financing and funding health care optimal policy and political implementability health care financing and funding are usually analyzed in isolation this paper combines the corresponding strands of the literature and thereby advances our understanding of the important interaction between them we investigate the impact of three modes of health care financing namely optimal income taxation proportional income taxation and insurance premiums on optimal provider payment and on the political implementability of optimal policies under majority voting considering a standard multi task agency framework we show that optimal health care policies will generally differ across financing regimes when the health authority has redistributive concerns we show that health care financing also has a bearing on the political implementability of optimal health care policies our results demonstrate that an isolated analysis of optimal provider payment rests on very strong assumptions regarding both the financing of health care and the redistributive preferences of the health authority

strategic considerations the pecking order hypothesis and market reactions to equity financing myers and majluf 1984 showed that in a world of asymmetric information managers of overvalued firms issue equity while managers of undervalued firms use cash if available this paper shows that in a multiperiod world managers of undervalued firms may find it optimal to issue stock even though cash is available consequently the market does not interpret all announcements of equity issues as signals of firm overvaluation the paper also generates predictions regarding the effect of information asymmetry and investment oppor tunities on i dividend policy and ii the cross sectional distribution of market reactions when an equity issue is announced

public versus private investment in human capital endogenous growth and income inequality in this paper we present an overlapping generations model with heterogeneous agents in which human capital investment through formal schooling is the engine of growth we use simple functional forms for preferences technologies and income distribution to highlight the distinction between economies with public education and those with private education we find that income inequality declines more quickly under public education on the other hand private education yields greater per capita incomes unless the initial income inequality is sufficiently high we also find that societies will choose public education if a majority of agents have incomes below average

the intergenerational earnings and income mobility of canadian men evidence from longitudinal income tax data our objective is to obtain an accurate estimate of the degree of intergenerational income mobility in canada we use income tax information on about 400 000 father son pairs and find intergenerational earnings elasticities to be about 0 2 earnings mobility tends to be slightly greater than income mobility but nonparametric techniques uncover significant nonlinearities in both of these relationships intergenerational earnings mobility is greater at the lower end of the income distribution than at the upper end and displays an inverted v shape elsewhere intergenerational income mobility follows roughly the same pattern but is much lower at the very top of the income distribution

tax evasion across italy rational noncompliance or inadequate civic concern the paper suggests anexplanation for the geographical dimensionof tax evasion that focuses on thestructure of territorial government taxesadministered by the central government arenot differentiated by regions poor areasmay prefer a combination of lower taxes andlower levels of public services at both thecentral and the local level this isespecially true when income and wealthlevels differ among the areas and thedemand for publicly provided goods iscorrelated to these levels but the use ofnationally uniform tax schedules imposes awelfare burden on poorer areas while thetax rates of local taxes can be adjusted tolocal preferences tax evasion may betacitly accepted as a compensation for thewelfare loss deriving from too highcentrally set tax rates

income inequality size of government and tax progressivity a positive theory abstract i investigate the relationship between income inequality and the composition of public spending in redistributive policies i extend the meltzer richard model of voting over redistribution allowing voters to choose not only the amount of a uniform lump sum transfer but also the level of provision of a public good the governmental budget is balanced thus these two choices determine the tax rate on labor income the multidimensionality of the policy space implies that there is no condorcet winner i adopt a citizen candidate model of electoral competition to tackle this problem i show that the progressivity of the tax system is increasing in the mean to median income ratio while the size of the government need not be this means that higher income inequality implies a more progressive tax system but in contrast with the traditional analysis it may also result in a smaller size of government such results are consistent with the most recent findings in the empirical literature

like grand parent like child multigenerational mobility across the eu abstract this study shows that the multigenerational transmission of inequality in most of the 28 eu countries is higher than what a parent to child paradigm would suggest while a strand of the literature claims that this is due to a direct grandparental effect economic historian gregory clark argues that multigenerational mobility follows a markovian process in his view not only are previous estimates severely attenuated by an errors in variables problem but persistence is also constant across time and space using a unique retrospective survey containing information on three generations of european citizens we provide suggestive evidence against such a universal law of mobility while estimates based on measurement error models show that persistence is indeed as strong as clark suggests there are cross country differences furthermore for a few eu countries we cannot reject the hypothesis of a direct grandparental effect overall there is no single data generating process to describe multigenerational persistence that fits all eu countries 2

