how does health insurance affect workers compensation filing i introduction workers compensation serves as a near universal health insurance system for workers who become sick or injured because of their job almost every private sector worker in the united states is covered by workers compensation which typically provides full reimbursement for medical expenditures and partial reimbursement for wage losses incurred as a result of a workplace injury or illness 1 given that employer provided health insurance usually involves cost sharing for medical expenditures and offers no income replacement one would expect workers to seek compensation for nearly all workplace health conditions however it appears that many injured workers elect not to participate in workers compensation using data from a survey of workers in michigan biddle and roberts 2003 found that just 55 1 of the workers with lost time reported filing for any workers compensation benefits and just 39 1 reported filing for wage replacement this suggests that workers may not view workers compensation filing as free for example workers might lack information about the availability or even the existence of workers compensation benefits employers might discourage participation and there could be a stigma associated with filing for benefits additionally a worker might be uncertain about his or her ability to prove that an injury or an illness is work related as a result pursuing a workers compensation claim could require that a worker spend money on healthcare consultations upfront with uncertain prospects for reimbursement while any of these costs could lead a worker not to file a claim the magnitude of nonparticipation is still surprising the existence of alternatives to workers compensation specifically health insurance is often thought to exacerbate nonparticipation injured workers may be unwilling to bear workers compensation filing costs if their health insurance reduces or eliminates the burden of medical costs moreover individuals without health insurance have greater incentive to pass off nonoccupational injuries or illnesses as work related if the possession of health insurance explained nonparticipation there would be fewer normative concerns that poor participation imperils the health of injured workers however a look at data on health insurance and workers compensation filing from the national longitudinal survey of youth nlsy reported in table 1 calls the conventional wisdom into question the first two columns of the table show that injured workers without health insurance are 7 percentage points about 13 less likely to file a claim than those with health coverage 2 this is in spite of the fact that uninsured workers are more likely to have lost wages and missed more days of work as a result of their injuries this result is puzzling given the argument above that the uninsured worker should be more likely to file the last two columns of the table add nuance to this picture showing that the gap in filing widens substantially when we compare workers in firms that do and do not offer health insurance workers in insuring firms are 16 percentage points more likely to file a claim even though their injuries are still less severe in terms of lost wages and work time it would appear that the effects of health insurance on workers compensation claiming are not as straightforward as they might appear and may have more to do with the characteristics of employers who offer health insurance than with the incentives faced by the workers this table illustrates a result that we confirm in this study actual health insurance coverage itself is much less important than whether an employer offers health insurance we found that injured workers are more likely to file claims when they work for an employer who offers health insurance this result holds even when we incorporate worker fixed effects and other control variables suggesting that the characteristics of the employer are not simply proxies for unobserved worker characteristics

liquidity constraints and labor supply abstract in this paper we shed some light on how restrictions in financial markets the so called liquidity constraints might act in affecting labour supply decisions of italian workers one way to neutralize the existence of binding liquidity constraints is simply by supplying additional labor instead of reducing consumption we estimate whether resorting to additional labor supply as a smoothing consumption device is at work by using the italian survey of households income and wealth shiw the longitudinal dimension of the shiw dataset allows us to control for individual unobserved heterogeneity we also use an iv strategy to address the endogeneity of our measure for credit constraints in labor supply equations due to time varying factors our results show that liquidity constraints increase the intensity in the supply of men s labor constrained men work on average 4 hours more than their unconstrained counterpart self employed workers turn out to be more sensitive to binding liquidity constraints possibly because they are more flexible in adjusting the intensity of their labor supply

nonmonetary effects of the financial crisis in propagation of the great depression this paper examines the effects of the financial crisis of the 1930s onthe path of aggregate output during that period our approach is complementary to that of friedman and schwartz who emphasized the monetary impact of the bank failures we focus on non monetary primarily credit related aspects of the financial sector output link and consider the problems of debtors as well as those of the banking system we argue that the financial disruptions of 1930 33 reduced the efficiency of the credit allocation process and that the resulting higher cost and reduced availability of credit acted to depress aggregate demand evidence suggests that effects of this type can help explain the unusual length and depth of the great depression this abstract was borrowed from another version of this item

