automation and labor force participation in advanced economies macro and micro evidence abstract technological advances raise productivity and growth but are also likely to reshape labor markets we examine the impact of automation on aggregate labor force participation rates and individuals attachment to the workforce in advanced economies cross country analysis which leverages the variation in the routinizability of occupations and occupational composition points to significant negative effects of automation on the participation rates of prime age men and women individual level analysis confirms that workers previously employed in routinizable occupations are more likely to drop out of the labor force encouragingly higher spending on active labor market programs and education are however associated with smaller negative effects of technological change on participation

the generalized multinomial logit model accounting for scale and coefficient heterogeneity the mixed or heterogeneous multinomial logit mixl model has become popular in a number of fields especially marketing health economics and industrial organization in most applications of the model the vector of consumer utility weights on product attributes is assumed to have a multivariate normal mvn distribution in the population thus some consumers care more about some attributes than others and the iia property of multinomial logit mnl is avoided i e segments of consumers will tend to switch among the subset of brands that possess their most valued attributes the mixl model is also appealing because it is relatively easy to estimate recently however some researchers have argued that the mvn is a poor choice for modelling taste heterogeneity they argue that much of the heterogeneity in attribute weights is accounted for by a pure scale effect i e across consumers all attribute weights are scaled up or down in tandem this implies that choice behaviour is simply more random for some consumers than others i e holding attribute coefficients fixed the scale of their error term is greater this leads to a scale heterogeneity mnl model s mnl here we develop a generalized multinomial logit model g mnl that nests s mnl and mixl by estimating the s mnl mixl and g mnl models on 10 data sets we provide evidence on their relative performance we find that models that account for scale heterogeneity i e g mnl or s mnl are preferred to mixl by the bayes and consistent akaike information criteria in all 10 data sets accounting for scale heterogeneity enables one to account for extreme consumers who exhibit nearly lexicographic preferences as well as consumers who exhibit very random behaviour in a sense we formalize below

land use and density in cities with congestion abstract it was well documented that monocentric spatial models with congestion require driving tolls to generate market efficiency because driving and location are equivalent tolling congestion is the same as regulating density this paper shows that internalizing the congestion externality always requires upward adjustments to market density which are greatest at the urban center this holds whether or not transportation capacity is optimally provided simulations suggest optimal cities should have central densities that are orders of magnitude greater than market cities

second best congestion pricing schemes in the monocentric city abstract this paper considers second best congestion pricing in the monocentric city with endogenous residential density and endogenous labour supply a spatial general equilibrium model is developed that allows consideration of the three way interactions between urban density traffic congestion and labour supply congestion pricing schemes are analysed that are second best by design and not because distortions exist elsewhere in the spatial economy like cordon charging and flat kilometre charges both for cobb douglas utility and for ces utility the analyses suggest that the relative welfare losses from second best pricing compared to first best pricing are surprisingly small

social security and retirement an international comparison this article concerns the following items 1 decline in labour force participation 2 social security benefit accrual and the implicit tax on work 3 the importance of the early retirement age 4 the implicit tax on work and labour force participation etc

economic conditions and alcohol problems this study investigates the relationship between macroeconomic conditions and two alcohol related outcomes liquor consumption and highway vehicle fatalities fixed effect models are estimated for the 48 contiguous states over the 1975 1988 time period alcohol consumption and traffic deaths vary procyclically with a major portion of the effect of economic downturns attributed to reductions in incomes rather than employment the intake of hard liquor is the most sensitive to the state of the macroeconomy there is no evidence however that fluctuations in economic conditions have a disproportionate impact on the drunk driving of young adults

spatially variable property tax and optimal tax composition in congested monocentric cities george pigou ramsey and strotz unified abstract we explore the optimal spatial structure of the property tax in a monocentric city with transportation congestion to show how the availablity of revenue instruments impacts the properties of the optimal property tax we discuss three regimes with different combinations of a head tax congestion tolls and property tax in each regime the tax composition is optimally determined to finance a predetermined expenditure under the first regime with all the three taxes available the first best allocation is achievable only when the property tax is unused under the second regime where only head and property taxes are available a spatially variable property tax substitutes for the unavailable congestion tolls the head tax or subsidy fills the gap between the property tax revenue and the predetermined expenditure moreover property tax is negative positive close to the city center boundary under the third regime where only property tax is available the role of the property tax is twofold to substitute for the unavailable congestion tolls and to finance the predetermined expenditure in general for both roles the optimal tax rates are spatially variable furthermore if its role as a substitute for congestion tolls dominates its other role the property tax may be negative close to the boundary

