefficiency in public schools implies that spending and resource measures do not accurately capture variations in school quality this finding then has clear implications for both education policy and economic research because school inputs are poor policy instruments an alternative policy focus that appears much more productive is performance incentives related to student achievement

national wage trends and migration in a chinese village economy a micro level modeling approach based on a composite utility function china s economy is experiencing a regime shift away from a fully elastic supply of labor from a large pool of rural surplus labor and toward a situation of increasing labor scarcity and rising wage rates moreover faster wage increases in the regions of origin of many rural urban migrants are likely to affect the dynamics of inter regional migration these wage trends have implications at the local level in particular in a setting in which migration connects rural communities to the national labor market and in which migration is of high importance for the livelihoods of rural households taking a village perspective this article develops a village computable general equilibrium model to study local impacts of current wage trends in china as a central piece of the model the role of access to migration for household livelihoods is recognized access to migration is linked to household demographics and included in the model through a composite utility function that captures household preferences and disutilities associated with alternative off farm activities simulation results illustrate how households utility considerations affect migration responses to national wage changes statements about possible impacts on village level labor supply land use and agricultural production are made when migration wages and local off farm wages are simulated to increase an overall increase in household and village migration and a higher supply of labor to local off farm labor markets is accompanied by a contraction of farm production although land is reallocated between households with different migration responses total agricultural output declines

expectation formation in a new environment evidence from the german reunification abstract exploiting the german reunification we study how households adapt to a new environment in their macroeconomic forecasting east germans expect higher inflation than west germans decades after reunification these differences are likely driven by the persistent effect of the inflation shock after reunification which contrasted strongly with experiences of zero inflation in the gdr east germans higher inflation expectations are reflected in higher consumer debt and lower bond holdings our findings suggest that large changes in the environment can permanently impede people s ability to form expectations with an important role for the interaction of experiences before and after the event

estimating labor supply and production decisions of self employed farm producers abstract this paper proposes a model oriented towards integrating farm households production and consumption decisions into a unified theoretical and econometric framework it is argued that in contrast with other forms of economic organization farm households utility and profit maximization decisions are not likely to be independent econometric estimation of a farm household model using canadian data suggests that utility and profit maximizing decisions are not indeed independent and moreover that there are significant gains in explanatory power and efficiency by estimating the consumption and production equations jointly

economies of scale and scope in the finnish non life insurance industry abstract economies of scale and scope in finnish non life insurance are studied the production process is separated into cost and portfolio management functions firms expand their branch network to either gain market power or informational advantages there are diseconomies of scale at firm and economies of scale at branch level and economies of scope in production large firms in the non life insurance industry pay a substantial premium to gain market power via branch networks the retained premiums curve of portfolio management is u shaped and a positive function of the number of branches

a welfare criterion for models with distorted beliefs this paper proposes a welfare criterion for economies in which agents have heterogeneously distorted beliefs instead of taking a stand on whose belief is correct our criterion asserts an allocation to be belief neutral ine cient if it is ine cient under any convex combination of agents beliefs while this criterion gives an incomplete ranking of social allocations it can identify negative sum speculation in a broad range of prominent models with distorted beliefs

neglected risks financial innovation and financial fragility abstract we present a standard model of financial innovation in which intermediaries engineer securities with cash flows that investors seek but modify two assumptions first investors and possibly intermediaries neglect certain unlikely risks second investors demand securities with safe cash flows financial intermediaries cater to these preferences and beliefs by engineering securities perceived to be safe but exposed to neglected risks because the risks are neglected security issuance is excessive as investors eventually recognize these risks they fly back to the safety of traditional securities and markets become fragile even without leverage precisely because the volume of new claims is excessive