credit constraints and the government spending multiplier abstract this paper studies the government spending multiplier in a quantitative model with credit constraints we have four key results first credit constraints reduce the liquidity trap government spending multiplier this occurs partly because credit constraints weaken the expected inflation channel that has been central to large liquidity trap spending multipliers in quantitative models second this result holds even if the rise in government spending does not alter the tightness of the credit constraints third the rise in government spending crowds out private borrowing which leads to tighter credit constraints and even smaller spending multipliers fourth with credit constraints the liquidity trap spending multiplier could be smaller than the spending multiplier during normal times

the impact of body weight on occupational mobility and career development this paper examines the relationship between individuals weight and their employment decisions over the life cycle i estimate a dynamic stochastic model of individuals annual joint decisions of occupation hours worked and schooling the model allows body weight to affect non monetary costs switching costs and distribution of wages for each occupation and also allows individuals employment decisions to affect body weight i use conditional density estimation to formulate the distributions of wages and body weight evolution i find that heavier individuals face higher switching costs when transitioning into white collar occupations earn lower returns to experience in white collar occupations and earn lower wages in socially intensive jobs simulating the model with estimated parameters decreased occupational mobility accounts for 10 percent of the obesity wage gap while contemporaneous wage penalties for body weight are small the cost over the life cycle is substantial an exogenous increase in initial body mass by 20 percent leads to a 10 percent decrease in wages over the life course

estimating the value of a statistical life the importance of omitted variables and publication bias measures of public preferences toward risk are critical to evaluations of public policies on many safety environmental and health issues in this paper we provide a method for measuring the revealed preferences for safety risks from state level public choices about speed limits the idea is to measure the value of the time saved per incremental fatality that results from the voluntary adoption of an increased speed limit since adopters must have valued the time saved by greater speeds more than the fatalities created this ratio provides a convincing and credible upper bound on the value of a statistical life vsl

the finance growth nexus evidence from bank branch deregulation this paper provides evidence that financial markets can directly affect economic growth by studying the relaxation of bank branch restrictions in the united states we find that the rates of real per capita growth in income and output increase significantly following intrastate branch reform we also argue that the observed changes in growth are the result of changes in the banking system improvements in the quality of bank lending not increased volume of bank lending appear to be responsible for faster growth

credit constraints and labor supply evidence from bank branching deregulation this paper examines labor supply adjustment both at the intensive and extensive margins following financial market development specifically we exploit the staggered passage of bank branching deregulation in the united state to study the impact of relaxing credit constraints on labor supply decisions we find strong evidence that improvements in how credit markets function decrease weekly hours worked and that the effect is most significant for the lower middle marginal income group furthermore we observe heterogeneous responses across demo graphic groups race and income in contrast we find little to no evidence that deregulation has a significant impact on the extensive margin of participation

financial intermediation and endogenous growth an endogenous growth model with multiple assets is developed agents who face random future liquidity needs accumulate capital and a liquid but unproductive asset the effects of introducing financial intermediation into this environment are considered conditions are provided under which the introduction of intermediaries shifts the composition of savings toward capital causing intermediation to be growth promoting in addition intermediaries generally reduce socially unnecessary capital liquidation again tending to promote growth

beauty and the labor market the authors examine the impact of looks on earnings using interviewers ratings of respondents physical appearance plain people earn less than average looking people who earn less than the good looking the plainness penalty is 5 to 10 percent slightly larger than the beauty premium effects for men are at least as great as for women unattractive women have lower labor force participation rates and marry men with less human capital better looking people sort into occupations where beauty may be more productive but the impact of individuals looks is mostly independent of occupation suggesting the existence of pure employer discrimination copyright 1994 by american economic association

banking development socioeconomic structure and income inequality abstract using rich unique data from the italian local credit markets provinces this paper investigates the impact of local banking development on income inequality and the role of the socioeconomic structure in this link exploiting the italian historical banking regulation to instrument for the local presence of bank branches we find that local banking development mitigates income inequality however the finance inequality nexus manifests itself only in relatively advanced areas when we study the structural channels of influence we uncover evidence that banking development can reduce inequality by affecting geographical mobility and urbanization while it has modest effects through the development of material infrastructures and human capital

a joint dynamic model of fertility and work of married women this article estimates a dynamic model of fertility and labor supply of married women drawn from the national longitudinal survey of young women 1968 91 it distinguishes part time and full time employment sectors which differ by pecuniary and nonpecuniary returns and transferability of human capital the model with unobserved heterogeneity in earning ability and preferences for children fits the data and produces reasonable forecasts of labor force participation in decisions the estimates unpack important features of the persistence in labor market decisions intertemporal substitution of leisure over the life cycle and the effect of work interruptions due to childbirth on lifetime utility