are there dynamic gains from a poor area development program poor area development programs in which the government transfers extra resources to unusually poor areas have been widely used to fight poverty there has been some research on such programs but little is known about their impact on household living standards over time the authors address the issue for a sizable poor area development program in rural china china s program had a significant impact on rural living standards in the targeted areas of the sample the consumption growth model suggests that households living in the targeted areas had a higher rate of consumption growth than one would have otherwise expected nonetheless the authors found that while the gains in growth were enough to prevent an absolute decline in average living standards they were not enough to reverse the strong underlying divergent tendencies in the rural economy

the role of debt and perferred stock as a solution to adverse investment incentives we analyze the optimal mix of debt common equity and preferred equity in a model with an investment opportunity and asymmetric information about its quality and show that an all equity financed firm will overinvest issuing the appropriate amount of debt before the project becomes available resolves this overinvestment problem introducing a second motive for debt such as taxes leads to a role for preferred stock as a means of enhancing the firm s debt capacity by creating additional incentives to invest we derive an opti mal capital structure involving debt preferred stock and common stock this paper examines the ifnpact of a firm s capital structure on its subsequent investment decisions we assume that a firm s equityholders receive private information about the quality of a project that must be funded externally before the project becomes available and before the information asymmetry exists however the equityholders can choose a capital structure from among debt preferred stock and common stock we show that a subsequent informational asymmetry about project quality induces fully equity financed firms to overin vest that is to accept some negative net present value investments this overin vestment will be reflected in security values prior to the investment we then demonstrate that an appropriate initial debt issue eliminates this suboptimal in vestment behavior and results in an optimal initial debt equity ratio not based upon taxes bankruptcy costs or other exogenous factors we then allow for a corporate tax advantage to debt that leads the firm to issue additional debt however the additional debt creates an underinvestment problem we demonstrate that preferred stock has features that generate incen tives for equityholders to invest and so preferred stock enhances the firm s debt capacity i e the firm can issue more debt in conjunction with preferred stock without creating an underinvestment problem

support for public provision of a private good with top up and opt out a controlled laboratory experiment abstract this paper presents the results of a revealed choice experiment testing the theoretical predictions of political economy models regarding public support for a publicly provided private good financed with proportional income taxes when individuals can purchase the good privately and either continue to consume public provision top up or forego public provision opt out but in each case continue to pay income taxes our laboratory results confirm behavior is consistent with the predicted majority preferred tax rate under mixed financing with top up but we identify preferences for significantly higher rates of public provision than predicted under mixed financing with opt out using non parametric regression analysis we explore the relationship between individuals top up and opt out decisions and both their income levels and the implemented tax rates

persistent inequality an explanation based on limited parental altruism abstract this paper proposes an alternative theory for the observed persistence in income inequality across households a theory based on limited parental altruism we argue that the degree of parental altruism is limited by the economic status of the parent a poor parent not only has less ability but also has less willingness to invest in children s human capital formation this generates a non linearity in such investment expenditures as a result initial income differences may perpetuate over time even with convex technology and convex preferences in this context we also compare the efficacy of the public vis a vis the private education system from the perspective of long run growth

the politics of redistributive social insurance this paper analyses the political support for a social insurance that includes elements of redistribution when there exists an imperfect private insurance alternative individuals differ both in their income and risk the social insurance is compulsory and charges an income related contribution with pooling of risks the private insurance is voluntary and charges a contribution based on individual risks however due to the adverse selection problem private insurance companies provide only partial insurance adopting a non expected utility model we show that there is a general majority support for social insurance and that this support is increasing with risk aversion we also show that a mixed insurance is politically impossible regardless of the degree of redistribution of social insurance and the joint distribution of risk and income in the population lastly we analyse how the political support for social insurance is affected by any change in its redistributive component and the possibility of using genetic tests