when are urban growth boundaries not second best policies to congestion tolls pines and sadka proved that a not too stringent urban growth boundary is a second best policy to congestion tolls when traffic congestion is unpriced by assuming that all jobs are exogenously located at one urban center monocentric city d pines e sadka zoning first best second best and third best criteria for allocating land to roads journal of urban economics 17 1985 167 183 the result is also implied by kanemoto y kanemoto cost benefit analysis and the second best land use for transportation journal of urban economics 4 1977 483 503 and arnott r arnott unpriced transport congestion journal of economic theory 21 1979 294 316 brueckner extrapolated this narrow theoretical result to real cities j brueckner urban sprawl diagnosis and remedies international regional science review 23 2000 160 179 we show that if there is no cross commuting between city and suburb first best efficient tolls on traffic can reduce congestion and total travel cost by shifting worker residents from the city to the suburbs causing urban expansion then planned urban boundaries of any stringency are not a second best policy because they induce people to relocate to more congested areas with cross commuting boundaries of any stringency can be inefficient even when tolls shrink cities as boundaries do little but tolls do a lot to reduce inefficient suburb to city commuting we also show that when the urban radius is limited by a natural boundary then growth boundaries of any stringency are inefficient

zoning first best second best and third best criteria for allocating land for roads this paper elaborates on the cost benefit criteria for land uses in an urban setting and on the bias which results from use of market data rather than true shadow prices in the calculation this bias has been discussed extensively in the urban economics literature especially in response to the studies of solow and vickrey 7 and solow 6 progress has been made especially by kanemoto 3 arnott and mackinnon 2 amott l and pines and saclka 151 however because of the different underlying assumptions it is difficult to evaluate and compare some of the seemingly conflicting results reported in these works the purpose of this paper is to reformulate the issues using a systematic exposition to distinguish among various cost benefit calculations and policy regimes and to derive concisely the main results with some useful extensions the cost benefit criteria evaluated in this paper refer to three types of decision making

seniority wages and the role of firms in retirement in general retirement is seen as a pure labor supply phenomenon but firms can have strong incentives to send expensive older workers into retirement based on considerations about wage costs and replacement costs we discuss steep seniority wage profiles as incentives for firms to dismiss older workers before retirement conditional on individual retirement incentives e g social security wealth accrual rates or health status the steepness of the wage profile will have different incentives for workers as compared to firms to maintain the employment relationship using an instrumental variable approach to account for selection of workers in our firms and for reverse causality we find that firms with higher labor costs for older workers have on average a lower job exit age and a higher incidence of golden handshakes author s abstract

second best road taxes in polycentric networks with distorted labor markets this paper examines the interaction of road taxes with spatially invariant labor taxation in a polycentric network it derives analytical expressions for the network counterparts of the traditional double dividend effects i e pigouvian tax interaction and revenue recycling effects and computes them under different policy regimes the analysis reveals a series of conditions under which a system of cordons around the major nodes of a network might be more efficient than marginal external cost pricing with a high elasticity of labor supply and limited public transport coverage it is shown that the pigouvian tax rule might reduce welfare even when the generated revenue is used to finance labor tax cuts

cordon pricing and land use regulation this study explores the simultaneous imposition of cordon pricing and land use regulations in a continuous and closed monocentric city with homogeneous households results reveal the optimal level of a single cordon toll and its location and the optimal floor area ratio far regulation clarifying what distortions remain in the existence of cordon pricing and far regulation among other results this paper shows that with an optimal cordon toll far regulation should alternate between a minimum and a maximum regulation both inside and outside the cordon line