the impact of obesity on wages abstract previous studies of the relationship between body weight and wages have found mixed results this paper uses a larger data set and several regres sion strategies in an attempt to generate more consistent estimates of the effect of weight on wages differences across gender race and ethnicity are explored this paperjnds that weight lowers wages for white females ols esti mates indicate that a difference in weight of two standard deviations roughly 65 pounds is associated with a difference in wages of 9 percent in absolute value this is equivalent to the wage effect of roughly one and a half years of education or three years of work experience negative cor relations between weight and wages observed for other gender ethnic groups appear to be due to unobserved heterogeneity i introduction several previous studies have found among females a negative cor relation between body weight and wages there exist three broad categories of ex planations for this finding the first explanation is that obesity lowers wages for example by lowering productivity or because of workplace discrimination the sec ond is that low wages cause obesity this would be true if poorer people consume

roy model sorting and nonrandom selection in the valuation of a statistical life roy model sorting and the vsl wage hedonics is used to recover the value of a statistical life vsl by exploiting the fact that workers choosing riskier occupations are compensated with a higher wage roy oxford economic papers 3 1951 135 46 suggests that observed wage distributions will be distorted if individuals choose jobs according to idiosyncratic returns we describe how this type of sorting biases wage hedonic vsl estimates and implement two new estimation strategies that correct that bias using data from the current population surveys we recover vsl estimates that are three to four times larger than those based on the traditional techniques statistically significant and robust to a wide array of specifications

are labor supply decisions consistent with neoclassical preferences evidence from indian boat owners this paper studies the labor supply of south indian boat owners using daily labor participation decisions of 249 boat owners during seven years it tests the standard neoclassical model of labor supply which predicts that i individuals should be more likely to work when earnings are temporarily high and ii recent accumulated earnings should play no role in the participation decision it finds that boat owners labor participation depends positively on expected earnings but also on recent accumulated earnings albeit weakly participation elasticities with respect to expected earnings range between 0 8 and 1 3 and about 0 05 and 0 01 with respect to changes in recent income while the standard neoclassical model is statistically rejected it is still a good approximation of the labor supply behavior of boat owners in southern india

changes in wage discrimination against people with disabilities 1984 93 a group of health impaired workers who self report in the survey of income and program participation that their productivity is not affected by their impairment is used to separately measure the effects of discrimination from the effects of poor health on earnings in 1984 and 1993 the results indicate that in 1984 only 3 7 percentage points of the earnings gap is due to discrimination and the amount of discrimination did not decrease by 1993 although discrimination did not change over the 1984 to 1993 period the negative effects of poor health on the earnings of people with disabilities fell substantially

allocation inflexibilities female labor supply and housing assets accumulation are women working to pay the mortgage this article uses data from the 1986 canadian family expenditures survey to estimate a life cycle consistent model of household labor supply and commodity demand that incorporates a mortgage qualification constraint based on earnings both the parametric and nonparametric implications of the model suggest that the labor supply of a nontrivial percentage of married women is constrained by mortgage commitments the results of generalized selectivity models of female labor force participation and labor supply show that the positive effect of a high debt service ratio exceeds the negative effect of young children

testing for liquidity constraints in euler equations with complementary data sources previous tests for liquidity constraints using consumption euler equations have frequently split the sample on the basis of wealth arguing that low wealth consumers are more likely to be constrained we propose alternative tests using different and more direct information on borrowing constraints obtained from the 1983 survey of consumer finances in a first stage we estimate probabilities of being constrained which are then utilized in a second sample the panel study of income dynamics to estimate switching regression models of the euler equation our estimates indicate stronger excess sensitivity associated with the possibility of liquidity constraints than the sample splitting approach

the real costs of credit access evidence from the payday lending market using geographic differences in the availability of payday loans i estimate the real effects of credit access among low income households payday loans are small high interest rate loans that constitute the marginal source of credit for many high risk borrowers i find no evidence that payday loans alleviate economic hardship to the contrary loan access leads to increased difficulty paying mortgage rent and utilities bills the empirical design isolates variation in loan access that is uninfluenced by lenders location decisions and state regulatory decisions two factors that might otherwise correlate with economic hardship measures further analysis of differences in loan availability over time and across income groups rules out a number of alternative explanations for the estimated effects counter to the view that improving credit access facilitates important expenditures the results suggest that for some low income households the debt service burden imposed by borrowing inhibits their ability to pay important bills copyright 2011 oxford university press