human capital inequality and growth a local perspective abstract a recent body of work has demonstrated the crucial role played by local human capital externalities and local school funding in generating socio economic segregation persistent poverty and low aggregate income or productivity growth we present a simple model which captures the main insights from this literature and prove three general propositions first minor differences in education technologies preferences wealth or minor imperfections in capital markets can lead to a high degree of stratification second stratification makes inequality in education and income more persistent across generations the same is true for total wealth provided the rich succeed in capturing the rents created by their secession finally this polarization or urban areas can be very inefficient especially in the long run

majority voting with single crossing preferences we clarify and extend a number of sufficient conditions for the existence of a majority voting equilibrium on one dimensional choice domains these conditions variously stated in the previous literature all impose order restrictions on voter preferences for instance monotone marginal rates of substitution which we show to imply or be equivalent to a general ordinal version of the single crossing condition this simple property is economically intuitive and easily checked in applications this ease of application is demonstrated through an examination of voting models of redistributive income taxation and trade union bargaining behaviour

health economics worldwide i issues in health insurance 1 pricing and imperfections in the medical care market place 2 how can we prevent cream skimming in a competitive health insurance market the great challenge for the 90s 3 the impact of utilization review on costs and utilization 4 the normative and positive economics of minimum health benefits ii criteria for allocating health care resources 1 cost effectiveness analysis of strategies for screening prostatic cancer 2 the validity of the mimic health index some empirical evidence 3 welfare economics and cost utility analysis iii administrative and market allocation in health care 1 excess demand and patient selection for heart and liver transplantation 2 non price allocative procedures scottish solutions to a national health service problem 3 priorities among waiting list patients 4 consumer information price and nonprice competition among hospitals iv health care in the political arena 1 cost containment in health care justification and consequences 2 political economy of hospital financing 3 a pooled cross sectional analysis of the health care expenditure of the oecd countries 4 is there a sisyphus syndrome in health care 5 deaths from gastrointestinal cancer in mexico probable cause for water sampling index of names index of subjects

debt and the marginal tax rate abstract do taxes affect corporate debt policy this paper tests whether the incremental use of debt is positively related to simulated firm specific marginal tax rates that account for net operating losses investment tax credits and the alternative minimum tax the simulated marginal tax rates exhibit substantial variation due to the dynamics of the tax code tax regime shifts business cycle effects and the progressive nature of the statutory tax schedule using annual data from more than 10 000 firms for the years 1980 1992 i provide evidence which indicates that high tax rate firms issue more debt than their low tax rate counterparts

majority voting in a model of means testing abstract we study a model of endogenous means testing where households differ in their income and where the in kind transfer received by each household declines with income majority voting determines the two dimensions of public policy the size of the welfare program and the means testing rate we establish the existence of a sequential majority voting equilibrium and show that the means testing rate increases with the size of the program but the fraction and the identity of the households receiving the transfers are independent of the program size furthermore the set of subsidy recipients does not depend on households preferences but depends only on income heterogeneity

human capital heterogeneity and estimated degrees of intergenerational mobility we study the parental investment model of intergenerational mobility where heterogeneity in innate earnings ability and parents altruism rate is explicitly modelled we show that heterogeneity increases the difficulty of detecting the existence of borrowing constrained families conversely the presence of heterogeneity means that economic and linear statistical models of inheritance generate similar intergenerational data on consumption and earnings we also suggest that nay cross country differences in intergenerational earnings mobility are more readily interpreted according to the heterogeneity of inherited ability rather than optimal family responses to countiy specific institutions for accumulating human capital the relationship between a citizen s economic status and his family background is an important clue for understanding and evaluating a country s economic performance some eg bowles 1972 have suggested a close relationship between economic status and family background indicates some failure of labour markets or of institutions fostering investment in human capital others eg altonji et al 1992 mulligan 1997 table 4 1 have offered an apparently contradictory suggestion that efficient allocations involve a very close relationship on some measures between the economic status of parents and children still others find family background effects to be the most offensive sources of inequality regardless of whether those effects are consistent with efficiency empirical studies of this relationship date back to the earliest days of statistical social science eg galton s 1869 british study of the success and eminence of relatives and many can be found outside the field of economics see goode s 1966 survey for a few examples but the increasing availability of new data sets for exploring the relationship between earnings income wealth and consumption of parents and years later of adult children has appropriately led to new and better econometric estimates of intergenerational mobility or the intergenerational auto regression of various measures of economic status and has even permitted some careful comparisons of those estimates across countries however fewer results are available on interpreting such estimates in terms of economic models of inheritance or of the labour market loury 1981 and becker and tomes 1986 are among the exceptions where they show how access to capital markets or other means of