sex discrimination and women s labor market outcomes the human capital explanation of sex differences in wages is that owing to specialization in household production women intend to work in the labor market more intermittently than men and therefore invest less leading to lower wage growth an alternative feedback hypothesis is that women experience labor market discrimination and respond with career interruptions less investment and lower wage growth this paper explores the relationship between self reported discrimination and subsequent labor market outcomes to test this alternative hypothesis some of the evidence is consistent with the feedback hypothesis working women who report discrimination are more likely subsequently to change employers to have children and to marry however the evidence is not consistent with the two implications of the feedback hypothesis that most directly challenge the human capital explanation of sex differences in wages women who report discrimination do not accumulate less experience nor do they have lower wage growth

separation hypothesis tests in the agricultural household model in an agricultural household model farmers production decisions can be either separated or nonseparated from preferences since previous studies on agricultural household behavior and policy effects have shown that the model with separation yields different results than the model with nonseparation it is important to have a test to identify the correct model this paper provides new tests that extend current tests in two directions first the new tests avoid issues that current tests have to address such as simultaneity bias and the estimation of the production function second the new tests make use of more information implied from the separation hypothesis than current tests

economies of scale and economies of scope in multiproduct financial institutions a study of british columbia credit unions this paper investigates the production technology facing computerized credit unions in canada a full system of translog cost equations is estimated in order to test for economies of scale economies of scope and other production characteristics in a multiproduct context the regression results indicate that most of the credit unions in our sample experience significant increasing returns to scale as they expand their level of output there is also evidence of cost complementarity or economies of scope in their mortgage and other lending activities as a result legislation which limits the ability of credit unions to grow and diversify will likely raise the operating costs of this important group of financial institutions additional structural tests of the most general translog specification suggest that none of the restrictive production conditions commonly imposed by other researchers using cobb douglas and ces specifications provide a valid representation of credit union technology the results of many earlier studies are therefore open to question this paper presents a number of structural tests of the production technology facing large computerized credit unions in canada a full system of translog cost equations is estimated using detailed cross sectional data on british columbia credit unions the parameter estimates obtained from our multiproduct specification allow us to test for economies of scale economies of scope and factor substitution unlike many earlier studies the present paper introduces the various outputs as separate variables instead of crudely proxying them with a single output measure such as total assets the total number of loans or the number of depositors by explicitly recognizing the multiproduct nature of the intermediation process we are able to address more interesting production questions and remove some of the bias caused by misspecification and measurement error in simpler approaches the flexible translog specification allows us to estimate the sensitivity of costs to proportionate increases in all outputs economies of scale as well as the cost savings firms realize by producing several outputs jointly rather than specializing in the production of one economies of scope the test results reported in the latter part of the paper suggest that increasing returns to scale exist in almost all of the credit unions in our sample though

socioeconomic status and macroeconomic expectations we show that individuals macroeconomic expectations are influenced by their socioeconomic status ses people with higher income or higher education are more optimistic about future macroeconomic developments including business conditions the national unemployment rate and stock market returns the spread in beliefs between high and low ses individuals diminishes significantly during recessions a comparison with professional forecasters and historical data reveals that the beliefs wedge reflects excessive pessimism on the part of low ses individuals ses driven expectations help explain why higher ses individuals are more inclined to invest in the stock market and more likely to consider purchasing homes durable goods or cars received november 13 2017 editorial decision february 12 2019 by editor wei jiang authors have furnished an internet appendix which is available on the oxford university press web site next to the link to the final published paper online

asymmetric non separation and rural labor markets abstract this paper develops and implements a test that provides insight into the state of rural labor markets the test is based on a theoretical link between a shortage or surplus in the labor market and asymmetric responses to changes in household composition we develop auxiliary tests to distinguish other market imperfections from labor market imperfections and provide evidence that most changes in household composition are exogenous to local labor market conditions we implement the test using data from ethiopia malawi tanzania and uganda the overall pattern is one of excess labor supply in rural areas with heterogeneity across cultivation phases genders and agro ecological zones surplus labor is most evident during low intensity cultivation phases in ethiopia there is suggestive evidence that credit constraints create a de facto labor shortage for poorer households there is also evidence of partial gender segmentation in rural labor markets

