taxes and capital structure understanding firms savings abstract the u s non financial corporate sector became a net lender to the rest of the economy in the early 2000s with close to half of all publicly traded firms holding financial assets in excess of their debt liabilities we develop a simple dynamic model of debt and equity financing where firms strive to accumulate financial assets even though debt is fiscally advantageous relative to equity moreover firms find it optimal to fund additional financial asset holdings through equity revenues the calibrated model matches well the distribution of public firms balance sheets during the 2000s and correctly predicts which firms are net savers

has work sharing worked in germany industry by industry basis in an attempt to raise employment whether this work sharing works is theoretically ambiguous i exploit the cross industry variation in standard hours reductions to examine their impact on actual hours worked wages and employment analysis of industry level data suggests that work sharing may have reduced employment in the period 1984 1994 using individual data from the german socio economic panel i substantiate the union claim of full wage compensation the hourly wage rose enough to offset the decline in actual hours worked

firm dynamics and financial development abstract using comprehensive firm level datasets this paper studies the impact of cross country variation in financial market development on firms financing choices and growth in less financially developed economies small firms grow faster and have lower leverage than large firms as financial development improves the growth difference between small and large firms shrinks while the leverage difference rises the paper then develops a quantitative model where financial frictions drive firm growth and debt financing through the availability of credit and default risk the model explains the observed cross country variations in firm size leverage and growth in response to changes in financial frictions

measuring value change in western industrialized societies the impact of unemployment during the past two decades a four item battery administered in biannual eurobarometer surveys has been used to measure changing value priorities in western european countries we provide evidence that the measure is seriously flawed pooled crosssectional time series analyses for the 1976 86 period reveal that the euro barometer postmaterialist materialist value index and two of its components are very sensitive to short term changes in economic conditions and that the failure to include a statement about unemployment in the four item values battery accounts for much of the apparent growth of postmaterialist values in several countries after 1980 the aggregate level findings are buttressed by analyses of panel data from three countries

taxes and financial frictions implications for corporate capital structure abstract according to data from compustat we observe three general trends between 1980 and 2012 first firms have been reducing their reliance on debt as leverage ratios have fallen and an increasing fraction of firms are now actually net lenders second the frequency at which firms neither issue external equity nor distribute dividends to shareholders has fallen third marginal corporate income tax rates have fallen significantly as well using compustat balance sheet data we structurally estimate a model in which heterogeneous firms finance investment with equity and debt our model incorporates costly external finance as well as a detailed tax structure including personal dividend and corporate income taxes we conclude that there has been a significant reduction in the cost of external equity while overall leverage ratios have fallen mainly because of a lower tax advantage of debt

the development benefits of maternity leave summary within developing countries studies addressing the effects of maternity benefits on fertility infant child health and women s labor force participation are limited and provide contradictory findings yet knowledge regarding the implementation of maternity provisions is essential as such policies could significantly improve women and children s well being we add to this literature using fixed effects panel regression from 1999 to 2012 across 121 developing countries to explore whether different types of maternity leave policies affect infant child mortality rates fertility and women s labor force participation and whether those effects are shaped by disparities in gdp per capita and secondary school enrollment our findings demonstrate 1 both infant and child mortality rates are expected to decline in countries that institute any leave policy policies that last 12 weeks or longer and policies that increase in duration and payment as a percentage of total annual salary 2 fertility is expected to decline in countries that have higher weekly paid compensation 3 maternity leave provisions decrease fertility and infant child mortality rates most in countries with lower gdp per capita and countries with middle range secondary enrollment rates and 4 labor force participation does not increase our results suggest that policy makers must consider the duration compensation and goals addressing fertility versus mortality rates of a policy alongside a country s economic development and secondary school enrollment when determining which maternity leave provisions to apply within developing country contexts

the effect of health insurance on married female labor supply we investigate the effects of employer provided health insurance on the labor supply of married women because health benefits commonly are restricted to full time workers wives who prefer to work short hours but have no alternate source of insurance may work long hours in order to acquire coverage for their families we use data from the april 1993 current population survey benefits supplement and we exploit variation in coverage under husbands health plans to estimate the magnitude of this effect our reduced form labor supply models indicate a strong negative effect of husbands health insurance on wives work hours particularly in families with children this effect persists when we replace husbands insurance coverage with husbands offered insurance and when we use a multinomial logit model that accounts for unobserved heterogeneity in family labor supply preferences