two tier public provision comparing public systems abstract the paper considers a two tier institution in which government provides public services but individuals can opt out of public provision but not taxes funding for the public service is chosen endogenously by majority vote and we first provide necessary and sufficient conditions for a majority vote equilibrium in line with existing results the equilibrium tax rate usually falls below the one found in a one tier system opting out of public consumption is prohibited as the public system loses the political support of the rich who exit we prove that when the two tier system majority dominates a purely private system a majority in society always welcomes a transition from a one tier public system to a two tier system it is the only system that is stable in an evolutionary sense otherwise a majority consisting of the middle class may be in favor of staying in a one tier system prohibiting exit because of a slippery slope argument

the political economy of public health expenditure and wait times in a public private mixed health care system this paper investigates the determinants of public health expenditure in a public private mixed health care system where a longer wait time for public care is the major difference between public and private sectors voter preferences for health care vary according to their age and by income and public policy choices are part of a multi dimensional competitive political equilibrium we show how equilibrium public health expenditure and wait times depend on demographics and explain why they are independent of the distributions of income and political influence we also show that population aging may not always lead to more public health expenditure ce texte examine les determinants des depenses en sante publique dans un regime mixte public prive de soins de sante quand un temps d attente plus long est la difference majeure entre les secteurs public et prive les preferences des electeurs dans le monde de la sante varient selon l ge et le revenu et les choix de politique publique sont partie d un equilibre politique concurrentiel multidimensionnel on montre que les depenses en sante publique et les temps d attente en equilibre dependent de la demographie et que cela explique pourquoi elles sont independantes de la repartition des revenus et de l influence politique on montre aussi que le vieillissement de la population peut ne pas toujours entrainer des depenses en sante publique additionnelles

public private mix of health expenditure a political economy and quantitative analysis this paper constructs a simple model to examine decisions on public and private health spending under majority voting in the model agents with heterogeneous incomes choose how much to consume and spend on health care and vote for public health expenditure the health status of an agent is determined by a ces composite of public and private health expenditure the existence and uniqueness of the voting equilibrium are established a quantitative exercise reveals the importance of the relative effectiveness of public and private health expenditure and their substitutability in determining the public private mix of health expenditure and in accounting for the observed differences across a sample of 22 advanced democratic countries

a median voter model of health insurance with ex post moral hazard abstract one of the main features of health insurance is moral hazard as defined by pauly pauly m v 1968 the economics of moral hazard comment american economic review 58 531 537 people face incentives for excess utilization of medical care since they do not pay the full marginal cost for provision to mitigate the moral hazard problem a coinsurance can be included in the insurance contract but health insurance is often publicly provided having a uniform coinsurance rate determined in a political process is quite different from having different rates varying in accordance with one s preferences as is possible with private insurance we construct a political economy model in order to characterize the political equilibrium and answer questions like under what conditions is there a conflict in society on what coinsurance rate should be set and which groups of individuals will vote for a higher and lower than equilibrium coinsurance rate respectively we also extend our basic model and allow people to supplement the coverage provided by the government with private insurance then we answer two questions who will buy the additional coverage and how do the coinsurance rates people are now faced with compare with the rates chosen with pure private provision

ends against the middle determining public service provision when there are private alternatives abstract public provision of a service coexists with private market provision the quality of public provision is determined by majority vote preferences are not single peaked owing to the presence of private alternatives we identify two cases in one majority voting equilibrium always exists and the median income voter is pivotal in the other a necessary condition for equilibrium indentifies the pivotal voter who must have income below the median when equilibrium exists a coalition of middle income households who consume the public alternative will be opposed by a coalition of rich and poor households with the rich choosing private consumption

in kind transfers cash grants and labor supply abstract in kind and cash transfer programs are compared in their impacts on labor supply it is demonstrated that labor supply is higher under an in kind transfer program if in kind transfers and leisure are hicks substitutes leisure is normal and in kind transfers are over provided it is further shown that under these conditions a one dollar increase in in kind coupled with a one dollar cut in cash transfers increases tax revenues finally the paper proves that weak separability of preferences between leisure and other goods in addition to normality of leisure and normality and over provision of in kind transfers is also sufficient to ensure a higher level of labor supply under in kind transfers