gradual retirement financial incentives and labour supply of older workers evidence from a stated preference analysis abstract using data from a stated preferences experiment in the netherlands we find that replacing full time pension schemes with schemes that offer gradual retirement opportunities induce workers to retire one year later on average total lifetime labour supply however decreases by 3 4 months because the positive effect of delayed retirement on labour supply is cancelled out by a reduction in working hours in the years before full retirement the impact of gradual retirement schemes is however heterogeneous across groups of workers workers in bad health who gain access to gradual retirement postpone their retirement by 1 7 months more than workers in good health this suggests that introduction of gradual retirement alleviates to a certain extent the health related burden that employees in poor health may experience in carrying out their work nevertheless introduction of gradual retirement reduces the total labour supply of both groups of workers financial incentives either in terms of changing pension income or the price of leisure also affect expected retirement age but the impact of these financial incentives does not differ with the possibility of gradual retirement finally we find that gradual retirement is not a preferred option among workers as the large majority prefers full retirement

a note on the effect of unemployment on mortality in this note we test if unemployment has an effect on mortality using a large individual level data set of nearly 30 000 individuals in sweden aged 20 64 years followed up for 10 17 years we follow individuals over time that are initially in the same health state but differ with respect to whether they are employed or unemployed controlling also for a number of individual characteristics that may affect the depreciation of health over time unemployment significantly increases the risk of being dead at the end of follow up by nearly 50 from 5 36 to 7 83 in an analysis of cause specific mortality we find that unemployment significantly increases the risk of suicides and the risk of dying from other diseases all diseases except cancer and cardiovascular but has no significant effect on cancer mortality cardiovascular mortality or deaths due to other external causes motor vehicle accidents accidents and homicides

the impact of health status on the duration of unemployment spells and the implications for studies of the impact of unemployment on health status this paper examines the impact of health status on the duration of unemployment spells and finds that individuals with impaired health will have significantly longer unemployment spells these longer unemployment spells will result in the stock of unemployed being composed of a larger proportion of individuals with impaired health than the stock of employed although this difference in composition between the stock of unemployed and stock of employed can account for some of the observed difference in mortality rates it cannot explain all of the difference observed in earlier studies

optimal cordon pricing abstract this paper presents a simple spatial model of traffic congestion for a monocentric city to investigate the effects of cordon pricing on trip making and congestion level in each location optimal cordon pricing is obtained as a combination of the cordon location i e distance of the cordon from the cbd and the amount of toll charged there that maximizes the total social surplus in a city under optimal cordon pricing trips originating from locations inside the cordon are under priced those just outside the cordon are over priced and those near the urban fringe are under priced numerical simulations using the parameter values based on japanese data suggest that cordon pricing attains an economic welfare level very close to the first best optimum

a structural dynamic analysis of retirement behaviour in the netherlands this study focuses on determinants of elderly labour force participation and retirement decisions in the netherlands this is analysed by a dynamic programming model for the simultaneous choice of retirement age and route which includes social insurance and private pensions eligibility conditions for early retirement lifecycle wage and health profiles and layoffs special attention is given to opportunities for and the effect of participation policies results show that institutional structures of benefit and pension programmes are prime determinants of retirement particularly eligibility conditions and potential substitution between exit routes and that dynamic aspects are relevant for understanding retirement behaviour copyright 2004 john wiley sons ltd

the general equilibrium effects of congestion externalities abstract this is the second in a series of three articles on the topic of congestion externalities we use an urban general equilibrium model to compute two types of cities the market equilibrium city in which congestion externalities occur and the optimum city the optimum city has a more dispersed distribution of employment and a more concentrated distribution of residence if the population of the city is fixed the optimum pricing of transportation generates a per capita welfare gain of 3 78 per week if the population of the city is endogenous the internalization of congestion externalities causes the city to grow