schooling and economic well being the role of nonmarket effects standard estimates of the economic value of additional schooling based on earnings differences associated with differences in the level of schooling attained cover only a portion of the total effects of education that are valued by citizens we first identify a catalog of nonmarketed effects many of which have been recently studied by economists and then propose a procedure for estimating a willingness to pay value for these effects using empirical estimates of the magnitude of a selection of these effects found in the literature we calculate willingness to pay values using our proposed procedure these illustrative calculations suggest that standard estimates of the benefit of incremental schooling substantially understate the full value of such investments

farm earnings educational attainment and role of public policy some evidence from mexico abstract using real household survey data from mexico this study evaluates 1 a the impact of schooling on farm earnings through the direct and allocative effects of human capital 2 b the household demand for children s schooling 3 c using macro level data the association between children s school participation and some policy variables the overall rate of return to household heads schooling is estimated at 25 and for wives 19 the allocative effect of schooling of household heads dominates over the direct effect mother s schooling and farm size exercise significantly positive effects on household demand for schooling while in the macro model policy variables government expenditure and pupil teacher ratio appear strong determinants of children s attainment of primary schooling

social mobility and redistributive politics just like economists voters have conflicting views about redistributive taxation because they estimate its incentive costs differently we model rational agents as trying to learn from their dynastic income mobility experience the relative importance of effort and predetermined factors in the generation of income inequality and therefore the magnitude of these incentive costs in the long run left wing dynasties believing less in individual effort and voting for more redistribution coexist with right wing dynasties this allows us to explain why individual mobility experience and not only current income matters for political attiitudes and how persistent differences in perceptions about social mobility can generate persistent differences in redistribution across countries

earnings dynamics and measurement error in matched survey and administrative data this article analyzes earnings dynamics and measurement error using a matched longitudinal sample of individuals survey and administrative earnings in line with previous literature the reported

conservation payments liquidity constraints and off farm labor impact of the grain for green program on rural households in china this study evaluates the labor response of rural households participating in the grain for green program in china the largest payments for ecosystem services program in the developing world using a panel data set that we designed and implemented we find that the participating households are increasingly shifting their labor endowment from on farm work to the off farm labor market however the effects vary depending on the initial level of human and physical capital the results support the view that one reason why the participants are more likely to find off farm employment is because the program is relaxing households liquidity constraints

the expected price of keeping up with the joneses abstract inflation expectations elicited in surveys have been found to exhibit large dispersion across individuals although several explanations have been proposed none fully explain this puzzle we explore in this paper a new behavioral factor social comparison using original survey data we find that respondents who feel they are falling behind compared to their peers report significantly and substantially higher inflation expectations we argue that this result is consistent with an experience based belief formation model in which those unable to keep up with the joneses overweight the high prices of aspiration goods they are unable to purchase

expectations heterogeneous forecast errors and consumption micro evidence from the michigan consumer sentiment surveys the household data underlying the michigan index of consumer sentiment are used to test the rationality of consumer expectations and their usefulness in forecasting expenditure the results can be interpreted as characterizing the shocks that hit different types of households over time expectations are found to be biased and inefficient at least ex post people underestimated the disinflation of the early 1980s and the severity of recent business cycles people s forecast errors are also systematically correlated with their demographic characteristics in part because of time varying group level shocks further sentiment helps forecast consumption growth some of this rejection of the permanent income hypothesis is due to the systematic demographic components in forecast errors

the public accounting industry production function abstract a translog function is specified to represent the relation between revenue and human resource inputs in public accounting firms estimation of the model using a balanced panel of annual data for 64 large cpa firms for the period 1995 1999 indicates that increasing returns to scale prevail in the public accounting industry justifying recent merger and acquisition activities among accounting firms average marginal revenue product of partners increased monotonically from 1995 to 1998 decreased slightly in 1999 and was about nine times that of other professionals during 1995 1999 the public accounting industry exhibited continuing improvement in productivity over the 5 years