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

should i stay or should i go exit options within mixed systems of public and private health care finance abstract mixed public private finance is widespread in health care systems internationally in one variant of mixed finance some countries e g germany allow eligible beneficiaries to fully exit from the public social insurance system and purchase private insurance using a controlled laboratory experiment we empirically investigate the predictions of a political economy model of mixed systems of public and private finance with two types of exit universal exit when all individuals can choose to exit the public system and conditional exit when only individuals with an income at or above a threshold income level can choose to exit we find that high income individuals are less likely to exit under universal exit than under conditional exit despite having the same incentive to exit in both treatments sensitivity treatments suggests that a number of factors may be at play in explaining this result including learning effects a priming effect and a framing effect but that other regarding preferences do not appear to be an important factor

are tax subsidies for private medical insurance self financing evidence from a microsimulation model this paper develops an empirical strategy to estimate whether subsidies to private medical insurance are self financing in countries where public and private insurance coexist and the latter covers the same treatments as the former we construct a simulation routine based on a micro econometric discrete choice model that allows us to evaluate the impact of premium changes on the utilization of outpatient and inpatient health care services as an application we estimate the budgetary effects of scrapping a subsidy from the purchase of individual private policies using micro data from catalonia our results suggest that the subsidy is not self financing this result is driven by the fact that private medical insurance holders make concurrent use of public and private services and by the price inelasticity of the demand for private policies

a pecuniary reason for income mixing abstract empirical studies have found a high degree of income mixing in american neighborhoods we give a new explanation of this phenomenon that is based on consumer search a low price for a given good benefits high valuation buyers more than low valuation buyers but with search the probability of obtaining a low price is increasing in the proportion of low valuation buyers this gives high valuation buyers an incentive to live near low valuation buyers with many goods a buyer has an incentive to live near neighbors whose valuations are uncorrelated with hers

ethnic capital and intergenerational mobility this paper analyzes the extent to which ethnic skill differentials are transmitted across generations i assume that ethnicity acts as an externality in the human capital accumulation process the skills of the next generation depend on parental inputs and on the quality of the ethnic environment in which parents make their investments or ethnic capital the empirical evidence reveals that the skills of today s generation depend not only on the skills of their parents but also on the average skills of the ethnic group in the parent s generation

cross jurisdictional income shifting by u s multinationals evidence from international bond offerings we examine whether tax incentives influence where u s multinationals locate their interest deductions worldwide our sample includes international bond offerings by u s multinationals during 1987 1997 denominated in the currencies of australia canada france germany italy japan or the united kingdom our results suggest that u s multinationals debt location decisions take into account the effect of jurisdiction specific tax loss carryforwards and binding foreign tax credit limitations on the value of debt tax shields our results are also consistent with u s multinationals locating interest deductions in different tax jurisdictions as a mechanism to achieve tax motivated income shifting

on the public choice critique of welfare economics the public choice literature urges the welfare economist to anticipate how political forces will shape the levels of new policy instruments when government intervenes in a new way this paper argues that the welfare economist should also recognize that new interventions may impact the politically determined levels of existing policy instruments it shows how the introduction of a new instrument can lead to shifts in political coalitions or compromises in existing areas of conflict that can produce significant changes in existing policies such spillover effects can provide new arguments for introducing particular policy interventions even a policy instrument without an obvious welfare economic rationale can change voter coalitions and shift the policy equilibrium in a welfare improving direction

asymmetric information in securitization an empirical assessment abstract asymmetric information in securitization deals is analyzed based on a unique dataset comprising a million mortgages both securitized and not and using a methodology previously applied to insurance data that looks at the correlation between risk transfer and default probability the main finding is that for given observable characteristics securitized mortgages have a lower default probability than non securitized ones we show that this finding is consistent with banks caring about their reputation for not selling lemons