local financial development and household welfare in vietnam evidence from a panel survey we examine the impact of local financial development on household welfare in vietnam we employ household level panel data for the periods 2007 2008 2010 and 2013 covering three provinces and mea

household expenditure and the income tax rebates of 2001 using questions expressly added to the consumer expenditure survey we estimate the change in consumption expenditures caused by the 2001 federal income tax rebates and test the permanent income hypothesis we exploit the unique randomized timing of rebate receipt across households households spent 20 to 40 percent of their rebates on nondurable goods during the three month period in which their rebates arrived and roughly two thirds of their rebates cumulatively during this period and the subsequent three month period the implied effects on aggregate consumption demand are substantial consistent with liquidity constraints responses are larger for households with low liquid wealth or low income

personal bankruptcy and credit supply and demand this paper examines how personal bankruptcy and bankruptcy exemptions affect the supply and demand for credit while generous state level bankruptcy exemptions are probably viewed by most policy makers as benefiting less well off borrowers our results using data from the 1983 survey of consumer finances suggest that they increase the amount of credit held by high asset households and reduce the availability and amount of credit to low asset households conditioning on observable characteristics thus bankruptcy exemptions redistribute credit toward borrowers with high assets interest rates on automobile loans for low asset households also appear to be higher in high exemption states

life cycle employment and fertility across institutional environments in this paper we formulate a dynamic utility maximization model of female labor force participation and fertility choices and estimate approximate decision rules using data on married women in italy spain and france the pattern of estimated state dependence effects across countries is consistent with aggregate patterns in part time employment and child care availability suggesting that labor market rigidities and lack of child care options are important sources of state dependence simulations of the model reveal that italian and spanish women would substantially increase their participation rates were they to face the french institutional environment

revisiting incentive effects in workers compensation do higher benefits really induce more claims an important question to ask regarding social insurance programs such as workers compensation wc is to what extent do higher benefits lead to more claims the authors of this study revisit incentive effects of wc using 25 years of data 1977 2004 from the march current population survey cps to estimate the relationship between wc cash benefit levels and the frequency of wc receipt providing new evidence on the subject they demonstrate that conclusions regarding workers incentives to claim benefits differ dramatically depending upon how one controls for the confounding influence of an individual s past earnings the authors expanded empirical specifications which include flexible earnings controls yield benefit participation elasticities smaller than 0 1 their findings suggest that wc claims are not particularly responsive to changes in benefit levels and that labor supply disincentives may warrant less concern than economists or policymakers have typically exhibited the authors also find th

california s 2004 workers compensation reform costs claims and contingent workers the large excess fraction of difficult to diagnose injuries that occur on a monday was originally thought to reflect employees use of workers compensation to cover weekend injuries evidence has

regulation and preemptive technology adoption two rival firms must decide if and when to adopt a new technology knowing how adoption costs decline over time and how profit flows vary with adoption patterns in many cases price and entry regulations beneficially slow technology adoption by making preemption strategies less attractive in some cases these regulations can so discourage a firm from preemption as to change the order in which firms adopt new technologies speeding one firm s adoption date and slowing the other s in the context of a particular scenario for cable and telephone companies adoption of new fiber optic technologies the case for lifting the cross ownership ban depends on the extent to which telephone companies are able to implement a superior technology reregulation of cable companies strengthens this case

what constrains financial inclusion for women evidence from indian micro data summary the role and relevance of gender in financial inclusion has been an evolving area of research in recent times although there are several cross country studies on this aspect few within country studies have addressed this issue in a comprehensive manner in this context exploiting disaggregated household level data for india we analyze the interface between gender and finance more specifically we examine whether gender matters for financial inclusion and if so what are the possible factors that influence this relationship our findings suggest significant disparity in both the access to as well as the use of finance by gender on average female headed households are 8 less likely to access formal finance and 6 more likely to access informal finance as compared to households that are headed by males after taking into account other relevant household and state level characteristics that are important in explaining financial access by households similar evidence carries over to the use of finance households headed by female use 20 less cash loans as compared to male headed households subsequently we investigate the possible channels which impede financial inclusion for female headed households our analysis highlights that for female headed households education and wages are more relevant in explaining the access to finance whereas political and social factors are much more germane in explaining the use of finance