property rights labour markets and efficiency in a transition economy the case of rural china we investigate the consequences of imperfect factor market development for farm efficiency in north china we estimate the extent to which an inverse relationship in farm productivity can be attributed to the administrative as opposed to market allocation of land combined with unevenly developed off farm opportunities using a new household survey we find considerable inefficiency in the use of labour this inefficiency is alleviated by external labour markets and to a limited degree by administrative reallocations the reallocations do not go far enough however which raises important questions about con straints on rental activity and property rights formation more generally jel classification q15 012

gender and ethnicity differentials in school attainment and labor market earnings in ecuador summary indigenous people in ecuador are most likely to be disadvantaged and live in poverty this paper reports on the findings of an econometric analysis which explores the extent to which lower educational attainment and labor market discrimination contribute to these disparities the analysis utilizes a proportional hazard regression model to examine which factors raise the probability of early school departure it also employs a classic regression model to explore the relationship between low educational attainment and earnings together with an oaxaca decomposition which parses out the extent to which earning differentials can be attributed to differences in human capital or to discrimination

participation constraints in the stock market evidence from unexpected inheritance due to sudden death we use a natural experiment to investigate the impact of participation constraints on individuals decisions to invest in the stock market unexpected inheritance due to sudden deaths results in exogenous variation in financial wealth and allows us to examine whether fixed entry and ongoing participation costs cause non participation we have three key findings first windfall wealth has a positive effect on participation second the majority of households do not react to sizeable windfalls by entering the stock market but hold on to substantial safe assets even over longer horizons third the majority of households inheriting stock holdings actively sell the entire portfolio overall these findings suggest that participation by many individuals is unlikely to be constrained by financial participation costs

time varying consumer disagreement and future inflation abstract the inflation expectations of over 285 thousand consumers are used to develop model free estimates of the monthly cross sectional mean dispersion asymmetry and extremeness of inflation expectations from 1995 to 2016 the moments provide a novel and direct measure of time varying consumer disagreement about prices i find that the higher order cross sectional moments of inflation expectations are highly informative about future inflation in contrast to popular assumptions these moments do not appear to be noise even after accounting for historical economic data the unanticipated components of the higher order moments are significantly associated with future inflation in effect the higher order moments are neither noise nor conventional economic news the results have significant implications for the widespread practice of trimming inflation expectations data the results also have implications for the study of information rigidities indicating that consumer inflation expectations broadly reflect two types of consumers the first type update their information set at a much faster rate than is typically estimated or assumed the second type have very high information rigidities and only update their information set in response to major economic events

using shadow wages to estimate labor supply of agricultural households with few exceptions most studies of the labor demand and supply decisions of agricultural households in developing countries have relied on the empirical advantages of separability given the questionable nature of some of the assumptions sufficient for separability i apply a recent methodology that accounts for the simultaneity between the production and consumption decisions of a farm household using data from rural india direct estimates of the marginal productivities shadow wages of family male and female labor are derived from a cobb douglas agricultural production function the estimated shadow wages and income are then used as regressors in a structural model of labor supply

markets discrimination and the economic contribution of women in china historical evidence data from a 1935 household survey of economic activity in manchuria rural northeast china are used to examine womens economic role findings are similar to findings from bucks framework for understanding womens agricultural roles in the winter wheat kaoliang region the results should not be generalized to the rest of china in 1935 women contributed to the household about as much as males ordinary least squares estimation suggests that total male contribution to household income was direct and direct female contribution ranged between 50 and 66 of the total income direct contribution by women shows a range across villages in high 40 commercialized areas with significant opportunities for off farm sales direct female contributions were statistically indistinguishable from that for males in low 10 commercialized areas female direct contributions were small in high commercialized areas men tended to work off farm and women took on greater farming roles the patterns were suggestive of the influence of womens agricultural productivity on time allocation the findings imply an underestimation of the role of women in agriculture pre 1949 the influence of collectivization on the role of women may not have been as great after 1949 as previously determined productivity considerations influenced allocation to farming and nonmeasurable household production reforms may have contributed to greater discrimination and costs today than pre 1049 land rental regulations which are constrained by political forces and land availability were a limitation on the ability of rural households to adjust to social changes