equilibrium and inefficiency in a community model with peer group effects public service output depends on input expenditures on own personal characteristics and on the characteristics of the other residents in the community the peer group effect in a community model with public expenditures set by voting with migration between communities and with land price differentials capitalization it is shown that communities may become heterogeneous in composition and second best inefficient this equilibrium occurs when the peer group effect is neither too strong nor too weak the inefficiency arises because an externality is created by migration the land price differential does not play the part of the price of the better peer group but of a transfer payment

empirical tax research in accounting this paper traces the development of archival microeconomic based empirical income tax research in accounting over the last 15 years the paper details three major areas of research i the coordination of tax and non tax factors ii the effects of taxes on asset prices and iii the taxation of multijurisdictional international and interstate commerce methodological concerns of particular interest to this field also are discussed the paper concludes with a discussion of possible directions for future research r 2001 elsevier science b v all rights reserved jel classification m41 h25 k34 g32 f23

foreign tax credit limitations and capital structure decisions this paper extends prior studies by collins and shackelford 1992 and froot and hines 1995 that investigate the impact of foreign tax credit ftc limitations on firms capital structure decisions binding ftc limitations reduce the marginal tax benefit of domestic interest deductions and provide incentives for firms to substitute equity financing for domestic debt collins and shackelford 1992 document a positive relation between the impact of ftc limitations and changes in firms preferred stock accounts during 1986 89 froot and hines 1995 unable to isolate domestic debt changes document that firms with excess ftcs decreased their worldwide debt growth in 1986 91 but they do not find evidence that ftc limitations influence a shift away from debt and into preferred stock financing thus these two studies find conflicting evidence regarding whether ftc limitations influence firms to use preferred stock as a financing vehicle and neither study provides direct evidence regarding a decline in domestic debt or a potential common

public health insurance and optimal income taxation abstract if individuals differ not only in their inherent capacity to earn income but also in the probability that they will fall ill can subsidized public health insurance be justified on the grounds that it serves as an efficient tool to redistribute welfare this question is analyzed in a model where the social welfare function is a weighted average of individual expected utilities and where taxation is by a linear income tax the answer is yes except in certain special cases

majority rule and the public provision of a private good this paper extends the literature on the socialization of commodities by developing a model of voting over the public provision of a private good health care

public provision of private goods government may provide a good that can if legally permitted be supplemented by private purchases policy is determined by majority rule under standard assumptions on preferences a majority voting equilibrium exists a regime of positive government provision with no restriction on private supplements is shown to be majority preferred to a regime of either only market provision or only government provision combined public and private expenditure on the good is higher under this dual provision regime than under either of the alternatives under some preference configurations the median income voter is pivotal under others a voter with income below the median is pivotal

using tax return data to simulate corporate marginal tax rates abstract we document that simulated corporate marginal tax rates based on financial statement data shevlin t 1990 estimating corporate marginal tax rates with asymmetric tax treatment of gains and losses the journal of the american taxation association 11 51 67 graham j 1996a debt and the marginal tax rate journal of financial economics 41 41 73 are highly correlated with simulated rates based on corporate tax return data we provide algorithms that can be used to estimate the book or tax simulated rates when they are not available we find that the simulated book marginal tax rate does a better job of explaining financial statement debt ratios than does the analogous tax return variable and discuss how the book simulated rate is likely to be an appropriate measure in settings with global long term considerations

voluntary public health insurance we look at the consequences of allowing public health insurance puhi to be voluntary when its coverage can be supplemented in the market puhi redistributes with respect to risk and income and the market is affected by adverse selection we argue that making puhi voluntary does not lead to its collapse since individuals always participate in it additionally in some cases a voluntary puhi scheme increases market efficiency because participation in it sends a signal to private insurers of an individual s health risk type the welfare consequences depend on the status quo if in the status quo no political support exists for a compulsory puhi making it voluntary constitutes a pareto improvement and in some cases all individuals are strictly better off if instead the status quo implements compulsory puhi making it voluntary then results in less redistribution

collective choice and voluntary provision of public goods some public goods are provided entirely with private contributions others with a mixture of public and private funding and still others are entirely publicly funded in order to study this variation a model of dual provision is developed that endogenizes public and private funding households vote over an income tax that finances public supply of the good and on whether to permit private contributions while permitting private contributions may lead to a reduction in total provision a majority always favors permitting private contributions results are developed for small and large economies and the relevance of nonexcludability and noncongestion are investigated