the value of a statistical life evidence from panel data abstract we address long standing concerns in the literature on compensating wage differentials the econometric properties of the estimated value of statistical life vsl and the wide range of such estimates we confront prominent econometric issues using panel data a more accurate fatality risk measure and systematic application of panel data estimators controlling for measurement error endogeneity latent individual heterogeneity possibly correlated with regressors state dependence and sample composition yields vsl estimates of 4 million to 10 million the comparatively narrow range clarifies the cost effectiveness of regulatory decisions most important econometrically is controlling for latent heterogeneity less important is how one does it

more wealth shorter hours evidence from the netherlands this study examines the effect of wealth shocks on working hours to address the endogeneity of wealth i use information on inheritances regional house price developments and expectations about saving behavior the results indicate that the effect of wealth on working hours is limited for men but significant for women

do analysts generate trade for their firms evidence from the toronto stock exchange abstract it has generally been assumed that the potential commission revenue is an important determinant of a sell side analyst s decision of what firms to cover and what information to publicly release however because stock volume has not been disaggregated on a brokerage firm level uncertainty remains regarding the economic importance of the relation between analyst coverage and brokerage firm volume using a unique data set that identifies the broker s involved in each trade i find that brokerage volume is significantly higher in covered stocks than in uncovered stocks on average brokers increase their market share in covered stocks by 3 8 relative to uncovered stocks

is there a compensating wage differential for high crime levels first evidence from europe abstract this paper investigates whether high regional crime levels lead to a compensating wage differential paid by firms in the respective region using data from german social security records official police statistics and official statistics for 2003 2006 i consider both violent and non violent crimes and use three way error components estimators to control for individual and regional heterogeneity the findings suggest that wages are practically unrelated to changes in crime rates this result is robust over a wide range of subgroups there is however some evidence that crime rates influence land prices

bank competition and firm creation we investigate the effects of competition in the financial sector on the creation of firms in the nonfinancial sector explicitly allowing for heterogeneous effects across borrowers characterized by different degrees of asymmetric information we find evidence of a bell shaped relationship between bank competition and firm creation in addition consistently with theories arguing that competition may reduce the availability of credit to informationally opaque firms we find that bank competition results less favorable to the emergence of new firms in industrial sectors where informational asymmetries are more important

conflicts of interest in the stock recommendations of investment banks and their determinants this study explores the phenomena associated with conflicts of interest particularly as they pertain to the brokerage and proprietary trading divisions of investment banks this distinguishes it from past studies which have researched conflicts of interest between underwriting and brokerage divisions we examine whether or not an investment bank issues buy recommendations to the market and buys sells the same recommended stocks through its proprietary trading division before after recommendations and if so to what extent this goes on we find that these conflicts of interest do exist and that these investment banks can profit from their recommendations in the short run

worker sorting and the risk of death on the job this article examines worker sorting across occupations in response to the risk of death on the job we use family structure as a proxy for willingness to trade safety for wages to test the proposition that workers with strong aversion to this risk sort into safer jobs we estimate conditional logit models of occupation choice as a function of injury risk and other job attributes our results confirm the sorting hypothesis within gender single moms and dads are the most averse to risk overall differences in the risk of death across occupations explain about one quarter of occupational gender segregation

compensating wage differentials and the duration of wage loss a formal model of occupational choice is developed that shows the extent to which the compensation for increased duration exceeds that for increased risk using the panel study of income dynamics linked to industry data on injuries and unemployment we find nearly all the compensating wage differential for losses due to workplace injuries is for increases in the duration of loss and similarly for losses due to cyclical unemployment the compensating differentials for risk of injury are larger for union than for nonunion workers while those for cyclical unemployment are smaller for union workers

beauty productivity and discrimination lawyers looks and lucre we propose models with an ascriptive characteristic generating earnings differentials and causing sectoral sorting allowing us to distinguish among sources producing such differentials we use longitudinal data on a large sample of graduates from one law school and measure beauty by rating matriculation photographs 1 betterlooking attorneys who graduated in the 1970s earned more than others after 5 years of practice an effect that grew with experience 2 attorneys in the private sector are better looking than those in the public sector differences that rise with age these results support theories of dynamic sorting and customer behavior