the measurement of efficiency in life insurance estimates of a mixed normal gamma error model abstract this paper make three contributions to the literature on efficiency in financial services first it presents estimates of a mixed error cost frontier in which the variances of both the normal and gamma distributions can vary with firm size second it extends the literature on life insurance scale and product mix economies by incorporating and measuring x inefficiency estimates of x inefficiency range from 35 to 50 ray scale economies exist up to 15 billion in assets third comparisons of normal gamma estimates with other methods 3 thick frontier weighted least squares half normal distributions 3 demonstrate some of their pitfalls

women s economic status in rural china household contributions to male female disparities in the wage labor market abstract rapid industrial growth in china coupled with economic reforms in the rural areas has created a growing demand for rural women s labor though often at substantially lower wages than those earned by men employed in the same sector an analysis of data collected in rural guangdong province suggests that households may contribute to the observed male female market wage differential through their influence in the formation of individuals reservation wages under these circumstances external employment opportunities while no doubt serving to increase the household s overall level of income may on their own be a less effective mechanism for raising the economic status of women on the contrary market wage signals may serve to reinforce rather than to ameliorate sex based differences that arise within the household

household composition labor markets and labor demand testing for separation in agricultural household models this paper tests the separation of farm labor supply and labor demand decisions using the observation that household composition is an important determinant of farm labor use with nonseparation after assessing the conditions under which the test has power against several alternatives an empirical model is developed to test the proposition that farm employment is independent of family composition the model is estimated on a data set from rural java the null hypothesis that farm labor allocation decisions are independent of household structure is not rejected the results are robust to different specifications of the labor demand function copyright 1992 by the econometric society

exports foreign direct investment and employment the case of china everal theories including the vent for surplus thesis smith 1776 and myint 1958 and the staples theory innis 1930 and 1940 and chambers and gordon 1966 have addressed the role of trade in economic development the former suggests that the opening up of the economy to international trade provides an outlet for surplus productive capacity of the country and promotes economic growth the staples theory argues that the production and trade of resource intensive staple products generates linkages and promotes industrialisation these theories were employed to explain the economic development pattern of the regions of recent settlement in the past such as canada and the united states the plantation economies of malaysia and the peasant export economies of ghana and burma a feature of all these economies was their endowments of natural resources and exports of primary commodities whilst the vent for surplus explanation appears to provide an explanation of the development of natural resource based economies could it also explain the growth of a populous country with huge reservoirs of surplus labour such as china it could be argued that models which specifically address the issue of surplus labour such as the development with unlimited supplies of labour model lewis 1954 provide a much more satisfactory explanation of the development of a surplus labour economy such as china than the vent for surplus model there are though subtle differences between the two explanations these differences discussed later suggest that the vent for surplus explanation may be superior to

wage growth landholding and mechanization in chinese agriculture this paper uses farm panel data from china to examine the dynamics of land transactions machine investments and the demand for machine services recently china s agriculture has experienced a large expansion of machine rentals and machine services provided by specialized agents which has contributed to mechanization of agricultural production the empirical results show that an increase in nonagricultural wage rates leads to expansion of self cultivated land size a rise in the proportion of nonagricultural income or the migration rate also increases the size of self cultivated land interestingly however relatively educated farm households decrease the size of self cultivated land which suggests that relatively less educated farmers tend to specialize in farming the demand for machine services has also increased if agricultural wage and migration rate increased over time especially among relatively large farms the results on crop income support the complementarity between rented in land and machine services demanded which implies that scale economies are arising in chinese agriculture with mechanization and active land rental markets