private versus public schools in post apartheid south african cities theory and policy implications blacks and whites have different incomes decide where to locate in the city and which school to send their children to we show that despite the tuition fees imposed by whites and their remote location some black pupils attend the private school this market solution is shown not to be optimal because whites overprice education in order to limit black attendance at the private school three types of education policies are then considered transportation subsidies private school vouchers and public school spending the efficiency of such policies depends on the fee setting behavior of whites that strongly varies from one policy to another

a positive theory of in kind transfers and the negative income tax normative arguments for restricting redistribution to cash transfers or a negative income tax have not appealed to politicians or their constituents all modern governments redistribute income in kind and provide goods and services that can be produced and distributed privately at times public and private supply coexist housing services medical care and education are examples but so too are safety and many regulatory activities of government

the political economy of long term care we build a two dimensional political economy model to explain the provision and financing of long term care and income redistribution voting agents differ in need and income opening up two conflicts one sets families with disabled parents who are in favor of a public long term care program against the ones without such parents who oppose public financing the other sets the poor against the rich with the former preferring heavier income taxation than the latter we show that a structure induced equilibrium always exists and that it is unique if informal care is provided in equilibrium the equilibrium not only explains the negative association of income inequality and long term care financing but also allows predictions about how demographic change might impact long term care arrangements and expenses

alternative systems of health care provision health care timothy besley and miguel gouveia rising costs of health care provision throughout the world have provoked a vigorous debate about the design of health care systems and the role of government in health care in countries that have predominantly social provision there are moves towards privatization and direct attempts to regulate prices in more market oriented systems rising costs seem to be resulting in a greater uninsured problem and this too is provoking demands for reform technological change will put constant pressure on health care systems public or private generating serious social choice problems however this must be seen in the context of a traditional commitment to providing a non trivial minimum level of health care to all members of society we discuss evidence from oecd countries from 1960 to 1990 then focus on more recent changes the central problems of market oriented systems are cost containment and the fact that significant segments of the population go uninsured most oecd countries have therefore chosen solutions where health care financing is socialized we present a simple political economy model to describe the conditions under which this will arise the hallmark of public provision is relative uniformity in access to health care this creates incentives for individuals to opt out of the public sector and to supplement what they can obtain through the state in addition it creates a significant commitment to redistribution through public provision rising costs strain the generosity of taxpayers we expect to see increased reliance on market solutions and moves towards multi tiered health systems that differentiate health care provisions made for different groups in society

tax and regulatory motivations for issuing non voting non convertible preferred stock this paper extends prior studies that attempt to explain the existence of unique securities particularly engel erickson and maydew 1999 by investigating why firms issue non voting non convertible preferred stock ps instead of other securities we find that the choice of ps is influenced by tax and regulatory changes imposed by the tax reform act of 1986 tra86 and the 1989 basle banking accord as well as various firm specific incentives we find that industrials issue ps to preserve tax attributes by avoiding an ownership change and to maximize foreign tax credit utilization in addition we find that the regulatory requirements of the basle accord influence the choice by banks to issue ps finally we show that although firms could have issued alternative securities that would have allowed them to achieve the same tax or regulatory goals firm specific factors limit their ability to do so for example firms can also avoid triggering an ownership change by issuing straight debt however financial distress considerations may constrain their ability to issue additional debt therefore we demonstrate that the final choice of ps is influenced by a combination of tax regulatory and firm specific incentives

explicit and implicit tax effects of the r d tax credit this paper investigates the effects of the 1981 research and development r d tax credit first by examining the impact of the credit on the level of r d investment and second by estimating the magnitude of the implicit tax created by the credit the two effects are interrelated because an increase in the level of r d investment will increase the demand for r d inputs thus reducing the pretax rate of return from r d activity 1 i test the credit s investment effect using a time series r d spending model that includes both factors from the industrial organization literature to control for nontax effects and an r d credit usability variable to capture the incentive created by the credit previous research has produced mixed evidence on whether the credit had any positive