business cycles and the relationship between concentration and price cost margins using a newly constructed panel data base we examine changes in price cost margins in 284 manufacturing industries between 1958 and 1981 a key finding is a dramatic narrowing of the spread between the margins of concentrated and unconcentrated industries over this period we provide evidence that this narrowing is a result of the greater sensitivity of price cost margins in more concentrated industries to demand fluctuations this finding is robust to the inclusion of other industry variables and to measures of import competition the results indicate that cross sectional estimates of the concentration margins relationship are likely to be both biased and misleading

an alternative test of racial prejudice in motor vehicle searches theory and evidence we propose a simple model of trooper behavior to design empirical tests for whether troopers of different races are monolithic in their search behavior and whether they exhibit relative racial prejudice in motor vehicle searches our test of relative racial prejudice provides a partial solution to the well known infra marginality and omitted variables problems associated with outcome tests when applied to a unique data set from florida our tests soundly reject the hypothesis that troopers of different races are monolithic in their search behavior but fail to reject the hypothesis that troopers of different races do not exhibit relative racial prejudice

the role of social capital in financial development to identify the effect of social capital on financial development we exploit social capital differences within italy in high social capital areas households are more likely to use checks invest less in cash and more in stock have higher access to institutional credit and make less use of informal credit the effect of social capital is stronger where legal enforcement is weaker and among less educated people these results are not driven by omitted environmental variables since we show that the behavior of movers is still affected by the level of social capital of the province where they were born

how important is intra household risk sharing for savings and labor supply abstract while it is recognized that the family is a risk sharing institution little is known about the quantitative effects of this source of insurance on savings and labor supply in this paper we present a model where workers females and males are subject to idiosyncratic employment risk and where capital markets are incomplete a household is formed by a female and a male who decide on consumption savings and labor supplies in a calibrated version of our model we find that intra household risk sharing has its largest impact among wealth poor households while the wealth rich use mainly savings to smooth consumption across unemployment spells wealth poor households rely on spousal labor supply for instance for low wealth households average hours worked by wives of unemployed husbands are 8 higher than those worked by wives of employed husbands this response in wives hours makes up 9 of lost family income we also study consumption losses upon an unemployment spell precautionary savings and the crowding out effects of the public unemployment insurance program on the extent of risk sharing within the household

firm size and the information content of prices with respect to earnings abstract beaver lambert and morse 1980 suggest that prices may be useful in forecasting future earnings we explore the information content of prices with respect to earnings by focusing on firm size and its relation to the predictive accuracy of price based earnings forecasts firm size proxies for the amount of information and for the number of traders and professional analysts processing the available information about an enterprise our empirical results are consistent with the hypothesis that price based earnings will outperform univariate time series forecasts by a greater margin for larger firms than for smaller firms

law finance and firm growth we investigate how differences in legal and financial systems affect firms use of external financing to fund growth we show that in countries whose legal systems score high on an efficiency index a greater proportion of firms use long term external financing an active though not necessarily large stock market and a large banking sector are also associated with externally financed firm growth the increased reliance on external financing occurs in part because established firms in countries with well functioning institutions have lower profit rates government subsidies to industry do not increase the proportion of firms relying on external financing the corporate finance literature suggests that market imperfections caused by conflicts of interest and informational asymmetries between corporate insiders and investors constrain firms in their ability to fund investment projects the magnitude of these imperfections depends in part on the effectiveness of the legal and financial systems because these systems differ across countries the literature implies that there should exist systematic cross country differences in firms ability to obtain external capital to finance investment in this paper we examine whether the underdevelopment of legal and financial systems does prevent firms in some countries from investing in potentially profitable growth opportunities in particular we focus on the use of long term debt or external equity to fund growth see our earlier work demirgut kunt and maksimovic 1996a which compares firms financial structures in developed and developing countries and finds the greatest difference to be in the provision of long term credit we estimate a financial planning model to obtain the maximum growth rate that each firm in our thirty country sample could attain without access to long term financing we then compare these predicted growth rates to growth rates realized by firms in countries with differing degrees of development in their legal and financial systems our approach enables us to identify specific characteristics of the legal and financial systems that are associated with long term financing of firm growth thus we provide a micro level test of the hypoth

self selection and analyst coverage this paper examines the relation between analysts information about a stock s future prospects and their decisions to issue investment recommendations and earnings forecasts for that stock and the implications of this relation for the observed distribution of recommendations and earnings forecast errors articles in the financial press have long argued that analysts are reluctant to issue unfavorable investment information perhaps because they fear jeopardizing potential investment banking