macroeconomic expectations of households and professional forecasters economists have long emphasized the importance of expectations in determining macroeconomic outcomes yet there has been almost no recent effort to model actual empirical expectations data instead m acroeconomists usually simply assume that expectations are rational this paper shows that while empirical household expectations are not rational in the usual sense expectational dynamics are well captured by a model in which households views derive from news reports of the views of professional forecasters which in turn may be rational the model s estimates imply that people only occasionally pay attention to news reports this inattention generates stickyness in aggregate expectations with important macroeconomic consequences

non cognitive abilities and financial delinquency the role of self efficacy in avoiding financial distress we investigate a novel determinant of financial distress namely individuals self efficacy or belief that their actions can influence the future individuals with high self efficacy are more likely to take precautions that mitigate adverse financial shocks they are subsequently less likely to default on their debt and bill payments especially after experiencing negative shocks such as job loss or illness thus noncognitive abilities are an important determinant of financial fragility and subjective expectations are an important factor in household financial decisions

male female wage differentials and policy responses without implicating them for any of the contents of the paper i am grateful to the following for helpful discussions or comments andrea beller university of illinois david bloom harvard and columnbia glen cain university of wisconsin ron ehrenberg cornell victor fuchs stanford bob gregory australian national university jonathan leonard university of california berkeley roberta robb brock university and paul weiler harvard financial support of the humanities and social sciences committee of the research board of the universitu of toronto is eratefullu acknowlede ed

moving toward markets labor allocation in rural china abstract china s economic reforms have brought rapid growth in rural off farm employment raising questions about the assumption that rural china is labor surplus and has poorly functioning factor markets we investigate this by testing for separability between household labor demand and supply using panel data we find that separability is rejected overall indicating that factor markets remain underdeveloped nonseparability however is associated with labor surplus in some areas and labor shortage in others moreover separability holds where substantial employment opportunities exist in the wider township suggesting that such employment promotes competitive allocation within villages as well as the inter village movement of resources

the dynamics of inequality the past forty years have seen a rapid rise in top income inequality in the united states while there is a large number of existing theories of the pareto tail of the long run income distributions almost none of these address the fast rise in top inequality observed in the data we show that standard theories which build on a random growth mechanism generate transition dynamics that are too slow relative to those observed in the data we then suggest two parsimonious deviations from the canonical model that can explain such changes scale dependence that may arise from changes in skill prices and type dependence that is the presence of some high growth types these deviations are consistent with theories in which the increase in top income inequality is driven by the rise of superstar entrepreneurs or managers

how sustainable are sustainable development programs the case of the sloping land conversion program in china summary this paper undertakes a comprehensive assessment of the long run sustainability of one of the world s largest sustainable development programs the slopping land conversion program slcp in china under different plausible post slcp scenarios the analysis is based on farmer contingent behavior post program land and labor decisions as well as choice experiment data our econometric results highlight the main obstacles to the program s sustainability which include specific shortfalls in program implementation and certain institutional constraints namely tenure insecurity and poor land renting rights the use of a choice experiment also reveals unique evidence on rural households preferences over tenure reform in china

shadow wages and peasant family labour supply an econometric application to the peruvian sierra a striking feature of developing economies is the large proportion of the work force that is self employed lack of widespread labor market participation in the agricultural sector can pose a major obstacle to the empirical implementation of economic models of the peasant household whether because wage data are simply not available or because the assumptions required to make use of wage data stretch the bounds of credulity this paper develops a methodology for estimating a structural labor supply model for primarily self employed peasant households which holds under a general agricultural technology and set of labor market conditions the unique feature of the approach is that the opportunity cost of time or shadow wage of household workers is explicitly estimated from an agricultural production function and is subsequently used to identify a set of structural labor supply parameters recent household survey data from rural peru is employed to estimate and perform various diagnostic tests on the model the empirical findings lend support to the hypothesis that peasant households allocate their members time as if to maximize a family utility function and moreover demonstrate the tractability of the shadow wage methodology and its usefulness in estimating more elaborate time allocation models