economic integration and mass politics market liberalization and public attitudes in the european union theory theories of how domestic politics influence international economic policy differ fundamentally in their treatment of the mass public a central issue in this controversy is whether members of the mass public form attitudes about international economics that reflect their economic interests this article examines this assumption using international economic theory to identify variation in economic interests regarding international economic policy hypotheses citizens of the european union eu form attitudes toward eu membership an international economic policy that are consistent with their occupation based economic interests methods individual level heteroskedastic ordered probit analysis of eurobarometer survey data and oecd economic statistics from 1975 to 1992 results while controlling for a variety of potentially confounding factors the likelihood of positive evaluations of eu membership is positively related to intraoccupational differences in economic benefits from eu membership

does unemployment insurance crowd out spousal labor supply previous research on unemployment insurance ui has emphasized the program s effect on individual search behavior this state contingent income may also reduce the labor supply of family members during the unemployment spell we investigate this question within the context of wives labor supply responses to their husbands unemployment spells we find strong crowdout of this form of family self insurance our estimates imply that for each dollar of ui receipt wives earn up to 73 cents less the reduction in spousal hours of work is over 40 as large as previous estimates of the effect of ui on search time of husbands

the family gap for young women in the united states and britain can maternity leave make a difference in the united states and britain there is a family gap between the wages of mothers and other women differential returns to marital and parental status explain 40 50 of the gender gap another 30 40 is explained by women s lower levels of work experience and lower returns to experience taking advantage of quasi experiments in job protected maternity leave in the united states and britain this article finds that women who had leave coverage and returned to work after childbirth received a wage premium that offset the negative wage effects of children

the global rise of corporate saving abstract the sectoral composition of global saving changed dramatically during the last three decades whereas in the early 1980s most of global investment was funded by household saving nowadays nearly two thirds of global investment is funded by corporate saving this shift in the sectoral composition of saving was not accompanied by changes in the sectoral composition of investment implying an improvement in the corporate net lending position we characterize the behavior of corporate saving using both national income accounts and firm level data and clarify its relationship with the global decline in labor share the accumulation of corporate cash stocks and the greater propensity for equity buybacks we develop a general equilibrium model with product and capital market imperfections to explore quantitatively the determination of the flow of funds across sectors changes including declines in the real interest rate the price of investment and corporate income taxes generate increases in corporate profits and shifts in the supply of sectoral saving that are of similar magnitude to those observed in the data

a macroeconomic approach to corporate capital structure abstract the cross sectional distribution of corporate capital structure and its macroeconomic implications are underexplored research areas this paper embeds a dynamic trade off theory of firm financing into a general equilibrium model with firm dynamics i find that the stationary equilibrium replicates fairly well the distribution of leverage as well as the relationship between leverage size and profitability the counterfactual experiment points out relatively small effects of tax benefits on corporate capital structure it also implies that the effects of the default cost on macroeconomic variables are almost negligible under endogenous capital structure choice

have the tax benefits of debt been overestimated abstract we re examine the claim that many corporations are underleveraged in that they fail to take full advantage of debt tax shields we show prior results suggesting underleverage stems from biased estimates of tax benefits from interest deductions we develop improved estimates of marginal tax rates using a non parametric procedure that produces more accurate estimates of the distribution of future taxable income we show that additional debt would provide firms with much smaller tax benefits than previously thought and when expected distress costs and difficult to measure non debt tax shields are also considered it appears plausible that most firms have tax efficient capital structures

the impact of protective measures for female workers policies designed to protect female workers have controversial effects on labor market outcomes both in theory and in practice the analysis uses repeated cross sections of household survey data for taiwan to estimate the impact of working hours restrictions and maternity benefits differential coverage across industrial sectors and demographic groups provides a unique opportunity to identify the impact of both policies in a single natural experiment framework while working hours restrictions have a negative impact on women s actual hours worked and employment maternity benefits increase these labor inputs implying that women value the opportunity to return to jobs they might otherwise have to leave

the incidence of mandated maternity benefits i consider the labor market effects of mandates which raise the costs of employing a demographically identifiable group the efficiency of these policies will be largely dependent on the extent to which their costs are shifted to group specific wages i study several state and federal mandates which stipulated that childbirth be covered comprehensively in health insurance plans raising the relative cost of insuring women of childbearing age i find substantial shifting of the costs of these mandates to the wages of the targeted group correspondingly i find little effect on total labor input for that group jel 118 j32 h51 in an era of tight fiscal budget constraints mandating employer provision of workplace benefits to employees is an attractive means for a government to finance its policy agenda consequently in recent years there has been a growth of interest in mandated benefits as a tool of social policy for example the centerpiece of president bill clinton s health care proposal is mandated employer provision of health insurance and more than 20 states have man