why do firms use incentives that have no incentive effects this paper illustrates why firms might choose to implement stock option plans or other pay instruments that reward luck i consider a model where adjusting compensation contracts is costly and where employees outside opportunities are correlated with their firms performance the model may help to explain the use and recent rise of broad based stock option plans as well as other financial instruments even when these pay plans have no effect on employees on the job behavior the model suggests that agency theory s often overlooked participation constraint may be an important determinant of some common compensation schemes particularly for employees below the highest executive ranks many compensation plans reward or punish employees for factors they cannot control an often discussed example of this phenomenon is executive compensation where stock options are not generally indexed to the overall market however many firms also offer firm wide stock options and profit sharing plans that provide even weaker incentives than executive plans after all most workers can expect to reap trivial personal gain from their contribution to firm value or profits i consider an explanation for this phenomenon in which firms contract with employees as a means of indexing wages to market rates rather than to provide incentives while much of the agency literature has concentrated on inducing optimal effort i consider the importance of the generally overlooked participation constraint i study a model in which employees outside opportunities are correlated with firm profits or stock price and in which both turnover and adjusting the pay scheme parameters are costly given these assumptions the firm may find it most profitable to pay the employee in a way that is correlated with the outside options presented by the outside labor market despite the requisite risk premium rather than pay a fixed wage that insures participation in all states the model derived below starts from the assumption that wage adjustments are costly but that workers are willing to make part of their pay contingent

measuring the value of a statistical life problems and prospects tradeoffs between monetary wealth and fatal safety risks are summarized in the value of a statistical life vsl a measure that is widely used for the evaluation of public policies in medicine the environment and transportation safety this paper demonstrates the widespread use of this concept and summarizes the major issues both theoretical and empirical that must be confronted in order to provide a credible estimate of a vsl the paper concludes with an application of these issues to a particular study of speed limits and highway safety

excess sensitivity and asymmetries in consumption an empirical investigation most empirical studies on liquidity constraints classify a consumer as being constrained on the basis of a single indicator such as the asset to income ratio in this analysis the authors model the probability that a consumer faces liquidity constraints as a function of multiple social and economic factors this probability function is estimated simultaneously with the degree of excess sensitivity of consumption to income in a switching regressions framework the switching regressions apply optimal weights to the densities for the euler equations in the two states and are less susceptible to sample misclassification our results based on data from the cex confirm that liquidity constrained consumers are excessively sensitive to variables already known to economic agents however there is also evidence that the unconstrained consumers exhibit behavior that is inconsistent with the theoretical predictions further analysis suggests that such behavior could be explained by time non separable preferences copyright 1997 by ohio state university press

incentive effects of workers compensation insurance abstract this paper uses micro level data from the current population survey to estimate the determinants of participation in state workers compensation programs in the united states the principal finding is that higher workers compensation benefits are associated with greater participation in the workers compensation program after accounting for a variety of covariates in addition the waiting period is found to have a substantial negative effect on program participation finally time series estimates based on the cross sectional model show that the growth in workers compensation claims in the 1970s corresponds reasonably well with the growth in real benefits in this time period

financial market imperfections and home ownership a comparative study abstract we explore the determinants of the distribution of owner occupancy rates across age groups using a collection of microeconomic data on 14 oecd countries in most the survey is repeated over time this allows us to construct an international dataset merging data on 39 national household surveys with aggregate data on down payment ratios we find strong evidence that the availability of mortgage finance as measured by down payment ratios affects the distribution of owner occupancy rates across age groups especially at the young end the results are consistent with previous theoretical models and have important implications for the debate on the relation between saving and growth

determinants of the informativeness of analyst research abstract we examine cross sectional determinants of the informativeness of analyst research i e their effect on security prices controlling for endogeneity among the factors affecting informativeness analyst reports are more informative when the potential brokerage profits are higher e g high trading volume high volatility and high institutional ownership and lower when information processing costs e g more business segments are high we also find that the informativeness of analyst research and informativeness of financial statements are complements

conflict of interest and the credibility of underwriter analyst recommendations brokerage analysts frequently comment on and sometimes recommend companies that their firms have recently taken public we show that stocks that underwriter analysts recommend perform more poorly than buy recommendations by unaffiliated brokers prior to at the time of and subsequent to the recommendation date we conclude that the recommendations by underwriter analysts show significant evidence of bias we show also that the market does not recognize the full extent of this bias the results suggest a potential conflict of interest inherent in the different functions that investment bankers perform