alleviating the constant stochastic variance assumption in decision research theory measurement and experimental test analysts often rely on methods that presume constant stochastic variance even though its degree can differ markedly across experimental and field settings this reliance can lead to misestimation of effect sizes or unjustified theoretical or behavioral inferences classic utility based discrete choice theory makes sharp testable predictions about how observed choice patterns should change when stochastic variance differs across items brands or conditions we derive and examine the implications of assuming constant stochastic variance for choices made under different conditions or at different times in particular whether substantive effects can arise purely as artifacts these implications are tested via an experiment designed to isolate the effects of stochastic variation in choice behavior results strongly suggest that the stochastic component should be carefully modeled to differ across both available brands and temporal conditions and that its variance may be relatively greater for choices made for the future the experimental design controls for several alternative mechanisms e g flexibility seeking and a series of related models suggest that several econometrically detectable explanations like correlated error state dependence and variety seeking add no explanatory power a series of simulations argues for appropriate flexibility in discrete choice specification when attempting to detect temporal stochastic inflation effects

understanding joint retirement abstract evidence from different sources shows that spouses retirement decisions are correlated retirement policies affecting individuals in couples are therefore also likely to affect behavior of their spouses it is therefore important to account for joint features in modeling retirement this paper studies a structural collective model of labor supply and retirement of both partners in a couple with interdependent preferences imperfect knowledge of preferences of the spouse and subjective expectations about the future we propose a novel method to estimate preferences and the intra household bargaining process which relies on stated preferences data collected in the health and retirement study respondents were asked to choose between hypothetical retirement trajectories describing the retirement ages and replacement rates of both spouses from three perspectives considering their own preferences only the preferences of their spouse only or the most likely decision for the household with these data all model parameters are identified and potential sources of joint retirement can be disentangled our results suggest that males misperceive their wives preferences overestimating their disutility of work our estimates correct for this we find strong positive correlations between preferences for joint leisure leisure complementarity of the two partners counterfactual simulations with stylized retirement paths suggest that the leisure complementarities explain a substantial part of joint retirement much more than correlation in unobserved heterogeneity or potential wage rates

unemployment and mental health some evidence from panel data microdata are used in this paper to analyze the effects of unemployment on mental health the analysis is done in two steps first cross section data of labor force participants are analyzed it appears that the unemployed have worse mental health than the employed next panel data are used to control for fixed effects that is unobserved omitted variables that are constant over time the model is also specified to allow both the occurrence of and duration of unemployment to affect mental health then we cannot reject the hypothesis that there are no effects of unemployment on mental health however some sensitivity tests indicate that the precision of our estimates is rather low

does job loss shorten life this paper examines the impact of job loss on overall and cause specific mortality using linked employer employee data we identified the workers displaced due to all establishment closures in sweden in 1987 and 1988 hence we have extended the case study approach which has dominated the plant closure literature the overall mortality risk among men increased by 44 percent during the first four years following job loss while there was no impact on either female overall mortality or in the longer run for both sexes however there was an about twofold short run increase in suicides and alcohol related mortality

redistribution of individual pension wealth to survivor pensions evidence from a stated preferences analysis abstract pension schemes in the netherlands allow workers to redistribute their own pension wealth to increase the survivor pension of their partner however due to lacking communication and knowledge of survivor pensions among workers and also due to the lack of transparent products and choice architecture redistribution remains limited this paper uses a stated preferences experiment that is explicitly designed for workers with a partner in the age group of 55 to 65 years to elicit their pension redistribution preferences we find that on average the preferred pension wealth redistribution amounts to 50 35 of all individuals have such a preference 33 of all individuals would prefer less redistribution and 32 percent prefers to redistribute more pension income to the partner upon one s death we further show that total family income during working life does not affect the redistribution to survivor pensions however the distribution of the contribution to total family income before retirement across partners as well as the survival likelihood of the partner and the number of years the partner is expected to survive have a significant causal impact on the preferred pension redistribution decision the preference for redistribution to survivor pensions also depends significantly on personal characteristics preferences and social attitude males have a significantly stronger preference for redistribution compared to females moreover forward looking more risk averse and more altruistic individuals have a stronger preference to redistribute part of their pension wealth to a survivor pension finally in particular when employees have the perception that their partner is more forward looking they are willing to invest more in a survivor pension