how economic integration affects party issue emphases the economic dimension has typically been considered the primary dimension of political party competition however parties often rally voters on the basis of non economic issues in this article we argue that integration into global markets and into the european union eu constrains parties abilities to credibly differentiate themselves on economic issues given these constraints and voters awareness of them parties activate other non economic issues along which to compete using data across 49 countries between 1961 and 2010 this study shows that increased economic integration is associated with increased emphasis on non economic issues during election campaigns this effect persists over time and remains robust to a number of alternative explanations and modeling strategies we also explore the proposed causal mechanisms and show that integration is indeed associated with convergence of party positions on economic issues and that all types of parties not just new and niche parties respond to int

the impact of the overtime policy reform evidence from the low paid workers in taiwan this article investigates the effects of shortening standard workweek on workers with different income levels using two repeated cross sectional survey data the taiwanese manpower utilization survey and human resource survey we estimate the impacts of the new policy on working hours and monthly income our results show that the new standard workweek in taiwan has made the working hours drop but the scale of decrease becomes smaller in the following 3 years although the hours drop has gradually risen back for every worker the rate of increase is higher for the low income workers the monthly incomes of the high income female workers have decreased however the decreases in the hourly wage rates are less than their average wage rates our results also show that the firms have automatically adapted under the new law and a poor enforcement scheme after a period of time

inflation and the evolution of firm level liquid assets abstract this paper shows that inflation has been an important determinant of firm level liquid asset holdings liquid assets as a share of total assets the cash ratio for u s corporations steadily declined from the 1960s to the early 1980s and has since steadily increased our empirical analysis finds that inflation is a key factor accounting for these changes we show that these liquid asset holdings are imperfectly hedged against inflation hence changes in inflation alter the real value of a firm s liquid asset portfolio causing them to readjust these balances

the craft of labormetrics using a wide array of examples from the literature and from original estimates the author examines the pitfalls that make good empirical research in labor economics at least as much craft as statistical technique among the subjects discussed are the appropriateness and cleanliness of data problems of extreme observations the validity of attempts to produce exogeneity using instrumental variables natural experiments and structural models and the treatment of selectivity and unobservable individual effects the author stresses the importance of testing empirical results to ensure that they make sense and of presenting them clearly and economically

the corporate propensity to save why do corporations accumulate liquid assets we show theoretically that intertemporal trade offs between interest income taxation and the cost of external finance determine optimal savings intriguingly we find that controlling for tobin s q saving and cash flow are negatively related because firms lower cash reserves to invest after receiving positive cash flow shocks and vice versa consistent with theory we estimate negative propensities to save out of cash flow we also find that income uncertainty affects saving more than do external finance constraints therefore contrary to previous evidence saving propensities reflect too many forces to be used to measure external finance constraints

the personal tax advantages of equity abstract we value a firm that pays its cash flows to equity through share repurchases in a dynamic environment where personal taxes are paid on capital gains upon realization the cost of capital is reduced by approximately 0 8 through the use of repurchases relative to dividends we use the empirical distribution of pre tax free cash flows in fama and french 1999 to evaluate the tradeoffs between the costs of financial distress the personal tax advantages of equity and the corporate tax advantage to debt the optimal capital structure is interior with a 3 bankruptcy cost

corporate cash holdings and credit line usage we investigate the factors driving the unprecedented rise in corporate liquidities since the 1970s we find that an economy wide reduction in the cost of holding liquidities and an increase in risk best explain the rise in cash holdings and the widespread use of credit lines the structural estimation results shed light on two widely acknowledged motives for holding cash the precautionary motive and the liquidity motive translate risk exposure into cash holdings our results however do not suggest that firms have become more prudent over time it is higher liquidity needs that has forced firms to hold more cash and use more credit lines abstract from author

europeans and the european community the dynamics of public support for european integration europeans evaluate the european community ec according to its economic performance political salience and role in international relations during the last two decades their measured attitudes toward european integration warmed especially when inflation rates fell as the ec share of the country s trade expanded when ec elections and referenda increased attention to the community and to some extend during periods when east west relations were relaxed europeans did not vary their support according to their countries shares of the brussels budget thus notwithstanding denmark s 1992 rejection of the maastricht treaty and the end of the cold war recent ec reforms that increase monetary stability intra european trade and political attention are all likely to maintain or increase citizen support for the ec these findings result from a model that blends comparative political economy with international relations in one of the first applications of pooled cross sectional and time series analysis to the comparative study of public opinion