worker investments in safety workplace accidents and compensating wage differentials the theory of compensating wage differentials cwds assumes that firms supply and workers demand workplace safety predicting a positive relationship between accident risk and wages this article allows for safety provision by workers which predicts a countervailing negative relationship between individual risk and wages firms pay higher wages for higher safety related productivity using national longitudinal survey of youth panel data and data on fatal and nonfatal accidents our precise cwds imply a value of a statistical injury of 45 4 thousand and a value of a statistical life of 6 3 million in line with our model individual risk and wages are negatively correlated

labour supply as a buffer evidence from uk households this paper examines how individuals use their labour supply hours of work and participation decisions as a margin of adjustment or buffer in response to financial shocks the financial shock measure is constructed using individuals expected change to their financial situation in the year ahead relative to the perceived outcome one year later using bhps data we find that both men and women adjust their labour supply in response to financial shocks the propensity to participate in the labour market also appears to respond to the experience of a financial shock but is less robust

government mandated discriminatory policies theory and evidence we study an economy with private and public sectors in which workers invest in imperfectly observable skills that are important to the private sector but not to the public sector government regulation allows native majority workers to be employed in the public sector with positive probability while excluding the minority from it we show that even when the public sector offers the highest wage rate it is still possible that the discriminated group is on average economically more successful the widening chinese malay wage gap in malaysia since the adoption of its new economic policy in 1970 supports our model

female labor supply as insurance against idiosyncratic risk in this paper we explore the role of female labor supply as an insurance mechanism against idiosyncratic earnings risk within the family we use a life cycle model in which a unitary family makes consumption saving and labor supply decisions additional uncertainty increases female participation rates this effect on participation is greatest when the ability to borrow and hence to smooth consumption is limited we calculate the welfare cost of increases in uncertainty and show that the welfare cost is greater when households are unable to adjust female labor supply jel j22 d91

firm characteristics and analyst following abstract this paper examines the major determinants of the number of analysts following a firm a simple model of analyst following is proposed and several firm characteristics are suggested that are likely to influence the extent of a firm s analyst following by either affecting the aggregate demand for or supply of analyst services or both for the firm almost all of these characteristics are found to be strongly significant in affecting the extent of analyst following of firms and the empirical results generally accord well with economic intuition

finance and the sources of growth the authors evaluate whether the level of development in the banking sector exerts a causal impact on economic growth and its sources total factor productivity growth physical capital accumulation and private saving they use 1 a pure cross country instrumental variable estimator to extract the exogenous component of banking development and 2 a new panel technique that controls for country specific effects and endogeneity they find that banks do exert a large causal impact on total factor productivity growth which feeds through to overall gdp gross domestic product growth the long run links between banking development and both capital growth and private savings are more tenuous

does local financial development matter we study the effects of differences in local financial development within an integrated financial market we construct a new indicator of financial development by estimating a regional effect on the probability that ceteris paribus a household is shut off from the credit market by using this indicator we find that financial development enhances the probability an individual starts his own business favors entry of new firms increases competition and promotes growth as predicted by theory these effects are weaker for larger firms which can more easily raise funds outside of the local area these effects are present even when we instrument our indicator with the structure of the local banking markets in 1936 which because of regulatory reasons affected the supply of credit in the following 50 years overall the results suggest local financial development is an important determinant of the economic success of an area even in an environment where there are no frictions to capital movements

financial development and economic growth views and agenda this critique argues that the preponderance of theoretical reasoning and empirical evidence suggests a positive first order relationship between financial development and economic growth the body of work would push even most skeptics toward the belief that the development of financial markets and institutions is a critical and inextricable part of the growth process and away from the view that the financial system is an inconsequential sideshow responding passively to economic growth many gaps remain however and the paper highlights areas in acute need of additional research

information aggregation in a noisy rational expectations economy abstract this paper analyzes a general equilibrium model of a competitive security market in which traders possess independent pieces of information about the return of a risky asset each trader conditions his estimate of the return both on his own private source of information and price which in equilibrium serves as a noisy aggregator of the total information observed by all traders a closed form characterization of the rational expectations equilibrium is presented a counter example to the existence of fully revealing equilibrium is developed