healthy bodies and thick wallets the dual relation between health and economic status there is abundant evidence of a quantitatively large association between many measures of economic status including income and wealth and a variety of health outcomes such as mortality or morbidity however considerable and often heated debate remains especially across disciplines about the direction of causation and about why the association arises although medical scientists are often convinced that the dominant if not exclusive pathway is that variation in socioeconomic status produces health disparities they are increasingly debating among themselves about why low economic status might lead to poor health at least for modern industrial countries 1 the old standby arguments the less well to do have access to less or lower quality medical care or a stronger pattern of deleterious personal behaviors have been rejected as insufficient instead a series of intriguing competing theories have arisen that emphasize long term impacts of early childhood or even inter uterine environmental factors the cumulative effects of prolonged exposures to individual stressful events or reactions to macro societal factors such as rising levels of income inequality a common link is that each theory attempts to document the physiological processes through which low economic status leads to poorer health while these scientific questions are extremely important this research has taken place with little input from economists economists are now making contributions about the alternative pathway the impact poor health may have on economic resources poor health may restrict a family s capacity to earn income or to accumulate assets by limiting work or by raising medical expenses at a minimum this work should provide a caution against exaggerating the magnitude of causation from economic status to health outcomes but the potential contribution runs deeper as people age the evolving variation in individual health outcomes may offer additional statistical information to estimate parameters of household savings and consumption behavior that so far have proven to be somewhat elusive thus incorporating health uncertainty and risk into economic models should eventually enrich our understanding of basic tenets of household behavior the first section of this paper documents the size of the association between health and one prominent economic status measure household wealth section two deals with how health influences economic status by sketching out reasons why health may alter household savings and eventually wealth and then providing estimates of the empirical magnitude of these effects section three shifts attention to the alternative pathway the links between economic status and health and summarizes 2major controversies and evidence surrounding these issues

how sensitive are retirement decisions to financial incentives a stated preference analysis we study the effects of financial incentives on retirement decisions using stated preference data dutch survey respondents were given hypothetical retirement scenarios describing age s of partial and full retirement and replacement rate s a stylized model is estimated in which utility is the discounted sum of within period utilities that depend on employment status and income parameters of the utility function vary with observed and unobserved characteristics simulations show that the income and substitution effects of pensions as a function of the retirement age are substantial and larger than according to studies using data on actual retirement decisions in the netherlands

the welfare gains from pricing road congestion using automatic vehicle identification and on vehicle meters it is a widely accepted proposition that there is a general underpricing of auto travel in u s cities auto travel imposes a congestion externality with an efficient peak period level estimated at lo 23t per mile on urban freeways small 1121 2 3 but for most urban auto travel tolls consist almost entirely of the gasoline excise tax at a fuel economy of 15 miles per gallon the auto toll implied by the current high gas tax in the united states of 25e per gallon is only 1 7e per mile this is much too low for most peak period travel and even underprices some off peak travel the purpose of this study is to estimate the welfare gains which are possible under different regimes for imposing higher auto tolls in urban areas the three regimes studied are associated with a higher gas tax and systems called automatic vehicle identification and on vehicle metering the framework for the study is a model of a city whose shape is that of a wedge or pie slice of a circle the model s features include

the lot of the unemployed a time use perspective this paper provides new evidence on time use and subjective well being of employed and unemployed individuals in 14 countries we devote particular attention to characterizing and modeling job search intensity measured by the amount of time devoted to searching for a new job job search intensity varies considerably across countries and is higher in countries that have higher wage dispersion we also examine the relationship between unemployment benefits and job search

unemployment and infant health times series evidence from the state of tennessee this is the first study that decomposes unemployment into its structural and cyclical components and investigates their impact on income distribution controlling for the influence of inflation increases in structural unemployment have a substantial

retirement behaviour of dutch elderly households we specify and estimate retirement models for singles and married couples and estimate these on data from the dutch socio economic panel we perform some simulations and find strong effects of retirement options in determining the retirement behaviour within different household types model estimates are used to simulate the effect of relevant retirement policies across subgroups we find that the disadvantageous treatment of the old age pension in the netherlands for married households with two earners has unintended perverse effects on the labour market behaviour of couples copyright 2004 john wiley sons ltd