explaining the negative correlation between values and practices a note on the hofstede globe debate this note provides an explanation for the presumably counterintuitive negative correlations between values and practices reported by the global leadership and organizational behavior effectiveness project we argue that such results are compatible with basic microeconomic insights concerning diminishing marginal utility this explanation implies that values surveys as they are generally elicit marginal preferences rather than underlying values therefore they are a problematic instrument for the measurement of cultures and need to be improved so as to discriminate between the importance attached to an objective in general and that attached to it given current levels of satiation

maximum hours legislation and female employment a reassessment the causes and consequences of state maximum hours legislation for female workers passed from 1848 to the 1920s are found to differ from a recent interpretation although maximum hours legislation served to reduce scheduled hours in 1920 the impact was minimal curiously the legislation appears to have operated equally for men legislation affecting only women was symptomatic of a general desire by labor for lower hours and these lower hours were achieved in the tight and otherwise special world war i labor market most important the restrictiveness of the legislation had no adverse effect on the employment share of women in manufacturing

economic security and value change confirming inglehart s prediction 1971 of an intergenerational shift toward postmaterialist values a time series analysis controlling for the joint effects of inflation and unemployment demonstrates that there is a statistically significant trend toward postmaterialism in all eight west european countries for which data are available over the past two decades evidence from the 1981 83 and 1990 91 world values surveys indicates that this value shift occurs in any society that has experienced sufficient economic growth in recent decades so that the preadult experiences of younger birth cohorts were significantly more secure than those of older cohorts large intergenerational differences tend to be found in societies that have experienced rapid growth in gross national product per capita and are negligible in societies that have had little or no growth accordingly postmaterialism increased in 18 of the 20 societies on five continents for which we have comparable data over the past decade

the effect of economic priorities on the measurement of value change new experimental evidence the euro barometer values battery has provided much of the empirical evidence for the thesis that a shift from materialist to postmaterialist values has occurred in advanced industrial societies over the past two decades it has been argued however that this widely used instrument is seriously flawed because of its sensitivity to current economic conditions we present data from experiments in canada and germany that tested the performance of the values battery in an era of joblessness analyses reveal that 1 substituting an unemployment statement for the standard inflation statement in the battery has major consequences for the classification of respondents as materialist or postmaterialist and 2 answers to the battery are conditioned by the interaction between its content and respondents economic issue concerns these findings support the argument that much of the shift from materialist to postmaterialist values recorded by the euro barometer since the early 1980s is a measurement artifact

value change and democratic reform in japan and korea this study explores the underlying causes of the processes of democratic reform in japan and korea over the past decade in both nations elite challenging pressures from below have been the stimulus forcing reforms on the governing elites for this reason changes in mass attitudes and values become a crucial explanatory variable in accounting for recent political reforms the authors discuss the pattern of political development in these two nations and their theory of how and why values are changing from an authoritarian to libertarian set of attitudinal orientations this pattern of value change has been eroding the traditional tolerance of the mass publics in these two nations for authoritarian and corrupt practices the authors empirically demonstrate how and why values have been changing and how these changes are related to increasing levels of elite challenging protest potential and leftist reform oriented attitudes

the economic consequences of parental leave mandates lessons from europe this study investigates the economic consequences of rights to paid parental leave in nine european countries over the 1969 through 1993 period since women use virtually all parental leave in most nations men constitute a reasonable comparison group and most of the analysis examines how changes in paid leave affect the gap between female and male labor market outcomes the employment to populations ratios of women in their prime childbearing years are also compared with those of corresponding aged men and older females parental leave is associated with increases in women s employment but with reductions in their relative wages at extended durations

evaluating the effects of optimally distributed public programs child health and family planning interventions this paper develops and tests an optimizing model determining the distribution of family planning and health subsidies across heterogeneous households and assesses the biases in cross area estimates of the health effects of such subsidies due to public resource optimization the model incorporates both health externalities and the endogenous response of the size of the recipient population to program subsidies longitudinal data describing child health and publicly provided family planning and health programs in 20 barrios in laguna province in the philippines are used to estimate the effects of such programs on child health and the relationships between the distribution of the programs and preprogram health levels the impact of a program on a particular childs health status is viewed as dependent upon the childs length of exposure to the program a basic feature of the model is the presence of health externalities which is shown to be sufficient along with plausible features of household behavior to make selective subsidization of fertility control either alone or in combination with health investment subsidies pareto efficient the model suggests that subsidization of fertility control is likely to be pareto efficient in the presence of health or human capital externalities when human capital and family size are gross substitutes and or when any per child human capital subsidies may substitute for direct subsidies to health investment and an equalizing distribution of the subsidies the highest family planning subsidies to the lowest health recipient households is efficient when both health and family planning subsidies are used fertility control subsidies minimize the subsidy burden for donors and are highest when total subsidy expenditures per child are greatest