the dynamics of chinese rural households participation in labor markets the work is devoted to the dynamics of labor market participation of chinese rural households based on a theoretical farm household framework the choice between four distinct labor market participation states is empirically analyzed using household data over the period 1995 2002 from the province zhejiang we apply a discrete time hazard approach to analyze households labor market participation histories in particular we investigate the movements between autarky and participation in general and more specifically the shifts between part time and full time farming estimation results suggest significant duration dependence more precisely a decreasing risk of moving from one state to another with an increasing time a household occupies one of these states further the likelihoods of starting any participation in labor markets and to start part time farming are considerably higher than to end participation or to return to full time farming in addition we find that labor market participation decisions are significantly related to several household and farm characteristics

personal experiences and expectations about aggregate outcomes using novel survey data we document that individuals extrapolate from recent personal experiences when forming expectations about aggregate economic outcomes recent locally experienced house price movements affect expectations about future u s house price changes and higher experienced house price volatility causes respondents to report a wider distribution over expected u s house price movements when we exploit within individual variation in employment status we find that individuals who personally experience unemployment become more pessimistic about future nationwide unemployment the extent of extrapolation is unrelated to how informative personal experiences are is inconsistent with risk adjustment and is more pronounced for less sophisticated individuals

rural industry and labor market integration in eastern china abstract this paper tests the competitiveness of the labor market in a semi industrialized county located in eastern china labor market segmentation is linked to the degree of government interventions and the management structures of the local enterprises and two forms of rationing labeled entrance and time rationing are identified a test based on income maximizing behavior is developed to find the form of rationing that is consistent with the data the results show that the labor market is not competitive and time rationing prevails in the county in addition industrial wages are not responsive to experience and education but strongly biased against women and varying to government interventions

changes in college skills and the rise in the college wage premium the college wage premium for new labor market entrants rose sharply during the 1980s we ask how much of this change arose from changes in the skill level of the typical college graduate we find that skills attained prior to college as measured by standardized test scores and high school grades had no effect on the change in the college wage premium for men in contrast the returns to math ability rose considerably for women failing to account for math skills thus substantially overstates the growth in the female college wage premium skills acquired in college as reflected in the distribution of students across majors had important effects on the relative wages of men the trend away from low skill subjects such as education and toward high skill subjects such as engineering accounts for one fourth of the rise in the male college wage premium

on the decomposition of wage differentials the often used method for decomposing wage differentials into human capital and discrimination components is reformulated so that both t he disadvantage or cost discrimination it imposes on a black or minority wage earner and the advantage or benefit it bestows on a white or majority wage earner can be estimated copyright 1988 by mit press

non farm activity household expenditure and poverty reduction in rural vietnam 2002 2008 summary diversifying into non farm activities has been suggested as an effective way out of poverty for rural households in developing countries using the vietnamese household living standards surveys of 2002 2004 2006 and 2008 we test this claim and investigate the effect of non farm sector involvement on poverty and expenditure growth our endogeneity corrected estimates show that an additional household member involved with non farm activity reduces the probability of poverty by 7 12 and increases the household expenditure by 14 over a two year period our findings also indicate that non farm involvement reduces the hours worked on farm but not the household agricultural income

land retirement and nonfarm labor market participation an analysis of china s sloping land conversion program summary china s sloping land conversion program pays more than 32 million households to plant trees on highly erodible cropland and has effected major land use changes farmers retire land indefinitely but receive time limited subsidies after which they in principle enter nonfarm employment we analyze annual data we collected on over 3 000 individuals and plots from 1998 2006 which contain variation in enrollment timing and alternative measures of enrollment and conclude enrollment has a small but significant and robust positive effect on nonfarm employment it arises not from alleviating constraints as recent papers have suggested but rather from simple farm to nonfarm labor substitution

moving off the farm land institutions to facilitate structural transformation and agricultural productivity growth in china agriculture has made major contributions to china s economic growth and poverty reduction but the literature has rarely focused on the institutional factors that might underpin such structural transformation and productivity this paper aims to fill that gap drawing on an 8 year panel of 1 200 households in six key provinces it explores the impact of government land reallocations and formal land use certificates on agricultural productivity growth as well as the likelihood of households to exit from agriculture or send family members to the non farm sector it finds that land tenure insecurity measured by the history of past land reallocations discourages households from quitting agriculture the recognition of land rights through formal certificates encourages the temporary migration of rural labor both factors have a large impact on productivity at about 30 percent each mainly by encouraging market based land transfers a sustained increase in non agricultural opportunities will likely reinforce the importance of secure land tenure which is a precondition for successful structural transformation and continued economic attractiveness of rural areas

measuring cost efficiency in the property liability insurance industry abstract escalating prices and periodic availability problems in property liability insurance markets are often attributed to insurance company inefficiency and lax claims settlement practices this paper investigates these issues by estimating stochastic cost frontiers for three size stratified samples of property liability insurers over the period 1980 1988 a translog cost function and input share equations are estimated using maximum likelihood techniques the results show that large insurers operate in a narrow range around an average efficiency level of about 90 percent relative to their cost frontier efficiency levels for medium and small insurers are about 80 and 88 percent in relation to their respective frontiers wider variations in efficiency are present for these two groups in comparison with large insurers large insurers slightly over produce loss settlement services while small and medium size insurers under produce this output the small and intermediate size groups are characterized by economies of scale suggesting the potential for cost reductions from consolidations in the industry

economies of scale and scope in thrift institutions the case of finnish cooperative and savings banks accounting data on operating costs and outputs for cooperative and savings banks in 1983 and 1984 are used to provide empirical evidence on the cost structure of thrift institutions in finland a modified translog cost model is fitted to the data economies of scale and scope are estimated based on the coefficients of the cost model using advances and bills as outputs the results indicate that cost curves for both cooperative banks and savings banks generally tend to be l shaped at the plant level and u shaped at the firm level scope diseconomies are found in the joint production of advances and bills this evidenceindicates that natural monopoly conditions are not present in the finnish thrift industry

returns to investment in education a global update the author updates compilations of rate of return estimates to investment in education published since 1985 and discusses methodological issues surrounding those estimates some key patterns among the three main levels of education primary education continues to exhibit the highest social profitability in all world regions private returns are considerably higher than social returns because of the public subsidization of education the degree of public subsidy increases with the level of education which is regressive social and private returns at all levels generally decline by the level of a country s per capita income overall the returns to female education are higher than those to male education but at individual levels of education the pattern is more mixed the returns to the academic secondary school track are higher than the vocational track since unit cost of vocational education is much higher and the returns for those who work in the private competitive sector of the economy are higher than in the public noncompetitive sector and the returns in the self employment unregulated sector of the economy are higher than in the dependent employment sector controversies in the literature are discussed in the light of the new evidence the undisputable and universal positive correlation between education and earnings can be interpreted in many ways the causation issue on whether education really affects earnings can be answered only with experimental data generated by randomly exposing different people to various amounts of education given the fact that moral and pragmatic considerations prevent the generation of such pure data researchers have to make do with indirect inferences or natural experiments some have been attempted the author looks at the research on overeducation or surplus schooling the conclusions reinforce earlier patterns they confirm that primary education continues to be the number one investment priority in developing countries they also show that educating females is marginally more profitable than educating males that the academic secondary school curriculum is a better investment than the technical vocational tract and that the returns to education obey the same rules as investment in conventional capital that is they decline as investment is expanded